Can you please answer the following list of questions regarding the asset value for Form 5500-EZ reporting?
I have a question about the criteria for filing a 5500-EZ. I understand that this filing is required when "value of assets" in my solo (k) reaches $250k.
I'm not sure how to calculate the value of assets for this purpose. Is it simply how much I've contributed, even if some of the value has been lost. What if gains are hard to quantify.
Here are some specific examples
1) My solo (k) owns a triplex, and it has a mortgage on that triplex.
My equity is about $56k
I've probably spent about $80k on this property so far (and counting--it's been a dog)
The current market value of the property is about $120k
What is the value of this asset for the purpose of determining when to file the 5500-EZ.
QUESTION: 2) I own shares in a private fund. My total contributions to that fund equal $95k. The fund pays distributions but also has an equity component. For the purpose of determining whether to file the 5500-EZ, do I need to account for equity appreciation of these shares?
ANSWER: It is the fair market value of all the assets as of the end of the plan year (e.g., the value of your Solo 401k investment in property, value of private equity investment, amount of cash if any in your account, etc). If the value is $250,000 as of end of year, please let us know so that we will prepare a Form 5500-EZ
QUESTION: My Solo 401k is invested in real estate as well as cash in a bank account. Do I just list the cash in the bank?
ANSWER: If your Solo 401k plan includes cash and/or traditional investments (stock, mutual funds, money market, etc.) in a bank/brokerage account & alternative investments (e.g. real estate, notes, etc.), you will need to consider the total value of all plan assets as of December 31.
QUESTION: How do I determine the value for real estate or other alternative investments?
ANSWER: For alternative investments, you need to make a reasonable determination of the value of the solo 401(k)’s ownership interest in the investment as of December 31:
- For real estate, you could work with your real estate agent to consider comps in the area;
- For an interest in a partnership, this will not be the amount listed on the K-1 but rather the value of such partnership interest.
QUESTION: My wife and I each have a Solo 401k account (under the same plan). Do we include the total value of both accounts? I also have pre-tax and Roth funds. Do I include the total value of all three accounts?
ANSWER: If there are multiple sub-accounts (e.g. pre-tax, Roth, etc.) and/or multiple participant accounts (e.g. accounts for spouses, partners), you will need to consider the total value of all sub-accounts.
