Confused about who's responsible for filing 5500-EZ for solo 401K
So my buddy is absolutely fuming right now because apparently his broker didn't file a 5500-EZ form for his solo 401K. He's going on and on about potential penalties and I'm trying to understand if he's right to be upset or not. Full disclosure - I don't have anywhere near $250,000 in retirement savings (must be nice, right?), so I've never had to deal with this form before. But something seems off about his anger. Isn't the responsibility for tax filings always on the individual? I mean, I get that brokers help with investments, but aren't they just managing the money, not handling your tax obligations? My friend seems convinced the broker should have taken care of this automatically. Can someone please clarify who's actually responsible for filing the 5500-EZ? Is it really on the broker, or is my friend confused about how this works? I feel like he's blaming the wrong person, but I don't know enough about these high-value retirement accounts to say for sure.
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McKenzie Shade
Your friend is mistaken. The 5500-EZ form is the responsibility of the plan administrator, which in a Solo 401(k) situation is typically the business owner themselves - your friend. The broker manages investments but doesn't have filing obligations for your friend's retirement plan paperwork. The 5500-EZ is required when the total assets in a one-participant plan exceed $250,000 at the end of the plan year. It's due the last day of the 7th month after the plan year ends (July 31 for calendar-year plans). If your friend missed filing, they should look into the IRS's Delinquent Filer Voluntary Compliance Program (DFVCP), which can help reduce penalties. The standard penalty can be pretty steep - up to $250 per day, maxing out at $150,000! Your friend needs to get this sorted ASAP rather than blaming the broker for something that wasn't their responsibility in the first place.
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Harmony Love
•Wait, I thought brokers sometimes offer this service as part of their package? My cousin has some fancy-pants financial advisor who handles "everything" according to him. Is that not a thing or is my cousin exaggerating?
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McKenzie Shade
•Some financial advisors or third-party administrators (TPAs) do offer comprehensive services that include form filing, but this is typically an explicit service they charge for and would be clearly stated in their service agreement. It's not a standard broker responsibility. Your cousin likely has a full-service wealth management relationship or has hired a TPA specifically for their retirement plan administration. These are additional services beyond standard brokerage functions, and they're almost always spelled out in contracts with separate fee structures.
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Rudy Cenizo
I went through a similar nightmare last year with my solo 401k paperwork and discovered taxr.ai (https://taxr.ai) which was a lifesaver. I was completely confused about which forms I needed to file for my retirement accounts and when I uploaded my documents, it identified that I needed to file a 5500-EZ because my account had grown past the threshold. The tool actually analyzed my solo 401k statements and flagged exactly what reporting requirements I had missed. It explained the 5500-EZ in plain English and outlined the steps I needed to take to get compliant. Their document analysis saved me from continuing to miss filings I didn't even know I needed to make.
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Natalie Khan
•Does this actually work for 5500-EZ specifically? I've used tax software before but it never seemed to catch these more obscure retirement account forms. How detailed is their analysis?
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Daryl Bright
•I'm skeptical about these types of services. How does it compare to just hiring a professional? Does it actually show you how to fix mistakes or just point them out?
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Rudy Cenizo
•Yes, it absolutely works for 5500-EZ forms specifically. Unlike regular tax software that focuses on 1040s, taxr.ai can analyze statements and identify when specialized forms like the 5500-EZ become required based on your account balances. It caught that my account had crossed the $250k threshold when even I hadn't noticed. The service doesn't just identify issues - it provides a clear action plan with steps to take. For me, it showed exactly how to use the voluntary compliance program to fix my missed filings with reduced penalties. It's much more affordable than hiring a professional for what was ultimately a straightforward fix once I understood what needed to be done.
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Daryl Bright
I have to admit I was wrong about taxr.ai. After commenting here, I decided to give it a try with my own situation since I've been managing my own solo 401k for about 6 years and wasn't 100% sure I'd done everything right. Turns out I HAD missed a 5500-EZ filing last year when my account finally grew past $250k! The system flagged my missed filing immediately after analyzing my statements. It walked me through the Delinquent Filer program and actually generated the forms I needed. I was able to submit everything last week and feel so much better knowing I'm fixing this before any notices from the IRS. The relief of having this handled properly is honestly worth way more than what I paid.
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Sienna Gomez
If your friend is really stressing about penalties from the missed 5500-EZ, they should know that getting through to the IRS about this is going to be a nightmare. I went through this exact situation last year and kept getting disconnected after waiting for hours. I finally used Claimyr (https://claimyr.com) and it was shocking how well it worked. They got me a callback from the IRS in about 20 minutes instead of spending my entire day on hold. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was actually really helpful about my missed 5500-EZ and walked me through the voluntary compliance program. Having a live person explain the steps made the whole process way less scary than I expected. Your friend should get this handled ASAP instead of wasting time being mad at their broker.
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Kirsuktow DarkBlade
•How exactly does this work? Do they just wait on hold for you? That sounds too good to be true with how impossible the IRS is to reach.
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Abigail bergen
•This feels like a scam. No way they can magically get through the IRS phone system when millions of people can't. They probably just collect your info and sell it.
