Form 5500-EZ: A Simple Guide to Filing, Deadlines & Avoiding Penalties

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If you have a Solo 401k with over $250,000 in assets, the IRS requires you to file Form 5500-EZ each year. 

Fortunately, it’s straight forward to fill out, takes only about an hour to complete, and can be filed online. Not bad, considering the potential tax advantages a Solo 401k could offer, depending on your financial situation.

In this guide, you’ll learn what  Form 5500-EZ is, how and when to file it, what happens if you miss the deadline, and why it may be worth filing even if you’re not required to.

What is Form 5500-EZ?

Form 5500-EZ is a required annual tax return for Solo 401k account holders whose plan assets exceed $250,000. Think of it as a yearly summary of your Solo 401k account.

The IRS uses it to track your asset types and ensure compliance. The form asks for simple information like your contributions, rollovers, loans, and the value of the asset types you have in your plan. You generally don’t need to report specific investments, just the overall numbers across categories.

Who Needs to File a Form 5500-EZ?

You are required to file a Form 5500-EZ if:

✅ Your Solo 401k plan has more than $250,000 in asset types at the end of the year.

✅ You’re terminating your Solo 401k account and rolling over or distributing all cash/asset types.

If your plan value is below $250,000 and you’re not officially closing your account, filing isn’t mandatory, but it may still be a smart move. Here’s why: 

File Even If Your Plan’s Asset Types Are Close to $250,000

If your plan assets are near the $250,000 mark (say $245,000), it’s best to file anyway. 

The penalties for late filings are extremely steep (more on that below), and market fluctuations could tip you over the limit without warning. 

File Even If You’ve Filed Previously 

If you’ve filed Form 5500-EZ in the past, continue filing, even if your plan’s value drops below the $250,000 threshold for the current tax year.

✏️ Hypothetical Example: Your plan was over $250,000 in previous years, but has decreased to $180,000 due to market changes. To avoid confusion or unwarranted IRS attention, it’s often safer to keep filing.

Why? Because dealing with IRS inquiries about a missed filing could be stressful. Even if you’ve done nothing wrong and have a valid reason, it’s best to avoid unnecessary scrutiny altogether.

File to Maintain an IRS-Approved Record

A Solo 401k generally doesn’t have annual tax filing requirements other than the Form 5500-EZ. Filing it—even when not required—creates a clear, official record of your contributions, loans, rollovers, and asset holdings. This shows the IRS that your plan is active and remains in compliance. 

Filing the form doesn’t take much time and is not restricted by your account’s value. Be sure to consult with your tax pro though to assure your plan is in good standing. 

File to Start the IRS Statute of Limitations

There are cases in the past where the IRS has disqualified a Solo 401k plan for minor violations. 

For example, if you’re unaware of any official rule changes to the Solo 401k plan set by the government, you could be disqualified for not complying with the updated regulations. Remember, with a Solo 401k you are the plan administrator and are responsible for maintaining plan compliance. 

While rare, plan disqualifications could have significant tax consequences, including:

📝 Important Note: The IRS has a three-year statute of limitations to reassess your taxes and potentially disqualify your plan. They won’t assess income taxes for periods beyond this timeframe. Filing a Form 5500-EZ officially starts the three-year statute of limitations. While filing doesn’t guarantee protection, it does start the clock on how long the IRS can look back. 

How Is the $250,000 Balance Determined?

The $250,000 threshold is determined based on the total balance across ALL plan participants and EVERY Solo 401k plan you have. Here’s how it works:

✅ One plan, one participant? Check your Solo 401k total balance at the end of the fiscal year.

✅ Multiple Solo 401k plans? Add the balances of all your accounts.

✅ Spouse included in the plan? Include both account balances in your total.

If the combined total across all accounts and participants exceeds $250,000, you’re required to file Form 5500-EZ.

How Do I Determine the Value of Assets Like Real Estate or Private Equity?

Assets like real estate and private equity don’t always have clear market value, so you’ll need to estimate their fair market value (FMV) at the end of the year.

✅ Real estate: Consider using online tools like Zillow for an estimate, or get a formal appraisal for more accurate reporting.

✅ Private equity: Request a valuation from the general partner or a third party auditor.

What If I Took Out a Solo 401k Loan?

A Solo 401k loan must be included in your total balance calculations.

✏️ Hypothetical Example: If your Solo 401k balance is $220,000, but you had previously taken out a $50,000 loan, your total balance becomes $270,000 ($220,000 + $50,000). Since this exceeds $250,000, you’re required to file Form 5500-EZ.

When is the Deadline to File Form 5500-EZ?

The filing deadline of your Form 5500-EZ depends on whether your Solo 410k plan follows a calendar year or a fiscal year.

✅ Calendar-year plans (Jan 1 – Dec 31):

✅ Fiscal-year plans:

This timeline applies regardless of business structure—whether you’re incorporated or unincorporated.

Can I Get an Extension?

Yes, you can request an extension of up to 2 ½ months by filing Form 5558 with the IRS. Note that Form 5558 must be filed before the original deadline to allow time for processing. If the IRS rejects the extension, you’ll still need to submit Form 5500-EZ on time to avoid penalties.

Penalties for Late Filings

The IRS charges steep penalties for failing to file Form 5500-EZ on time. The late fee is $250 per day, capped at $150,000. At that rate, a full year of missed filings could cost $91,250, which could seriously drain your retirement savings.

Fortunately, there are options for penalty relief:

✅ Valid reasons include:

❌ Not valid: Forgetting to file, making mistakes, lacking funds, or errors made by your accountant. The IRS considers you responsible for timely filing, even if you hired a professional.

How Do I File Form 5500-EZ?

You have two ways to submit Form 550-EZ:

✅ Option 1: Print this form, fill it out, and mail it to:

✅ Option 2: File electronically using EFAST2. The IRS launched this online system on January 1, 2021, making it the faster and more convenient option.

Unless you prefer mailing paperwork, online submission is recommended. If you’re unsure how to do it, your Solo 401k provider may offer support or step-by-step guidance. 

Wrapping It Up

If you have a Solo 401k with more than $250,000 in assets you’re required to file Form 5500-EZ each year. The deadline is seven months after your fiscal year ends, and missing it can result in steep penalties.

If your plan is under the $250,000 threshold, filing is not required—but it may still be a smart move. Here’s why:

Looking to open a Solo 401k plan? Get started today with just a few clicks – the Carry Solo 401k Plan is a feature-packed, self-directed account that lets you invest in both traditional and alternative assets, take out a loan, or do a Mega Backdoor Roth conversion with a few clicks.

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