Solo 401(k) and Form 5500-EZ: do you need to file?

The $250,000 rule, read correctly

The IRS instructions excuse a one-participant plan from filing when the total of its assets and the assets of all other one-participant plans the employer maintains does not exceed $250,000 at the end of the plan year. Three consequences people get wrong:

• Plans are added together. If your business has two one-participant plans and together they hold more than $250,000, each plan files — including one that holds less on its own.
• It is tested every year. The test is the assets at the end of each plan year. Crossing $250,000 once does not oblige you to file in later years that end at or below it.
• The final year always files. When the plan is terminated and its assets are fully distributed, a final Form 5500-EZ is due whatever the balance.

Use the total plan assets at the end of the year — the figure on line 6a(2) of the form — to decide.

Who counts as one participant

A one-participant plan covers only the business owner (and their spouse), or only the partners in a partnership (and their spouses), with no other employees in the plan. Hire an employee who becomes eligible and the plan stops being a one-participant plan; it then files Form 5500-SF or Form 5500 instead.

When it is due

The last day of the seventh month after the plan year ends: 31 July for a calendar-year plan. Filing Form 5558 by that date extends it to 15 October. If your plan year matches your business's tax year and your income tax return is on extension, the Form 5500-EZ is extended to that date automatically. Work out your own dates with the due date calculator.

How to file it online

Form 5500-EZ has been fileable through the Department of Labor's EFAST2 system since 2021. For plan years beginning in 2025 or later, filing electronically is required if you must file at least 10 returns of any kind with the IRS during the year (W-2s and 1099s count); for anyone else, paper filing with the IRS is still allowed. On 5500API you:

• answer plain-language questions about the plan and the year-end balance;
• see every government check explained before you sign;
• sign with your own EFAST2 signer credentials, which we never store;
• pay $49 when the return goes, and keep the acknowledgement for the plan's records.

The information on a Form 5500-EZ is made available to the public, but the IRS states that a one-participant plan's return is not published on the internet.

If you missed a year

The penalty under Code section 6652(e) is $250 a day, up to $150,000 per plan year. The IRS penalty relief program (Revenue Procedure 2015-32) lets a one-participant plan file its late returns for $500 each, capped at $1,500 per submission for a plan — but those returns must be filed on paper; electronically filed late returns are not eligible. The Department of Labor's DFVC program does not cover Form 5500-EZ.

This guide explains the rules in general terms and is not tax or legal advice. The plan sponsor remains responsible for what is filed.