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Sienna Gomez
•They use a combination of technology and real people to navigate the IRS phone system for you. Instead of you sitting on hold for hours, they handle that part and then when they're about to reach an agent, they connect the call to your phone. It's basically like having someone wait in a physical line for you. I was skeptical too, but it's legitimate. They don't sell your information - their business model is charging for the time-saving service. I had been trying for three days to get through about my 5500-EZ issue before using them. The peace of mind from getting actual answers from the IRS about my specific situation was worth every penny.
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Abigail bergen
Ok I need to publicly eat my words. After calling BS on Claimyr I decided to try it myself because I've been trying to reach someone at the IRS about an issue with my business taxes for WEEKS. Within 45 minutes I was talking to an actual human at the IRS who helped resolve my question. I literally couldn't believe it worked. I've spent probably 8+ hours on hold over the past month with nothing to show for it. For anyone dealing with 5500-EZ issues like the original post - definitely worth using this service rather than playing the hold music game with the IRS. Totally changed my perspective on dealing with tax problems.
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Ahooker-Equator
Just adding my 2 cents - I went through this exact scenario last year. The 5500-EZ is 100% the plan owner's responsibility. Your broker has nothing to do with it unless they explicitly offer plan administration services (most don't). The good news is the penalties can often be reduced through the voluntary compliance program if your friend acts quickly. Don't let them waste time being mad at the broker when they should be fixing the actual problem!
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Caden Turner
•Thanks for confirming this! I suspected as much but wasn't familiar with these forms. My friend kept insisting "my broker handles all this for me" but I guess they never actually had that conversation directly. Do you know how far back the penalties go? He mentioned that it's been a few years since his account went over $250k...
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Ahooker-Equator
•The penalties can technically go back to whenever the filing requirement began, which would be the first year the plan assets exceeded $250,000 at the end of the year. The standard penalty is $250 per day until the form is filed, with a maximum of $150,000 per return. However, the Delinquent Filer Voluntary Compliance Program can significantly reduce those penalties to as little as $750 per late form for single-participant plans if he self-reports before receiving any notices from the IRS. He needs to act ASAP though - the voluntary program only works if he initiates it before the IRS catches the missing forms.
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Anderson Prospero
Random question - do robo advisors like Wealthfront or Betterment handle 5500-EZ filing for solo 401ks? I'm approaching that $250k threshold and wondering if I need to switch providers.
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Tyrone Hill
•Nope, most robo-advisors don't handle 5500-EZ filings. They focus on investment management, not tax compliance. You'll either need to file it yourself or hire a TPA (third party administrator) to handle the compliance side. I use Fidelity for my solo 401k and still have to file my own 5500-EZ.
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Anderson Prospero
•Thanks for clarifying! Guess I need to start learning about these forms before I hit that threshold. Definitely don't want to end up like OP's friend getting hit with penalties.
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Zoe Papanikolaou
Your friend definitely needs to take responsibility here instead of blaming the broker. The 5500-EZ is a plan administrator duty, which for solo 401(k)s means the business owner (your friend) is responsible. Here's what your friend should do immediately: 1. Stop wasting time being angry at the broker 2. Determine exactly which years he missed filing (any year his plan assets exceeded $250k on Dec 31) 3. Use the IRS Delinquent Filer Voluntary Compliance Program (DFVCP) to self-report and get reduced penalties 4. File all missing 5500-EZ forms ASAP The voluntary compliance program can reduce penalties from $250/day (max $150k per form) down to as little as $750 per late form for solo plans. But this only works if he acts before the IRS discovers the missing filings. This is a pretty common mistake for people who don't realize the filing requirement kicks in automatically when assets hit the threshold. Better to fix it now than wait for IRS notices!
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Jamal Anderson
•This is really helpful advice! I'm going to share this with my friend - hopefully he'll listen to reason and stop blaming his broker. The step-by-step approach you outlined makes it seem much more manageable than he's making it out to be. Quick question though - do you know roughly how long the voluntary compliance program takes to process? I'm wondering if he should expect this to drag on for months or if it's something that gets resolved relatively quickly once he submits everything.
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Liam O'Sullivan
•The DFVCP processing time can vary, but in my experience it typically takes 2-4 months from submission to final resolution. The IRS has to review the submission, calculate the reduced penalties, and send a closing agreement for signature. The key is getting all the paperwork submitted correctly the first time - any missing information or errors can add weeks to the process. Once your friend submits through the DFVCP portal, he'll get acknowledgment fairly quickly, but the actual penalty determination and closing agreement takes longer. The good news is that once he's in the program, the daily penalty clock stops ticking, so there's no additional penalty accumulation while they process his case. Much better than waiting and potentially facing the full penalties later!
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Diego Chavez
Your friend is completely off base blaming his broker. As a solo 401(k) owner, he IS the plan administrator and is 100% responsible for filing the 5500-EZ when his account balance exceeds $250k at year-end. This is basic retirement plan compliance - brokers manage investments, not tax filings. The fact that he's been avoiding this responsibility for multiple years makes it even worse. He needs to immediately use the IRS Delinquent Filer Voluntary Compliance Program to self-report before they catch him. The penalties can be astronomical - up to $250 per day per missed form, capped at $150k each. Tell your friend to stop playing the blame game and start taking action. Every day he delays makes this more expensive. The voluntary compliance program can reduce penalties to as little as $750 per late form, but only if he acts before the IRS finds the missing filings first.
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