RECORD A DISTRIBUTION

This form can be used to record a distribution from a Solo 401(k).  Any distribution should be recorded, whether it is a taxable distribution to you, or a distribution that is being rolled over, directly or indirectly to another retirement plan.

Download Distribution Form

Things to consider:

When making a distribution from a Solo 401(k) to you, you must:

  • Withhold 20% and send it to the Treasury Dept. by the 15th day of the month following the distribution.
  • Complete a Form 945 to report the 20% withholding by January 31st of the following tax year in which the distribution was made.
  • Complete a and file a 1099-R from the 401(k) to you by February 28th.
  • Report the distribution on your 1040 by April 15th.

When funds are being distributed from the Solo 401(k) into another retirement plan such as an IRA or another 401(k) – what is commonly called a direct rollover – you must:

  • Complete and file a 1099-R by February 28th, to report the direct rollover distribution.
  • Report the direct rollover on your 1040 at the end of the year.
  • No withholding, and no Form 945 are required for a direct rollover distribution.

IMPORTANT:  You must order printed copies of the 1099-R from the IRS.  The IRS will not accept printed copies from their online PDF 1099-R form.  Look to the Useful Links section for a link to the IRS forms ordering page.

Distributions from the Roth sub-account of the Solo 401(k) do not require withholdings or a Form 945, however a 1099-R must still be filed by January 31st.

When making a Required Minimum Distribution (RMD) from a Solo 401(k), make sure to correctly calculate the distribution amount.  A link is provided to the right, to the IRS’s overview of RMD rules and calculations.

Withholdings are sent via the Electronic Federal Tax Payment System (EFTPS).  Withholding payments can be sent through your CPA’s account, or you may open an EFTPS account, in your Solo 401(k)’s name, and send in the payments yourself.

ALWAYS consult with your CPA or other tax professional when taking a distribution from your Solo 401(k), as you will likely be incurring taxes, and will have reporting requirements to meet.

COVID DISTRIBUTIONS

The relief provided by the CARES Act relating to COVID hardship distributions ended 12:00pm December 30, 2020.  Congress did not extend relief into 2021.

If you took a hardship distribution that was provided relief under the CARES Act, you must file IRS Form 8915-E.  The form is still in it’s draft form with the IRS, but links are provided below to the current draft version of both the instructions and the form itself:

          Form 8915-E Instructions  (IRS Draft Version)

          Form 8915-E  (IRS Draft Version)