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Tagged: 20%-Mandatory-Federal-Tax, Department-of-the-Teasury, EFTPS, Fidelity, Form-1099-R, Form-945, retirement-age, Solo-401k, solo-401k-distributions
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Fidelity Brokerage Account for Solo 401k for Retirement Distributions
1 Reply -
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Mark R.
June 18, 2022 at 7:45 pmI am 60 and will be taking retirement distributions starting later this year. I understand the checkbook control and I can write a check to myself with proper Trust paperwork. My question is how the 20% Fed Tax submittal is made. Does Fidelity submit those tax payments or do I need to do it another way?
Mark R. -
Mark Nolan
June 18, 2022 at 8:03 pmFidelity investments is not the solo 401k plan provider (we are); therefore, they won’t perform the Form 1099-R reporting for both reporting the taxable distribution or the payment of the 20% mandatory federal tax.
As such the following applies when making a distribution from a solo 401k:
1. You first must meet a triggering event such as age 59 1/2.
2. You fill out the following partial distribution form so that we can collect the necessary information to issue the Form 1099-R. https://www.mysolo401k.net/solo-401k-partial-taxable-distribution/
3. You use the solo 401k checkbook to deposit 80% (the other 20% is used to pay the mandatory federal tax) of the distribution amount to your personal bank account.
4. You register with the government through the EFTPS website for the payment of the 20% mandatory federal tax.
5. Yo then must make the mandatory 20% federal tax payment electronically by the 15th of the month following your Solo 401k distribution date, and the payment is made via the solo 401k holding account- that is, the Fidelity brokerage account for the solo 401k.
6. You must file Form 945 with the IRS by January 31 of the year following the year in which the distribution(s) occurred (e.g., for distributions processed in 2022 Form 945 must be filed with the IRS by January 31, 2023)) to report the 20% of mandatory federal taxes paid. https://www.mysolo401k.net/solo-401k/reporting-the-solo-401k-distribution-to-the-irs/
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