Why is an EIN needed for i401k?

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Hulk
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Why is an EIN needed for i401k?

Post by Hulk » Mon Dec 04, 2017 3:49 pm

Hello all,

I am considering rolling an old 401k into an i401k to create a more clean separation from my former company (of which I was a partner), which frankly had a rough exit. They are asking/pressuring me to roll into an IRA and I have explained that I do a BD Roth IRA and therefore could not, which they didn’t really understand.)

I do have $1,000 of 1099 income in 2017 and could set up my i401k through that but I am confused about the need for an EIN. Should I have ideally already had the EIN and used that as opposed to my SS# for the $1,000 1099 income that I have already earned? It was sort of a one-off that I cant really duplicate without more effort than I am interested in, but I am looking for a landing spot for my old 401k.

My question is, in the process of a sole proprietor entrepreneurial adventure (1099), should you have an EIN from the beginning? Especially if setting up an i401k is part of the goal. Why is an EIN even necessary? Why can I not just set up an i401k using my SS#?

Thanks!

feehater
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Re: Why is an EIN needed for i401k?

Post by feehater » Mon Dec 04, 2017 4:36 pm

I don't know the answer to the Why question, but you didn't need to have the ein from the start. You can still collect the 1099s with your SSN and put them on your schedule C (which has an optional place for your EIN). Yes, you do need an EIN to open the i401k. It only takes about 4 clicks to do on the irs website.

Edit: And make sure you pick a company that allowed incoming rollovers, for instance, Fidelity does but Vanguard doesn't.

livesoft
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Re: Why is an EIN needed for i401k?

Post by livesoft » Mon Dec 04, 2017 4:40 pm

I have a i401k and got an EIN for it in a few minutes. I use my SSN on my 1099s. I don't think it matters whether one gives their clients their EIN or their SSN as the IRS matches things up anyways: See Schedule C.

The EIN of the i401k is important so that there is no confusion in case you have multiple businesses and various i401k I would think.
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fabdog
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Re: Why is an EIN needed for i401k?

Post by fabdog » Mon Dec 04, 2017 4:59 pm

My guess would be since a Solo 401K is a qualified retirement plan, it has to be "sponsored" by an entity, hence the need for an EIN for your business. As the other posters noted, I have my self employment 1099's coming to my SSN, and got an EIN in just a couple of minutes on the IRS website to set up the solo 401(k).

Once you have the EIN you can go either way or your 1099's

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Re: Why is an EIN needed for i401k?

Post by Spirit Rider » Mon Dec 04, 2017 5:29 pm

Some one-participant 401k plan providers want you to have an EIN. The IRS really only needs an EIN for a one-participant 401k plan when you communicate/file a form with the IRS.The two most common circumstances that come to mind are; If you have an excess employer contribution and need to file Form 5330 or your year-end balance exceeds $250K and you need to File Form 5500-EZ.

I think the one-participant 401k providers are doing you a favor by insisting you have an EIN from the start. As pointed out by livesoft, it is trivial to obtain one. Do you really want to have to amend your plan later to add the EIN, when you are in the middle of having to deal with the IRS.

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Lieutenant.Columbo
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does LLC need new EIN after revoking S Corp election?

Post by Lieutenant.Columbo » Thu Sep 13, 2018 9:59 pm

Bumping old Topic so that hopefully I won't need to start a new one,

I have an LLC that elected S Corp taxation. The LLC has it's own EIN.
I'm considering revoking the S Corp election by Dec 31 and on Jan 1 continuing doing business in the name of the same LLC as a disregarded entity.

I'd like for this LLC to continue using the same EIN (for bank accounts, retirement plan, 1099 receipts, IRS-related stuff, etc) even after the S Corp revocation. Is this possible?

Thank you.
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MP123
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Re: does LLC need new EIN after revoking S Corp election?

Post by MP123 » Thu Sep 13, 2018 10:25 pm

Lieutenant.Columbo wrote:
Thu Sep 13, 2018 9:59 pm
Bumping old Topic so that hopefully I won't need to start a new one,

I have an LLC that elected S Corp taxation. The LLC has it's own EIN.
I'm considering revoking the S Corp election by Dec 31 and on Jan 1 continuing doing business in the name of the same LLC as a disregarded entity.

I'd like for this LLC to continue using the same EIN (for bank accounts, retirement plan, 1099 receipts, IRS-related stuff, etc) even after the S Corp revocation. Is this possible?

Thank you.
You should really start a new thread, you'll get many more substantive answers to this interesting question.

I would say yes since you're just changing the tax reporting status. But then again LLCs are state chartered not Federal so it may be more complex. And as a disregarded entity you won't be filing a 1120s as an S-corp so things might not line up with the IRS.

tesuzuki2002
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Re: Why is an EIN needed for i401k?

