How do I report Employer Roth Solo 401k Contributions on my S-corp Tax Return (1120s)? #401k #Roth - My Solo 401k Financial (2024)

FAQs

Where do I report Solo 401k employer contributions? ›

Employer pre-tax contributions to your Solo 401k are considered a business expense and reduce your net profit. The actual contribution amount, calculated based on the reduced net profit, is reported on Schedule 1, Line 16 of your 1040 tax return.

Yes, employer contributions to a Roth Solo 401k are reported as tax-deductible on the employer's tax return for the year for which the contributions are made.

Roth contributions aren't tax-deductible, and qualified distributions aren't taxable income. So you won't report them on your return. If you receive a nonqualified distribution from your Roth IRA you will report that distribution on IRS Form 8606.

It acts and is treated like any other 401(k) plan. Essentially, this plan has the sole owner and sole employee making contributions to the same one plan. This means you will report the total amount (as sole owner and sole employee) contributed as an adjustment on Schedule 1, line 16.

The amounts deferred under your 401(k) plan are reported on your Form W-2, Wage and Tax Statement. Although elective deferrals are not treated as current income for federal income tax purposes, they are included as wages subject to Social Security (FICA), Medicare, and federal unemployment taxes (FUTA).

Unless you're a business owner, you won't claim your 401(k) contributions as tax deductible when you fill out your Form 1040. Instead, the money is taken out of your paycheck before federal taxes on your income are figured. This is how you save on taxes today.

Contributions to a solo 401(k) are usually made with pre-tax dollars, which reduces your current taxable income. However, the tax treatment is different when you establish a Roth account. For this type of solo 401(k), you would pay taxes upfront on your contributions.

Unlike a tax-deferred 401(k), contributions to a Roth 401(k) do not reduce your taxable income now when they are subtracted from your paycheck. Contributions to a Roth 401(k) are after-tax contributions.

If your employer matches your Roth 401(k) contribution, the contributions will be made before the employer pays taxes on it. This means you will have to pay income taxes on the match and any growth associated with the match when you take distributions.

In terms of taxation and reporting, the IRS noted that Roth employer contributions are income in the year in which the contribution is allocated to the individual's account, and must be reported to the IRS on Form 1099-R, the same form that is used for distributions.

Do Roth contributions need to be reported on tax return? ›

Contributions to a Roth IRA aren't deductible (and you don't report the contributions on your tax return), but qualified distributions or distributions that are a return of contributions aren't subject to tax. To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it's set up.

Contributions for all types of IRAs—Roth, traditional, SEP, and SIMPLE—are reported on Form 5498.

Fill out your S-corp information using Form 1120-S. List your Solo 401(k) employer contribution on line 23. You will also need to fill out Form 5500 or 5500-SF if your account balance is over $250,000. And, on a personal level, you will need to fill out the employee contribution on box 12 of your W2.

Tax implications vary for traditional and Roth plans: Contributions to a traditional Individual 401(k) plan are generally tax deductible. Contributions to a Roth Individual 401(k) plan are after-tax salary deferrals.

The short answer is yes, as the owner of an S-corp you can open a Solo 401k even though you are both the employer and employee. The key requirements are that you have earned income reported on your W-2 from the S-corp, and you have no other full-time W-2 employees working for the business.

A one-participant 401(k) plan is generally required to file an annual report on Form 5500-EZ if it has $250,000 or more in assets at the end of the year. A one-participant plan with fewer assets may be exempt from the annual filing requirement.

With a solo 401(k), you can make contributions in 2 ways: as the employee and as the employer. Each portion of that equation has a different limit that adds up to that hypothetical max of $69,000, or $76,500, which includes catch-up contributions, for those 50 or older.

Individual 401(k) plans for the self-employed (also called solo 401(k) or solo-K plans) are entered in the Other Business Situations section of Income & Expenses in TurboTax. Note: If your TurboTax navigation looks different from what's described here, learn more.