I Received Form 1099-INT, Interest Income for My Solo 401k Investment

QUESTION:

If I invest my Solo 401k in a company (LLC) that invests in real estate rentals us that has hundreds of other member investors, should the company NOT send me a 1099 INT tax form with the income reported at the end of the year because my Solo 401K Trust is a tax-exempt entity? ….or if they do send it, do I just ignore it because there is no filing requirement? I’m concerned that if the company issues me a 1099, I’m assuming they will also report to the IRS, but is the IRS able to somehow identify that the 1099 is for a tax-exempt entity so they don’t expect to see this income reported in my tax return?

ANSWER:

Generally, your understanding is correct that the 1099 INT is for your records and you do not file it with the IRS because the solo 401k is a tax shelter vehicle; thus, the gains grow on a tax deferred basis until distributions commence, usually at retirement. Make sure the 1099-INT is issued in the name of the solo 401k and that the LLC sponsor uses the solo 401k EIN for reporting purposes.

 

 

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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