When a Solo 401k plan or Self-Directed 401k trustee/participant or beneficiary takes a distribution, IRS reporting applies. This is done through Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. This form is sent to the IRS and the individual receiving the distribution.
Form 1099-R is used to report distributions that a Solo 401k participant intends to roll over.
A 1099-R is issued for rollover distributions because the Solo 401k participant has the option to spend some of these funds before depositing them to another retirement plan such as a Solo 401k or Self-Directed 401k. Form 1099-R must be submitted to the IRS by February 28, or March 31 if filing electronically.
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