Form 5500 filing for sole proprietor - do retirement account assets (stocks, etc.) need to be on balance sheet?
I've been running my own consulting business for about 5 years now as a sole proprietor. Last year my revenue jumped to around $320K and I set up a Solo 401(k) through Vanguard. I've contributed pretty aggressively - about $40K for 2023 since I can do both employer and employee contributions. Now I'm dealing with Form 5500 for the first time and I'm totally confused about how to handle the retirement account assets on my balance sheet. Do I need to list all the specific investments (stocks, ETFs, etc.) from the 401(k) on the balance sheet section of the Form 5500? Or do I just report the total value of the plan assets? The form seems to ask for detailed financial information but I'm not sure if that applies to someone in my situation as a solo business owner. Anyone with experience filing Form 5500 as a sole proprietor who can clear this up? Thanks in advance!
19 comments
Join the conversation
Fatima Al-Hashimi
You don't need to list individual investments on Form 5500 for a solo 401(k) as a sole proprietor. For most small retirement plans (under $250K in assets), you may even qualify to file Form 5500-EZ or 5500-SF instead of the full Form 5500. When reporting plan assets, you'd typically just report the total value at the beginning and end of the plan year on the appropriate lines. The detailed asset schedules are more applicable to larger company plans with many participants. If your plan assets are under $250K at the end of the year, you might be exempt from filing altogether. However, if this is your first filing when terminating the plan, you'd still need to file regardless of the asset amount.
0 coins
NeonNova
•Thanks for this response. I'm a bit confused though - I thought the threshold for filing Form 5500-EZ was $250k in plan assets, but my friend who also has a solo 401k with about $180k told me she still had to file. Is there something I'm missing? Also, if I do have to file, do I need to include a Schedule I?
0 coins
Fatima Al-Hashimi
•Your friend might be confused. The filing threshold is indeed $250K in plan assets at the end of the plan year. If your friend has only $180K, she's exempt from filing unless she's terminating the plan. You only need Schedule I if you're filing a full Form 5500, not for 5500-EZ or 5500-SF. For a solo 401(k), the 5500-SF (Short Form) is often the appropriate choice if you exceed the $250K threshold. It requires less detailed asset reporting than the full 5500.
0 coins
Dylan Campbell
I went through this exact same headache last year with my SEP IRA that grew beyond $250k. After hours of research and frustration, I found taxr.ai (https://taxr.ai) which literally saved me days of confusion. It analyzed my retirement account statements and showed me exactly what needed to go where on the 5500-SF. The tool walked me through which form was right for my situation (turns out I qualified for the simplified 5500-SF) and exactly how to report my total assets without breaking down every individual stock. It also explained that as a sole prop, I didn't need to include detailed balance sheets like larger companies do. Super helpful for small business owners who get stuck with big business paperwork!
0 coins
Sofia Hernandez
•Sounds interesting. Does it actually file the form for you or just help you figure out what goes where? I'm using a popular tax software but it doesn't seem to cover Form 5500 at all.
0 coins
Dmitry Kuznetsov
•I'm a bit skeptical of online tools for something as important as retirement reporting. How does it handle the signature requirements? Doesn't the 5500 need to be filed electronically through the EFAST2 system? Would hate to mess this up and get penalties.
0 coins
Dylan Campbell
•It doesn't file the form for you - it analyzes your specific situation and documents, then gives you step-by-step guidance on exactly what to enter on each line of the form. It saved me from having to decipher the 80+ page IRS instructions document. The tool walks you through the EFAST2 electronic filing process too. It explains the signature requirements and helps you understand the process for obtaining an electronic filing signature. I was worried about the same thing, but the instructions were really clear on how to properly complete the electronic signature and submission through the DOL's system.
0 coins
Dmitry Kuznetsov
Just wanted to follow up about that taxr.ai site mentioned above. I decided to give it a try with my Solo 401k documents since I was totally stuck on the 5500-SF. Honestly wasn't expecting much but it surprised me! It analyzed my year-end statement from Fidelity and showed me exactly what numbers needed to go where. The best part was it helped me understand I only needed to report the total value of plan assets (around $287K) as a single entry rather than listing every mutual fund and stock. It also confirmed I was eligible for the streamlined 5500-SF instead of the full 5500. Just submitted through EFAST2 yesterday and got confirmation it was accepted. For anyone dealing with their first 5500 filing like me, definitely worth checking out.
