A Solo(k) Plan is also known as a Uni(k) or One Participant(k). The Solo(k) Plan isn’t a new or different type of retirement plan, it’s a Traditional 401(k) Plan that only covers a business owner with no employees. All rules and limits that apply to traditional 401(k) Plans also apply to Solo(k) Plans.
Most Individuals or Partnerships who own a business, but do not have any employees generally may open a Solo(k). They must establish an EIN if they have not already done so. Spouses of each owner are also allowed to contribute to the plan. Separate accounts must be held under the plan for each participant and may not be comingled.
NAI would assist in keeping the plan compliant with IRS/DOL regulations. NAI creates and updates the plan documents, files the 5500EZ IRS Form, if applicable, and processes transactions.
Please see the NAI Home Page for the current year’s contribution limits. Communication should also take place with your CPA to determine the amount you can contribute.
The IRS requires that any Solo(k) Plan that has $250,000 or greater in total plan assets needs to file the IRS Form 5500EZ. If you have less than $250,000 in plan assets and decide to terminate your plan, you are required to file a 5500EZ Form for the plan’s final year. NAI will complete the form, send over to you for approval and signature and then file it for you with the IRS once it is signed.
The NAI fees to setup a new plan or takeover a current plan is $250 to create Plan Documents. We then charge an Annual Fee of $100 to administer the plan for the year the plan is beginning. This will be charged on the initial invoice and then each January/February to follow. Plans with total balances of $250,000 or more are required to file a 5500EZ. NAI will charge an additional $200 per year to prepare this form.
Duplicate statements must be set up for plan administration. An additional $125 per year will be charged for those plans that have not enacted duplicate statements.
There is no additional fee to have a Roth account under the plan. Our Solo(k) plan allows for Pre-tax and Roth Deferrals as well as Profit Sharing and Employer Match. Any or all of these options may be chosen with no additional fee. Separate accounts under the plan must be used for Pre-tax and Roth dollars. If there are brokerage accounts as well as Life Insurance/Annuities/other an additional $100 per additional account type will be charged.
Initial invoice will be emailed at the time of set-up:
- $350 for plans with balances under $250,000
- $550 for plans with balances $250,000 or more
Annual invoices will be emailed each January/February:
- $100 for plans with balances under $250,000
- $300 for plans with balances $250,000 or more
The IRS has a mandatory Restatement Period every six years with a two year window to update your plan documents. You will receive a notice from NAI if a restatement is required for your plan. You will see on our application the option to add an additional $75 to the annual fee instead of the $250 in 2022. Here is an explanation of the choices:
- First choice is being charged $125 separately for each Amendment that may be required by the IRS/DOL. The client may then choose $250 at the time of Restatement, which is every 6 years and the next one is in 2022.
- Second choice is paying and additional $75 each year on top of the normal annual fee of $100 or $300 if over $250,000 in assets. With this choice, when the IRS/DOL requires or the client requests an amendment within the next 5 years, there will be no charge for the Amendment or at the time of Restatement.
The benefits to the Second choice is that if there are 4 Amendments required, as there were the last period between Restatements, this could save them money and avoid the large charge of $250 all at once.
- $500 4 Amendments required by IRS $125 each
- $250 Restatement Charge
- $750 Total
- $375 4 Amendments required by IRS $75 each year (5 years remaining)
- $0 Restatement Charge
- $375 Total
We cannot guarantee there will be 4 or more Amendments within the remaining 5 years. What we can tell you is there were 4 Amendments within the last Restatement Period that we charged for. We have not had one yet for this period, which is similar to the last Restatement Period.
Complete the NAI Application on the nai-net.com website. We setup all our Solo(k) Plans to allow the most flexibility for the client. Profit Sharing, Match, Pre-Tax Deferrals, Roth Deferrals would all be options within the Plan.