Annual Requirements for IRA LLCs & Solo 401(k)s

by Peter Rizzo

Life Settlements in a Retirement Account? Think Again.

A few weeks ago, we published an article in the Shield regarding the 5500 EZ form that some Solo 401k clients are required to file.

We had some responses from clients who use an IRA LLC, asking for a quick overview of the annual requirements to maintain an IRA LLC.

For your convenience, here is a quick overview of annual requirements for both the Solo 401k and IRA LLC structures.

For those using an IRA LLC

  1. At years end your IRA Custodian will send you a request, asking that you provide them with an updated value of the LLC.  It is the value of all the investments and cash owned by the LLC.  Your Custodian will use that value to report the total value of your IRA to the IRS at the end of the year.  If you have taken distributions, your IRA Custodian will also send you a 1099R by January 31 of the year following the distribution.
  2. Most States require an annual fee be paid to keep the LLC in good standing on the public record of that State.  Most States impose a flat annual fee, but some States have a franchise tax system that requires a franchise tax return, instead of an annual fee.  It is important to know your states filing requirements, so here is a good site that explains filing requirements for the different states

For those using a Solo 401k

  1. If the value of your Solo 401k is $250,000 or more ( this is per plan not participant) you must file the 5500EZ form .  If we are the plan document provider for your 401k plan, we have a portal and video that explains the process.  It is a relatively simple form that most clients do themselves or you can have your CPA fill it out. We also have affiliates that will do the filing for a nominal fee.  If you have taken distributions, you should have filled a 1099 with your personal returns.  There are firms that do the filings for reasonable fees and take the hassle away. The biggest deadline to be aware of is the July 31st 5500 deadline. The 5500EZ must be at least postmarked by July 31, in order to be accepted by the IRS.
  2. If the value of your Solo 401k is less than $250,000 and you do not have an LLC owned by the Solo 401k then your 401k does not file anything.  Make sure to keep good records so that you know when your plan reaches that $250,000 level.

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