EIN Number for Solo 401k Retirement Trust

Now that the solo 401(k) plan documents have been drafted and provided for your signature, the next step is to obtain the employer identification number (EIN) for the solo 401(k) retirement trust.

Obtaining the EIN for the solo 401(k) plan is covered in our setup fee; however, we will need your social security number in order to obtain the EIN. Therefore, if you prefer to obtain the EIN yourself, you can do so in a matter of minutes via the IRS website.

CLICK HERE to go directly to the IRS EIN page.

We discussed the need to obtain a separate EIN for the Solo 401k on our Daily Live Webinars on our My Community (Free to Join! All are Welcome!):

We have also provided the following steps once you click above that will need to be followed carefully when obtaining the EIN for the solo 401(k).

Step 1:

Click on “apply online now.”

Step 2:

Click on “Begin Application.“

Step 3:

Check off “View Additional Types…” and click on “continue.”

Step 4:

Check off “Employer Plan (401K, Money Purchase Plan, etc.),” and click on “continue.”

Step 5:

Click on “continue.”

Step 6:

Enter you name, social security number, and check off “I am the owner, trustee…,” and click on “continue.”

Step 7:

Enter your home or business address, phone number and click on “continue.”

Step 8:

Click on “accept database version.”

Step 9:

For “Legal Name of Employer Plan” enter the name of the solo 401(k) plan as listed on page 1 of the Adoption Agreement.

For “Trade Name/Doing Business as” leave this blank

For “County where Employer Plan is located” – if not already populated enter your state county

For “State/Territory where Employer Plan is Located” – enter your state

For “Employer Plan Start Date” enter January and the current year if the plan was opened in 2020.

For “Is this Plan Liable for non-payroll income tax withholding?” — enter NO

Step 10:

Check off “Receive letter online,” and click “continue.”

Step 11:

Review and then click on “submit.”

Step 12:

Write down your EIN, print and save a copy for your records and then click on “continue.”

You are done! Please make sure to save a copy of the EIN for your records and provide a copy for our records.

When we assist you in opening the solo 401(k) bank or brokerage account, the bank or the brokerage firm will ask for the EIN as they will need it for reporting purposes.
Since a Solo 401(k) is a qualified retirement plan, it has to be sponsored by a business entity. The EIN is for the solo 401(k), not for your self-employed business.
For more on the IRS view on the importance of using the solo 401(k) EIN for reporting purposes, please CLICK HERE.

EIN QUESTIONS:

I open a solo 401k in April 2018 . I applied for the EIN number online. The letter form IRS stated that :” when you submitted your application for EIN, you checked the box indicating you are a NON-PROFIT ORGANIZATION…”.

Is this correct? is my retirement 401k an non-profit organization ? or did I do something wrong when I filled out application online?. If something is wrong, Do I still have enough time to fix it for year 2018?

ANSWER:

As part of the Solo 401k process, an EIN is obtained from the IRS. Our instructions follow the IRS process to obtain an EIN for a 401k plan & the letter that you are referring to is the standard letter that is issued by the IRS at the end of the process. The fact that IRS letter states that the plan is a “non-profit” is helpful as this confirms that the plan is a tax-deferred entity as are all 401k plans generally (i.e. gains that flow to your 401k grow on a tax-deferred basis).

EIN For Each Participant QUESTION:

Since the Solo 401k requires each of us to have our own bank account, do I need another EIN number for my account?

ANSWER:

The employer identification number (EIN) is for the solo 401k plan not for each participant. Therefore, not only does the solo 401k require its own separate EIN (i.e., you can’t use your business EIN for your SSN), just one EIN applies to the solo 401k plan. Each participant’s holding account (e.g., bank or brokerage accounts) will be opened in the name of the solo 401k using the plan’s EIN.

Separate EIN QUESTION:

Why does my solo 401k plan require a separate EIN?

ANSWER:

The 401k needs to have a separate EIN from your self-employed business or SSN. This is clear based on the IRS guidance and because the 401k is a retirement trust which is distinct from the Corporation (i.e. the account that will be set up at Fidelity for the 401k will not be an account for you personally but rather a 401k for your benefit). 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 your SSN the IRS would expect to see such income reported on your personal taxes (which of course you will not do since the income is growing on a tax-deferred basis in your Solo 401k).

See the following:

from:https://www.irs.gov/retirement-plans/how-to-obtain-or-re-establish-an-ein–for-a-retirement-plan-trust

Note: Plan sponsor refers to the business sponsoring the 401k (ie. your business)

Othe Forms EIN QUESTION:

I noticed within the attached EIN letter:

“To apply for recognition of tax-exempt status under
Internal Revenue Code Section 501(c)(3), organizations must complete a Form
1023-series application for recognition. All other entities should file Form 1024 if
they want to request recognition under Section 501(a).
Nearly all organizations claiming tax-exempt status must file a Form 990-series
annual information return (Form 990, 990-EZ, or 990-PF) or notice (Form 990-N)
beginning with the year they legally form, even if they have not yet applied for or
received recognition of tax-exempt status.
Unless a filing exception applies to you (search www.irs.gov for Annual Exempt
Organization Return: Who Must File), you will lose your tax-exempt status if you fail
to file a required return or notice for three consecutive years.”

Do any of the above mentioned forms ever get filed for this type of self-employed solo 401k plan and if so who would file?

ANSWER:

With regards to the forms referred to in the excerpt of the EIN that you sent below:

Neither 1023 nor 1023 apply because those forms only applies to organizations filing for tax exempt status under 501(a) or 501(c)(3) (e.g. schools, charitable foundations, etc. as applicable).
990-t is used to report unrelated business income tax and would not apply to a Solo 401k unless it holds an equity position in an business that is not taxed as a C-corporation.

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