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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I am self employed with spouse as an employee. As the employer

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I am self employed with spouse as an employee. As the employer I have an individual 401k plan and contribute to the plan on line 28 of 1040 which includes profit sharing. My spouse contributes through W2 deductions. My question is on filing 5500EZ line 9. I want to list 2E and 3B as plan characteristics. Is this sufficient for a Individual 401k plan?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor :

Hi, 2E and 3B are correct ... but you'll also need ...

NPVAdvisor :






2JSection 401(k) feature – A cash or deferred arrangement described in section 401(k) that is part of a qualified defined contribution plan that provides for an election by employees to defer part of their compensation or receive these amounts in cash. (What this means is that it DOES have a salary deferral feature - this is the part that applies to your' wife
NPVAdvisor :

s W-@ cage deferrals into the plan

NPVAdvisor :

And I'm gussing you'll need 2R as well - Don't overread "Brokerage." What this is really referring to is the fact that it's self directed plan, meaning that your employees get to choose how the dollars are invested (mutual funds, for example)

NPVAdvisor :

Also 3D .. if you just set this up through a mutual fund company, investment co/brokerage like Schwab, Scottrade, etc or even a bank, You are probably using a prototype plan document ... basically, if you just chose from check boxes and a plan design questionnaire about things like who was eligible, etc, and didn't pay someone to "design the plan" then you are using a prototype plan document

NPVAdvisor :

And that will do it ... (2E), YOu DO have a profit sharing component ... (3B), does cover you as a self-employed individual ... (2J), it's 401(k) plan with salary deferral features .. and (3D) if it's like 99% of plans out there and uses a bank, brokerage or insurance Co plan document, you're using a prototype document.

NPVAdvisor :

Hope this helps

NPVAdvisor :

Let me knos if you have questons

NPVAdvisor :

Lane

NPVAdvisor :

I still don't see you coming into the chat .... I'll move us to the Q&A mode, Maybe that will help .... We can still continue a dialoduge there, just not in real-time, as we can here ... again let me know if you have questions ....

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4491
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 2 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.


Thanks for the rating Steve.

If you'd like to work with ME again, just say "For Lane only," at the beginning of your next question.


Thanks again,
Lane
Customer: replied 1 year ago.
Thank you Lane for your clear explanation to my question. I have a new question regarding the same 5500ez form. If I submit another question will I be able to request that you answer it. Thanks again, Steve
Expert:  Lane replied 1 year ago.


Yes Steve, (and I appreciate that).

At the beginning of the question, just say "For Lane only, ..."

Also I have some folks (wish I knew more about what you see on your end) that just come back to the same thread and ask a different question .. then rate again on the answer for THAT question.


... all on the same thread (like I think you've just done).

Lane
Customer: replied 1 year ago.

replying from thread. repeating particulars for 5500EZ Part III. I am self employed with spouse as an employee. As the employer I have an individual 401k plan and contribute to the plan on line 28 of 1040 which includes profit sharing. My spouse contributes through W2 deductions. On 5500EZ part III question 8a, I have included all my contributions including profit sharing. On 8b I have included all of my spouses contributions. Is this what they mean by employer and participant?


Thank you


Steve

Expert:  Lane replied 1 year ago.

Hi Steve,

Yes, If you are doing a salary deferral for yourself, that will go on 8b along with your wife's .. then the profit sharing proportion would go on 8(a).

If your's is all Self employment income and there's no W-2 wages for you, then all of your contributions should be on 8a.

Also, 8(a) and 8(b) ... (plus any rollovers into the plan on 8(c)), should total to all inflows into the plan. There's no overlap.

Lane
Customer: replied 1 year ago.

I think I am clear on this but for verification does this mean when I contribute my self employment income with no W2 wages and profit sharing, with Schwab, I should classify their total as employer contribution and when I fund my (spouse employee) from W2 wages, with Schwab, I should classify it as elective deferral.

Expert:  Lane replied 1 year ago.

Yes.

You have it.

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4491
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 2 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Thanks again, Steve

Lane

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Lane
Lane
JD, MBA, CFP, CRPS
3630 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986