Investor · New Orleans, LA · Member since 2012 · 53 posts · 30 votes
Hello BP!
I have a problem. My Solo 401k administrator disabled my account for non-payment (long story). But they won't assist with filling out a final form 5500 EZ with the IRS. I closed the account with Fidelity not realizing I had to file a final 5500 EZ regardless of the amount in the account (-$5,000). So now im past the due date and panicking because I saw the fines are hefty.
This is fixable, and it's more common than you'd think. A one-participant plan has to file a final-year Form 5500-EZ even when it's under the $250K threshold where filing is otherwise waived. That means the form is simple: mark it as the final return, enter zero assets at the end of the year, and file.
On the penalty: the statutory late-filing penalty is steep ($250 a day, up to $150,000), but the IRS runs a late-filer penalty relief program for Form 5500-EZ that replaces it with a small flat amount per late return, as long as you file before the IRS contacts you. Search "Form 5500-EZ late filer penalty relief" on IRS.gov for the current rules, amount and how to pay. I'd move on this soon, before a notice arrives.
Practical steps:
1. Pull the plan name, plan number and EIN from old Fidelity or administrator statements.
2. File the final-year return, plus any earlier year that was missed.
3. A CPA or ERISA/retirement-plan preparer can usually do this in an hour or two for a flat fee. Worth it for a penalty problem.
If a notice does arrive, answer it with a reasonable-cause explanation (the administrator disabled the account and wouldn't assist) and the relief request.