-
Restating a Solo 401k Plan – Question on EIN
-
3 Replies
-
When restating a Solo 401k, can I use the existing EIN on file with the Custodian that was used for the original plan, or do I have to obtain a separate EIN as mentioned by MySolo401k as part of their set up process?
I would assume that I could just write in the current EIN being used somewhere on the new application.
I want to get this correct for reporting purposes today and more importantly, in the future for distributions and 1099s.
-
1) The 401k needs to have a separate EIN from the EIN for the self-employed business or the SSN of the Solo 401k participant/owner. This is clear based on the IRS guidance and because the Solo 401k 401k is a retirement trust that is distinct from the self-employed business (i.e. the account that will be set up at Bank/Brokerage for the 401k will not be an account for the Solo 401k owner/participant personally but rather a 401k for the benefit of the Solo 401k owner/participant). This is beneficial in the instance that any tax reporting is done with respect to the Solo 401k, it will be done with respect to the tax ID for the Solo 401k – if the tax reporting was done under the SSN of the Solo 401k owner/participant the IRS would expect to see such income reported on the personal taxes of the Solo 401k owner/participant (which of course the Solo 401k owner/participant will not do since the income is growing on a tax-deferred basis in their Solo 401k).
2) On the application to open a brokerage account at Schwab, the form asks for the EIN number for both the plan sponsor (i.e. the self-employed business that sponsors the solo 401k) as well as the EIN number for the plan (i.e. the EIN for the Solo 401k).
-
-
The concern is that if and when the custodian does tax reporting on the account, it will do so under the EIN of the plan sponsor. For example, if the custodian reports investment income with respect to activity in the account under the EIN of the Plan Sponsor (i.e. the self-employed business that sponsors the Solo 401k), the IRS will expect that the income will be reported on the tax return of the Plan Sponsor. As such, it would be prudent to discuss with the custodian the best way to provide the EIN for the Solo 401k for purposes of the tax reporting (whether it be communicated via the application or some other means is acceptable from a solo 401k perspective provided that ultimately the tax reporting is done under the EIN of the Solo 401k).
-
-
Log in to reply.