ForumsSolo 401kHow to handle rent on a 1099 Misc within a SDIRA/SOLO401K

Forums Solo 401k How to handle rent on a 1099 Misc within a SDIRA/SOLO401K

  • How to handle rent on a 1099 Misc within a SDIRA/SOLO401K

    1 Reply
  • John Dembrowsky

    Top SubjectSolo 401k
    Top ForumsSolo 401k

    John Dembrowsky

    John Dembrowsky

    Top SubjectSolo 401k

    January 25, 2022 at 11:17 am

    Hi All,

    I’m looking at purchasing a rental property in a solo401k LLC. I plan on using a property manager to handle it for the LLC and I expect that I’ll receive a 1099 MISC for the rent at the end of the tax year. I understand I will need to file form 5500EZ with the IRS if the trust is valued over $250k. Will I need to file that 1099 Misc anywhere with the IRS?

    Thanks!

    John

    John Dembrowsky
  • George Blower

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    George Blower

    George Blower

    Top SubjectSolo 401k,Solo 401k Contributions

    January 25, 2022 at 1:40 pm

    @JohnnyD

    John Dembrowsky

    Top SubjectSolo 401k

    While it is questionable that a 1099-MISC to the Solo 401k would be issued for rent paid to the Solo 401k, even if it is (or if an analagous tax form is issued to the Solo 401k), this is acceptable provided that the form is issued under the EIN of the Solo 401k.

    Please note that as part of the solo 401k establishment process we will obtain an EIN for the Solo 401k which will communicate to the IRS that the EIN is for a 401k.

    As such, even if income is reported as paid to the Solo 401k (via a 1099-MISC or otherwise), the IRS will understand that this income is accruing in a 401k on a tax-deferred basis.

    In the event that a 1099-MISC is issued to the Solo 401k, you would simply retain it in the files of the plan (i.e. no need to file it with the Form 5500-EZ).

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