0 coins
Ava Thompson
Guys, after 6 HOURS on hold with the IRS trying to get answers about Form 5500 reporting requirements for my one-person plan, I finally discovered Claimyr (https://claimyr.com). You can see how it works here: https://youtu.be/_kiP6q8DX5c I was about to lose my mind waiting on hold, but Claimyr got me connected to an actual IRS agent in about 20 minutes. The agent confirmed that for a solo 401(k), you report the total value of the plan assets without listing individual investments. They also explained that I should file Form 5500-SF since my plan exceeded the $250K threshold. The IRS agent actually walked me through several sections I was confused about. Can't believe I wasted almost a full day on hold before finding this service!
0 coins
Miguel Ramos
•Wait, how does this work? I thought it was impossible to get through to the IRS these days. I've literally had to hang up after 2+ hours on hold multiple times.
0 coins
Zainab Ibrahim
•This sounds like complete BS. Nothing can get you through to the IRS faster. They have a queue system and everyone waits. I don't buy that some random service can magically jump the line. If it were possible, everyone would be doing it.
0 coins
Ava Thompson
•It uses a callback system. When you call the IRS, there's no option to request a callback, so you're stuck waiting on hold. Claimyr uses technology that continuously calls the IRS and when they finally get through, they connect that open line to your phone. It's not "jumping the line" - they're basically waiting in line for you. I was skeptical too, but after wasting an entire day on hold, I was desperate. The service called me when they had an IRS agent on the line. It still took about 20 minutes of their system calling repeatedly, but that's a lot better than the 6+ hours I wasted trying myself. Nothing magical about it - just saves you from having to keep your phone tied up all day.
0 coins
Zainab Ibrahim
I need to eat my words from my previous comment. After another frustrating failed attempt to reach the IRS this morning (2 hours on hold before getting disconnected), I tried Claimyr out of desperation. Honestly, it worked exactly as described. Their system called me back after about 25 minutes with an actual IRS representative on the line. I got my Form 5500 questions answered in about 10 minutes. The agent confirmed that I only need to report the total value of my Solo 401(k) on the 5500-SF, not each individual stock/fund. The agent also mentioned that if I file late, the penalties can be pretty steep (up to $250/day), so I'm glad I finally got through to confirm what I needed to do. Sorry for being so skeptical - just wanted to update for anyone else struggling to get IRS help with these forms.
0 coins
StarSailor
One important thing to note that hasn't been mentioned - if your Solo 401k has BOTH traditional and Roth components, you'll need to report the total values separately on the form. This confused me last year. Line 7a is for the total of all plan assets, but there's also a section where you'll need to break out the pre-tax (traditional) and post-tax (Roth) portions separately if you have both. Don't just lump the total value together or you'll get a notice asking for clarification.
0 coins
Connor O'Brien
•Where exactly do you report the Roth vs traditional breakdown? I have both in my solo 401k but can't seem to find where this goes on the 5500-SF. Is it in Part III?
0 coins
StarSailor
•You'll need to complete Part VI of Form 5500-SF if you have both Roth and traditional components. Look specifically at line 11a and 11b where it asks about pre-tax and designated Roth contributions. The total combined value goes on line 7 of Part III, but the breakdown between traditional and Roth gets reported in Part VI. It's easy to miss because most of the solo 401k guidance focuses on the asset reporting and not this specific detail.
0 coins
Yara Sabbagh
Has anybody actually been audited on these 5500 forms for a one-person plan? I'm late filing mine and freaking out a bit about penalties. What's the realistic chance the IRS actually cares about a small solo 401k form being filed a few weeks late?
0 coins
Keisha Johnson
•I was about 3 months late filing mine last year and did get a notice with a proposed penalty. I called and explained that as a small business owner I wasn't aware of the requirement, and they actually waived the penalty completely. I think first-time abatement is pretty common. Just don't ignore it!
0 coins
Yara Sabbagh
•That's a relief to hear! Did you have to submit anything in writing or was the phone call enough to get the penalty waived? I'm about 6 weeks late at this point.
0 coins