I think the Solo 401(k) plan is one of the great treats for sole proprietors. I have been using it for years. The problem is that there is so little help, that sponsors of these plans fall into a trap when they forget that there is a Form 5500 to file. It doesn’t help that most solo 401(k) plan providers get zero help from the custodians they work with.

Plans with no employees still have to file a Form 5500 when plans hit $250,000 in assets or more. When plan sponsors forget the 5500 deadlines, they then compound their error by filing the Form late, without using the Department of Labor’s self-correction program for late filings. Then they get a bill from the IRS for tens of thousands of penalties.

If you have a solo or know those that do, be aware of those Form 5500 obligations.