Self-Directed Solo 401k FAQ – Which Tax ID Number do I use when selling real estate in my solo 401k?

Please check out this good question from our Daily Live Zoom call. Subscribe to our YouTube Channel to get notifications of our Daily Solo 401k FAQs.

QUESTION: When I sell Solo 401k real estate property, will I use my EIN for the Solo 401k for reporting rather than my social security number?

When conducting Solo 401k transactions, the EIN for the Solo 401k must be used which helps ensure that any reporting is done properly under the EIN of the Solo 401k.

Please note that in the establishment process, we will obtain an EIN number for the plant so that lets the IRS know that any reporting that’s done with respect to the EIN number is done with respect to the Solo 401(k) plan.

So for example if there gains are in the Solo 401k, this is being reported with respect to that EIN and the IRS will understand that this income is is growing on a tax-deferred basis inside of 401(k).

In contrast, if the tax reporting were done under Social Security number or the self-employed business EIN number (e.g. an interest-bearing bank account for your Solo 401(k) and the bank will report the interest earned using a 1099-INT to the IRS), the IRS would expect that interest income to be reported under business tax return, but if it’s reported under the EIN for the Solo 401k plan, the IRS will understand that the income is growing inside of 401(k) on a tax-deferred basis.

About George Blower

I have the privilege of educating our clients about our products and services so that they can make informed and confident decisions about their financial future. Prior to joining My Solo 401k Financial, I served as the general counsel for a subsidiary of a Fortune 500 financial services company. Learn more about George Blower and My Solo 401k Financial >>


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