Vanguard small-business retirement plan is moving to Ascensus

[Surewhitey]

If you terminate your Solo 401(K) plan, a final 5500-EZ filing is required, regardless of plan value. The filing must occur within 7 months of plan termination.

This^^^

I may not have been clear, but the closure reporting is for any value. The 7 months was mentioned by the agent and the cleared funds after transfer/rollover had to be completed.

 

[HenryD]

Thanks for posting this. What is the filing deadline for the 5500-EZ to report the closure? Is it Dec 31 of this year, or Apr 15 of next year? Or some other date? (My Vanguard rep said no reporting was necessary, so it's good to know the real answer from the IRS!)

I forgot doing mine when I was distracted and wasn't paying attention when I crossed the asset limit. They fined me $500 to catch up. That was the amnesty-style 'Late Filer Penalty Relief Program' fine. I'd let it go long enough that the calculated fine was insane.

I terminated my plan when I closed my business on 12/31/23, but not the account, so I couldn't file the final. Closed the account in Feb. I hope the 2024 form is available soon because they are still showing 2023 as the current year for 5500-ez. After my costly mistake I started setting myself a June 30 reminder to file.

 

[Surewhitey]

I forgot doing mine when I was distracted and wasn't paying attention when I crossed the asset limit. They fined me $500 to catch up. That was the amnesty-style 'Late Filer Penalty Relief Program' fine. I'd let it go long enough that the calculated fine was insane.

I terminated my plan when I closed my business on 12/31/23, but not the account, so I couldn't file the final. Closed the account in Feb. I hope the 2024 form is available soon because they are still showing 2023 as the current year for 5500-ez. After my costly mistake I started setting myself a June 30 reminder to file.

Ouch, seems excessive. Guess it's like getting a ticket for not knowing laws. "No excuses"

 

[Sunset]

I forgot doing mine when I was distracted and wasn't paying attention when I crossed the asset limit. They fined me $500 to catch up. That was the amnesty-style 'Late Filer Penalty Relief Program' fine. I'd let it go long enough that the calculated fine was insane.

I terminated my plan when I closed my business on 12/31/23, but not the account, so I couldn't file the final. Closed the account in Feb. I hope the 2024 form is available soon because they are still showing 2023 as the current year for 5500-ez. After my costly mistake I started setting myself a June 30 reminder to file.

I had to fill out the EFAST2 an all-electronic system designed by the Department of Labor for the first time this year...
What a pain, and I hate how public the information is. I looked at various other people's entries easily.

I immediately transferred some $$$ to my IRA so I would be below the $250K reporting limit.

 

[Sunset]

If you terminate your Solo 401(K) plan, a final 5500-EZ filing is required, regardless of plan value. The filing must occur within 7 months of plan termination.

Thanks..... As I've started the rollover to IRA/Roth process and the Rep didn't mention any paperwork needed by IRS !!

This^^^

I may not have been clear, but the closure reporting is for any value. The 7 months was mentioned by the agent and the cleared funds after transfer/rollover had to be completed.

What do you mean by cleared funds , is this a separate form or just part of the 5500 one ?

 

[Koolau]

I feel so blessed that none of this applies to me. Not knowing what I'm doing (with threat of screwing something up - with consequences) makes me crazy. SO sorry for those folks here who find themselves needing to make decisions they hadn't planned on. I think I'd just "pay the $20" and forget it, but YMMV.

 

[Sunset]

^^^^^^^^^ Just letting it move and paying the $20x2 = $40/yr (for me) certainly was for me an option. However it would not remove the filing of paperwork for closing the 401K at the end in some years.

So really just advancing paperwork issue.

 

[Surewhitey]

Thanks..... As I've started the rollover to IRA/Roth process and the Rep didn't mention any paperwork needed by IRS !!



What do you mean by cleared funds , is this a separate form or just part of the 5500 one ?

