Thank you so much for this warning about not rolling it into our own accounts! I honestly might have tried to do that thinking it would simplify things. Do you happen to know if we can just start taking the correct distributions now, or do we need to "catch up" on all the ones we missed over the past years?

You don't need to "catch up" by withdrawing all the missed distributions at once. You should calculate what you should have taken each year, but going forward you just need to start taking the correct annual distributions based on the appropriate life expectancy table. What you DO need to do is file Form 5329 for each year you missed a distribution, request the penalty waiver on each form, and include a letter explaining that you didn't understand the RMD requirements. Then start taking the correct annual distribution this year. Most financial institutions that hold IRAs can help calculate your required distribution amount.

I used H&R Block software (not the in-person service) last year to handle my missed RMDs on an inherited IRA. It worked fine for generating the 5329 forms, but it didn't help with the waiver request letter or calculating what my distributions should have been. I ended up having to research those parts separately.

Thanks for sharing your experience! Sounds like I might need some additional help beyond just the tax software to get the calculations right. I'll look into what supplemental services might help with those calculations while still using the software for the actual filing.

Does the Roth option for Solo 401k have income limitations like the regular Roth IRA? I've been avoiding looking into this because I thought I'd be over the income limits.

There are no income limitations for Roth contributions to a Solo 401k! This is one of the biggest advantages compared to Roth IRAs. You can make Roth contributions to the employee portion regardless of your income level. This is actually a great "backdoor" way for high-income earners to get money into a Roth account. Even if your S Corp starts doing really well and your income increases substantially in the future, you can still contribute to the Roth portion of your Solo 401k.

This is a really important point. The "reasonable compensation" requirement for S Corps needs to be balanced against maximizing the Section 199A deduction. With the pass-through deduction, you get a 20% deduction on your qualified business income (QBI), which is essentially your profit MINUS your salary. So there's a tradeoff - higher salary means more retirement contributions but less QBI deduction.

Yeh exactly! My accountant had me model different scenarios. If I paid myself $65k instead of $50k, I could put more in retirement but lost like $3k in QBI deduction. Gotta run the numbers both ways.

Thank you! I just double-checked and I did enter everything correctly from my W-2. The federal withholding amount on my W-2 is $5,460 which seems lower than it should be based on my income. I'm wondering if something changed with my withholding during the year without me realizing.

That withholding amount does sound low for a corporate salary. As a quick rule of thumb, your federal withholding should typically be around 15-20% of your income if you're single with no dependents. Check your first pay stub of the year against your most recent one - sometimes withholding percentages change mid-year due to payroll system updates or corporate policy changes. Your HR department should be able to provide a withholding history if you request it.

This happened to me too! My income went from $78k to $86k and I ended up owing $2,100 because my withholding didn't keep pace with the higher bracket. If you got a significant raise or bonus during the year, that's probably what happened.

This happened at my company too. HR gave everyone the new forms but provided zero guidance. Half our accounting department had withholding problems. The new form is way more confusing than the old one.

Thanks for the heads up about H&R Block. Do you know if there's a way to find CPAs who specialize in retirement accounts specifically? Should I be looking for any particular certifications or experience?

I'd recommend searching for a CPA who specializes in "individual tax planning" or "retirement tax planning" specifically. There's no special certification just for retirement accounts, but you want someone who regularly handles them. When you contact them, ask these specific questions: 1) How many backdoor Roth conversions do you handle annually? 2) Are you familiar with filling out Form 8606 for both non-deductible contributions and Roth conversions? Any CPA who hesitates on those questions probably isn't the right fit. The American Institute of CPAs (AICPA) website has a "Find a CPA" feature that lets you search by specialty, which could be a good starting point.

Exactly this! The IRS systems will assume the entire conversion is taxable if you don't have a properly filed 8606 showing your non-deductible basis. They have no way of knowing you already paid tax on that money otherwise.