If you have a self-directed 401(k), the Internal Revenue Service (IRS) requires you to report assets for accounts with more than $250,000 annually. This is done through the IRS form 5500-EZ. However, these are not the only individuals who should be acquainted with this form.
Terminating a Plan
If you are terminating a self-directed 401(k), whether it is associated with you as a sole-proprietor or through an entity you own, you also need to file a 5500-EZ form. In fact, once you close your account, the IRS gives you seven months to file. How does this work?
Step 1: Terminating Your Plan
As the Trustee of your account, you are responsible for a great amount of the work related to terminating your plan. Transferring your funds to another retirement account, for example, is not the end all for a plan’s termination. In order for you to be compliant with the IRS regulations, you will need to contact your plan document sponsor. In turn, the sponsor will provide you with the necessary forms required for you to terminate your account. (At IRA Business Trust, our custodians do our best to ensure this goes as smoothly as possible. We keep things simple and can assist you with the steps needed to terminate your account.)
Step 2: Filing with the IRS
Once you have completed the forms provided to you by your plan document sponsor, you will need to file the 5500-EZ Form with the IRS. This form, which can be downloaded from the IRS website, is relatively simple. However, hiring a reputable professional, like those at IRA Business Trust, can ensure you have help with the form if you need it.
IRA Business Trust
At Royal Legal Solutions, our professionals are well acquainted with IRS regulations. After all, we are trained experts who deal with the IRS, regulations, and finances every day. However, this is not true for everyone. While we do our best to assist you with every aspect of your account with us, not all financial institutions lean forward to help. If you thought rolling over one account into another was all that needed to be done, you are mistaken. Working with a reputable institution, like Royal Legal Solutions can help you keep your good standings with the IRS when it comes to your retirement account. Contact us today if you would like to discuss retirement plan options available at Royal Legal Solutions.