What Form 5500-EZ is
Form 5500-EZ is an annual informational return filed with the IRS by one-participant retirement plans. It is not a tax return and calculates no liability. It reports summary data about your plan, including total asset value, contributions, distributions, and any outstanding participant loans, which the IRS uses to monitor the retirement savings system.
Which plans the form applies to
Form 5500-EZ is for one-participant plans, meaning plans covering only the business owner, the owner's spouse, business partners, and the spouses of business partners. A plan with non-owner employees is not eligible to use this form and files a different return.
How the $250,000 threshold works
The measurement date is the end of the plan year. If total plan assets exceed $250,000 on that date, the plan files for that year. If they do not, no return is due.
If you maintain more than one one-participant plan through the same business, the threshold applies to their combined assets. When the combined total exceeds $250,000, every one of those plans files, including any plan individually below the threshold.
A final Form 5500-EZ is required whenever a plan is terminated, regardless of plan value at the time of termination.
Many plan administrators continue filing every year once they have filed a first return, even in a year the plan closes below the threshold. That is a conservative practice rather than a requirement, and it keeps the filing history continuous.
When the return is due
For calendar-year plans, Form 5500-EZ is due July 31 of the following year. When July 31 falls on a weekend or holiday, the deadline moves to the next business day.
Termination changes the calculation. The plan year ends on the last day of the month in which the plan terminates, and the final return is due by the end of the seventh month after that date. A plan terminated in September has a final Form 5500-EZ due by the end of the following April.
How to file the return
Form 5500-EZ can be filed on paper or electronically.
Paper filers use the fillable PDF on the IRS website and mail it in. The form is revised annually, so confirm you have the version matching the plan year you are reporting.
Electronic filers use the EFAST2 system. Anyone required to file 10 or more returns of any type with the IRS during the calendar year must file Form 5500-EZ electronically, and paper submissions are not accepted from those filers. Set up your EFAST2 account well ahead of the deadline rather than in the days before it.
How to determine plan value
Plan value for Form 5500-EZ purposes is the total fair market value of all assets held across the plan as of December 31, including all participant sub-accounts. Count cash, real estate, private placements, cryptocurrency, promissory notes, and outstanding participant loan balances.
Valuation method depends on the asset. Cryptocurrency and brokerage holdings use the exchange or account value on December 31. Real estate can generally rely on realtor comparables, unless a taxable event such as a Roth conversion or in-kind distribution is involved, which raises the standard. Promissory notes use open principal plus accrued unpaid interest. The broader valuation standards that apply across plan assets are the same ones used here.
Plan characteristic codes to use
A standard Solo 401(k) uses the following codes on the form:
- 2E: Profit Sharing
- 2J: 401(k) Feature
- 3B: Self-employed individual
- 3D: Pre-approved plan
What failure to file costs
The IRS assesses $250 per day for failure to file, up to $150,000 per plan year. Late filers may qualify for penalty relief under Revenue Procedure 2015-32. If you have missed a deadline, consult your CPA before filing late, since the relief program has its own procedure and filing outside it can forfeit eligibility.
Frequently Asked Questions
What if my plan value dropped below $250,000 before year end?
No return is due for that year. The threshold is tested against the year-end value only, so a plan that peaked above $250,000 mid-year and closed at or below it has no filing obligation for that year.
Do I need to file if my plan had no activity during the year?
Yes, if year-end assets exceed $250,000. The obligation follows plan value, not plan activity, and a plan holding a single passive asset files the same as an active one.
Can I file Form 5500-EZ myself?
Yes. Many Solo 401(k) owners prepare and file it themselves, particularly when the plan holds straightforward assets. Others use a CPA. If your CPA is unfamiliar with the form, ask for a referral to someone who files them regularly.
Should I try to keep my plan under $250,000 to avoid filing?
No. Form 5500-EZ is a straightforward informational return, and avoiding it is not a reason to limit your plan's growth. There may be legitimate reasons to balance capital across multiple retirement accounts in your name, but staying under the filing threshold should not be one of them.