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Self-Employed 401k – Is the EIN for the Solo 401k the same as the Business EIN?
QUESTION:
Is the EIN for the Solo 401k the same as the EIN for my self-employed business?
RESPONSE:
No, it is not.
Just to give a simple example: if a Solo 401k owner/participant were to open a bank account for the solo 401(k) which was an interest-bearing account such that the bank was paying interest on the balance of that account, the bank would need to report that interest income to the IRS via a 1099-INT under the tax identification number that was used to open the account.
If that account was opened up under the business EIN such that the IRS received a 1099-INT showing the interest income, the IRS would therefore look for that interest income to be reported on the business tax return (but of course, the Solo 401k owner/participant will not report the interest income on the business or personal tax returns since the income is growing tax-deferred in the Solo 401k).
As part of the Solo 401k establishment process, we obtain an EIN for the Solo 401k which is then used to open bank accounts, make investments, etc. such that when income is reported with respect to the Solo 401k EIN the IRS will understand that such income is earned on a tax-deferred basis inside a 401k and not look for the income to be reported the business or personal tax return of the Solo 401k owner/participant.
