BG5150 Posted January 20, 2021 Share Posted January 20, 2021 We have some plans done by a former administrator that have individual brokerage type accounts. I believe these accounts were set up using the ER's EIN instead of a Trust EIN. What are the ramifications of this, if any? I always get a separate TIN when the accounts are either in a pooled account or individual brokerage accounts. The former admin ceased doing that because he got tired of the pushback when the TIN was retired due to inactivity. I was setting up a new plan, and was told it was OK to just have the sponsor's EIN as the Trust EIN in the doc. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
Bird Posted January 21, 2021 Share Posted January 21, 2021 15 hours ago, BG5150 said: What are the ramifications of this, if any? No practical ramifications. If 1099-DIVs are suppressed on the accounts, as they should be, then the IRS isn't getting anything to find anything wrong with in a cross-checking process (and I believe if it is a corporation they're not cross-checking anyway). Having said that, we do exactly what you do. (I guess) the former TPA was waiting until there was a distribution to get an id number? Or in fact using the 'er id for distributions...that opens a different can of worms. I see not getting a trust id number right away as just delaying the inevitable deactivation, but it's not really a crazy approach. Luke Bailey 1 Ed Snyder Link to comment Share on other sites More sharing options...
BG5150 Posted January 21, 2021 Author Share Posted January 21, 2021 But shouldn't the trust accounts be set up under the Plan's EIN and not the sponsor's? Bill Presson 1 QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
ESOPMomma Posted January 21, 2021 Share Posted January 21, 2021 Yes... they should be. Link to comment Share on other sites More sharing options...
shERPA Posted January 21, 2021 Share Posted January 21, 2021 IRS has been squishy on this over the years. I remember a story from a TPA who had a client in arrears on payroll withholding deposits. IRS finally hoovered up their bank accounts - including the plan assets - since they executed the levy based on the EIN. So a separate number is best practice, but there are thousands of plans using the EIN on accounts. ESOPMomma, Bird, Bill Presson and 1 other 4 I carry stuff uphill for others who get all the glory. Link to comment Share on other sites More sharing options...
Bird Posted January 22, 2021 Share Posted January 22, 2021 14 hours ago, shERPA said: IRS has been squishy on this over the years. I remember a story from a TPA who had a client in arrears on payroll withholding deposits. IRS finally hoovered up their bank accounts - including the plan assets - since they executed the levy based on the EIN. So a separate number is best practice, but there are thousands of plans using the EIN on accounts. Exactly. It is permissable to use the employer ID but then you do get mixed up with payroll WH and it is not a good idea (and the worst-case scenario of the IRS seizing plan assets although I have to believe they were returned...but who wants to be involved in trying to fix that?!). Ed Snyder Link to comment Share on other sites More sharing options...
Kac1214 Posted January 22, 2021 Share Posted January 22, 2021 Another consideration, if the client is in a state that requires withholding, using the EIN of the employer it can cause tremendous issues. We had a CA client that was audited by the state and it a mess trying to unwind the Plan's withholdings from the Employers obligations. The state was completely unreasonable through this process and fines/penalties were stacking up quarterly. It was a mess. It is easy enough to get a TIN for the Plan so we do for every plan that is not on a recordkeeping platform. ESOPMomma and Bill Presson 2 Link to comment Share on other sites More sharing options...
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