Why did I receive a letter from Electronic Federal Tax Payment System (EFTPS) in the mail?

If you opened a new solo 401k plan recently, you might receive a letter in the mail from the Electronic Federal Tax Payment System (EFTPS) with instructions on how to start making payments via EFTPS.

The Electronic Federal Tax Payment System (EFTPS) is a free system offered by the US Department of the Treasury to pay your federal taxes online. It’s available 24/7, and you can schedule payments up to 365 days in advance.

You do not need to use the EFTPS system unless you have a taxable transaction to report, such as if you instituted an early withdrawal from your solo 401k plan.

The reason the letter was sent to you is because when you open a solo 401k plan, it’s assigned a unique EIN. The letter is just setting up your account with the IRS for any future tax obligations from your solo 401k plan. It’s specific to your solo 401k plan and plan EIN, and is separate from your business EFTPS account.

If you don’t have any taxable distributions from your solo 401k, you can ignore the letter but keep it on file for your records in case you ever need it in the future. You’ll need to use it if you ever have taxes due on the solo 401k plan (for instance, taking an early taxable distribution from your plan).