When you roll over from the SEP401K & funds are showing up in the rollover IRA, then you have to send notice of the SEP401K closure via the 5500-EZ form.

 

[kgtest]

If I terminate my Solo 401k plan with Ascensus, or Vanguard prior to the move... can I just open a new one with another institution after the closure and this IRS form filing? I have both a Solo 401k and a SEP IRA, but this appears to only apply to my Solo 401k with them.

When I close my Solo 401k, and Solo Roth 401k accounts, is it a rollover?

What I wouldn't mind doing is closing the Vanguard 401ks, rolling over into Vanguard Rollover IRA, and then doing a backdoor Roth Conversion but then open a NEW Solo 401k plan with some other institution immediately after the closure and subsequent rollover of the Vanguard accounts. I need to call a few people and see how doable this is.

 

[kgtest]

I just saw if you close a Solo 401k you have to wait 2 years before you can open a new one. One thing that concerns me is access to funds. I am currently invested into VIGAX which is the only fund I chose for my Vangaurd Solo 401k and Solo Roth 401k accounts.

Hopefully Ascensus will allow access to that fund (or equivalent). If not I will rollover somewhere that does.

I paid I BELIEVE $20/yr /fund /plan. So I had 2 plans with 2 funds for $40/year fee's total at Vanguard. Sounds like for me, the fee's will be mute / equivalent.

 

[Sunset]

When you roll over from the SEP401K & funds are showing up in the rollover IRA, then you have to send notice of the SEP401K closure via the 5500-EZ form.

Thanks for the clarification. It took Vanguard 1 day to roll my self 401K to my Vanguard IRA and Roth accounts.

 

[Surewhitey]

If I terminate my Solo 401k plan with Ascensus, or Vanguard prior to the move... can I just open a new one with another institution after the closure and this IRS form filing? I have both a Solo 401k and a SEP IRA, but this appears to only apply to my Solo 401k with them.

When I close my Solo 401k, and Solo Roth 401k accounts, is it a rollover?

What I wouldn't mind doing is closing the Vanguard 401ks, rolling over into Vanguard Rollover IRA, and then doing a backdoor Roth Conversion but then open a NEW Solo 401k plan with some other institution immediately after the closure and subsequent rollover of the Vanguard accounts. I need to call a few people and see how doable this is.

I'm going to meet with Fidelity (in person) on Tuesday and ask the question about opening a new SEP401K with them and, hopefully, clarity the 2 years statement.

 

[Surewhitey]

I just saw if you close a Solo 401k you have to wait 2 years before you can open a new one. One thing that concerns me is access to funds. I am currently invested into VIGAX which is the only fund I chose for my Vangaurd Solo 401k and Solo Roth 401k accounts.

Hopefully Ascensus will allow access to that fund (or equivalent). If not I will rollover somewhere that does.

I paid I BELIEVE $20/yr /fund /plan. So I had 2 plans with 2 funds for $40/year fee's total at Vanguard. Sounds like for me, the fee's will be mute / equivalent.

Can you provide the reference info on the 2 years rule?

 

[kgtest]

AI is referring to a 12 month waiting period between a company closing a Solo 401k and opening a new one as the Successor Plan Rule. This MAY be a different rule than closing a SEP IRA, not sure. SO I guess its not 2 years, but 12 months, and I'm not sure where AI is returning the data from. But I want to double check that. It says its generally not a good idea to have two, but in this situation, maybe it will be okay.

 

[Surewhitey]

AI is referring to a 12 month waiting period between a company closing a Solo 401k and opening a new one as the Successor Plan Rule. This MAY be a different rule than closing a SEP IRA, not sure. SO I guess its not 2 years, but 12 months, and I'm not sure where AI is returning the data from. But I want to double check that. It says its generally not a good idea to have two, but in this situation, maybe it will be okay.
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Thanks! I'll definitely ask about this. Kinda don't expect Fidelity to know, but maybe someone up the food chain?