How would you like to owe the IRS a $150,000 penalty because you failed to file a simple two-page form?

It can happen more easily than you’d think—especially if you have a solo 401(k) or another type of self-employed retirement plan.

If you're self-employed and have a solo 401(k)—whether it's just for you or also includes your spouse—there’s an IRS form you don’t want to overlook: Form 5500-EZ. Once your plan’s assets go over $250,000, you’re required to file this form each year.

The deadline? July 31.

Now, here’s the catch: you—the business owner—are considered both the plan sponsor and administrator. That means it’s your job to make sure the form gets filed, even if you hire a third-party administrator (TPA) to handle the paperwork and send it off. Unless you have a very rare contractual exception, the IRS holds you responsible for making sure it’s filed accurately and on time.

And missing the deadline? It’s not something to take lightly. The IRS can hit you with a penalty of $250 per day, up to $150,000 per plan. Ouch.

What if you forgot to file?

The good news: the IRS offers a Late Filer Penalty Relief Program. It’s a kind of amnesty deal. If you missed filing in past years, you could catch up by submitting all your delinquent Form 5500-EZs at once and paying a $500 fee per return, capped at $1,500 per plan. That’s not nothing—but it’s a whole lot better than a five- or six-figure penalty.

But don’t wait too long...

If the IRS has already caught the mistake and sent you a penalty notice, the amnesty option is off the table. At that point, your only option is to request a penalty waiver for reasonable cause. That could include things like serious illness, a natural disaster, or being unable to access your records. If the IRS agrees your situation shows you acted with ordinary business care and prudence, you could avoid the penalty entirely—but approval isn’t guaranteed.

One more tip:

If the IRS hasn’t flagged your late filing yet, you could skip the amnesty program and try for reasonable cause relief right away. If that works, you avoid both the penalty and the amnesty fee. But if your request is denied, you’ll lose access to the amnesty option—and that means you’ll be on the hook for the full penalty.

Bottom line: If your solo 401(k) has crossed the $250K threshold, don’t ignore Form 5500-EZ. A simple two-page form could save you from a massive, completely avoidable IRS headache.

We provide these articles as general information and not individualized tax advice.  They do not constitute a client relationship with you, and any information provided here should be applied at your own risk.