Post by tesuzuki2002 » Fri Sep 14, 2018 4:39 pm

Hulk wrote:
Mon Dec 04, 2017 3:49 pm
Hello all,

I am considering rolling an old 401k into an i401k to create a more clean separation from my former company (of which I was a partner), which frankly had a rough exit. They are asking/pressuring me to roll into an IRA and I have explained that I do a BD Roth IRA and therefore could not, which they didn’t really understand.)

I do have $1,000 of 1099 income in 2017 and could set up my i401k through that but I am confused about the need for an EIN. Should I have ideally already had the EIN and used that as opposed to my SS# for the $1,000 1099 income that I have already earned? It was sort of a one-off that I cant really duplicate without more effort than I am interested in, but I am looking for a landing spot for my old 401k.

My question is, in the process of a sole proprietor entrepreneurial adventure (1099), should you have an EIN from the beginning? Especially if setting up an i401k is part of the goal. Why is an EIN even necessary? Why can I not just set up an i401k using my SS#?

Thanks!
Yes get an EIN for the i401K Application. Use your SSN for 1099 unless you are trying to hid from people it keeps things simpler.

The IRS handles things and knows your EIN belongs to your SSN on the backend.

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Lieutenant.Columbo
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Re: does LLC need new EIN after revoking S Corp election?

Post by Lieutenant.Columbo » Sat Sep 15, 2018 5:15 pm

MP123 wrote:
Thu Sep 13, 2018 10:25 pm
Lieutenant.Columbo wrote:
Thu Sep 13, 2018 9:59 pm
Bumping old Topic so that hopefully I won't need to start a new one,

I have an LLC that elected S Corp taxation. The LLC has it's own EIN.
I'm considering revoking the S Corp election by Dec 31 and on Jan 1 continuing doing business in the name of the same LLC as a disregarded entity.

I'd like for this LLC to continue using the same EIN (for bank accounts, retirement plan, 1099 receipts, IRS-related stuff, etc) even after the S Corp revocation. Is this possible?

Thank you.
You should really start a new thread, you'll get many more substantive answers to this interesting question.

I would say yes since you're just changing the tax reporting status. But then again LLCs are state chartered not Federal so it may be more complex. And as a disregarded entity you won't be filing a 1120s as an S-corp so things might not line up with the IRS.
New Topic on whether an LLC could use the same EIN after it revokes the S Corp election (no replies yet). Thank you for suggesting it.
tesuzuki2002 wrote:
Fri Sep 14, 2018 4:39 pm
Yes get an EIN for the i401K Application. Use your SSN for 1099 unless you are trying to hid from people it keeps things simpler.

The IRS handles things and knows your EIN belongs to your SSN on the backend.
Since a disregarded entity's EIN redirects to the individual's SSN, what's the rationale getting an EIN is even in the picture for this kind of business entities? Thank you.
Lt. Columbo: Well, what do you know. Here I am talking with some of the smartest people in the world, and I didn't even notice!

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LadyGeek
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Re: Why is an EIN needed for i401k?

Post by LadyGeek » Sat Sep 15, 2018 7:23 pm

This thread is now in the Personal Finance (Not Investing) forum (individual 401(k)).
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tesuzuki2002
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Re: does LLC need new EIN after revoking S Corp election?

Post by tesuzuki2002 » Sat Sep 15, 2018 7:52 pm

Lieutenant.Columbo wrote:
Sat Sep 15, 2018 5:15 pm
MP123 wrote:
Thu Sep 13, 2018 10:25 pm
Lieutenant.Columbo wrote:
Thu Sep 13, 2018 9:59 pm
Bumping old Topic so that hopefully I won't need to start a new one,

I have an LLC that elected S Corp taxation. The LLC has it's own EIN.
I'm considering revoking the S Corp election by Dec 31 and on Jan 1 continuing doing business in the name of the same LLC as a disregarded entity.

I'd like for this LLC to continue using the same EIN (for bank accounts, retirement plan, 1099 receipts, IRS-related stuff, etc) even after the S Corp revocation. Is this possible?

Thank you.
You should really start a new thread, you'll get many more substantive answers to this interesting question.

I would say yes since you're just changing the tax reporting status. But then again LLCs are state chartered not Federal so it may be more complex. And as a disregarded entity you won't be filing a 1120s as an S-corp so things might not line up with the IRS.
New Topic on whether an LLC could use the same EIN after it revokes the S Corp election (no replies yet). Thank you for suggesting it.
tesuzuki2002 wrote:
Fri Sep 14, 2018 4:39 pm
Yes get an EIN for the i401K Application. Use your SSN for 1099 unless you are trying to hid from people it keeps things simpler.

The IRS handles things and knows your EIN belongs to your SSN on the backend.
Since a disregarded entity's EIN redirects to the individual's SSN, what's the rationale getting an EIN is even in the picture for this kind of business entities? Thank you.
I got mine with Fidelity... from a businesses perspective.. they require it... not an IRS thing.

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