Solo401k and Tax Return

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  • Avatar hendwine99 
    Status: Physician
    Posts: 3
    Joined: 05/13/2018

    Hi everybody,


    So I have a side gig in which I made 195,000 last month.  This went to an LLC which I own 75% of and my partner owns 25%.  This was our first year, so we really didn’t know what to expect.  I setup a solo401k for us through fidelity, and now I am trying to figure out how to fund it.

    I had my tax preparer create the K1’s for us two, and he just sent me a link to a calculator.  I asked him if I had to enter the solo401k employer contributions on any specific document, and he said no.  We will only be doing employer contributions since we both already contributed the full 18500 through our primary job.  Is this true?  Can somebody shed some light on how this is done?  I was thinking each employer contribution is listed under line 13 code R?

    Most of the stuff I read is related to non-partnerships, so I am kind of lost.

    Thanks for all your help!

    #196985 Reply
    Avatar spiritrider 
    Status: Small Business Owner
    Posts: 1709
    Joined: 02/01/2016

    Assuming by “$195,000 last month”, you really meant “last year”

    An LLC is a state chartered business entity, not a federal tax status. You need to clarify this. Assuming the LLC did not elect sub chapter S to be treated as a corporation. By default the IRS considers the LLC an disregarded entity taxed as partnership.

    In these circumstances, only the partnership can adopt a one-participant 401k, not the partners. Assuming the partnership adopted a one-participant 401k by 12/31. It must make all 401k contributions and report them on Form 1065 Schedule K-1 Box 13 Code R. You will claim any deduction on your personal Form 1040 Schedule 1 Line 28.

    The partnership should retain records of the contribution amounts, participant, dates and designation. The participant should retain the K-1 and personal tax return which records the tax year of the contributions. A Form 5500-EZ is only required when the total 12/31 balance of both participants in the one-participant 401k plan is > $250K

    #197108 Reply
    Liked by jfoxcpacfp, Peds
    Avatar hendwine99 
    Status: Physician
    Posts: 3
    Joined: 05/13/2018

    Thank you so much spiritrider.  I did mean last year.  The partnership did adopt a one-participant before 12/31/18, so I will make the employer contributions this immediately.  I spoke with my CPA, and he now understands what I meant by the employer contributions.  He has amended the K1’s.


    Thanks again for all the help in this thread and in all the other threads I have read.



    #197350 Reply
    Liked by jfoxcpacfp

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