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I can't imagine the IRS would complain about a taxpayer self-imposing the nuclear option. But you don't get to pick and choose which portions you get to impose. It is all or nothing. So, I think contacting a tax lawyer or an ERISA lawyer would be mandatory in such a case. And Bird, let me nitpick a bit. I agree with what you said but I'd substitute "new EIN for the **TRUST**" for "new EIN for the plan". The SS-4 is filled out slightly differently when the EIN being requested is for the **PLAN**.

As far as what the bank might do with reporting, it is unlikely that they would issue a 1099-R but you really have to ask them. It all depends on how it was set up and how they operate. Other Qs are above my pay grade.

Look at Notice 2015-87, Q&A 9

I agree with Mike. It's "wrong" but not necessarily disastrous. I'd start by getting a new EIN for the plan, and submitting a W-9 with that number. They should just change the number on the account.

There is no question about what the correct thing to do is: a trust account with a separate TIN (Trust Identification Number) With that said, I run across a gazillion plans established just as you described: an account set up at a random financial institution under the auspices of the Employer's EIN. In addition, I run into even worse: an account set up at a random financial institution under the auspices of the Plan Sposnor's SSN! I think the IRS takes a pragmatic approach to these things. As long as all the taxable reporting is done and as long as the accounts are treated properly (no comingling of personal assets, 1099's are issued when appropriate, withholding done properly) I have never seen the IRS make a big deal out of this issue. So, while I agree with those who have told you that, technically, the account as established is just another bank account of the employer and the IRS *CAN* take the position that contributions weren't really contributions and rollovers were something else entirely (what? hard to say, but certainly not entitled to favorable tax treatment) I've seen far too many of these mislabled accounts survive audits at all levels to be like Chicken Little when I see it. I try to get the financial institution to substitute a TIN (which I generally need to apply for on behalf of the client) which they frequently will refuse to do, instead insisting on closing the account and establishing a new account, but strangely some will just substitute the TIN and life goes on. The alternatives that the client faces are typically beyond their comprehension. If the account is just another account of the employer it means that the plan and plan sponsor suffer catastrophic consequences and they just can't believe that all their deductions are lost, both at the personal level (think 401(k) and rollovers that weren't) and the Plan Sponsor level (think deductions that all go away). Another alternative is to claim some sort of failure and try to fix it under EPCRS. I've never had a client opt for this. And finally, the one that always seems to win the day: change the accounts to a valid TIN either by substitution by the financial institution or setting up a new account, and rely on either winning the audit lottery or counting on being able to argue out of it should it become necessary. There is another option that I won't allow which is to leave things as they are "because my broker said this is fine". Those folks are just not ever going to be my clients. The reason that so many have gotten away with it for so long with so few consequences is that a Plan Sponsor is free to invest funds with a discretionary financial institution which processes all transactions under a TIN that belongs, not to the Plan Sponsor, but to the financial institution. This goes back to my point that as long as 1099's are properly issued (which virtually guarantees that the tax system doesn't suffer a loss) the IRS will not dig any deeper. I'm sure others will add their own experiences. In your specific case there may be enough on the line to convince the Plan Sponsor that formal correction is desirable. Your case highlights the trust account vs. employer account issue rather starkly. And it makes one wonder what might be different if this Plan Sponsor had done it right from the beginning: - would the financial institution have declined to open the account had they known that it was supposed to be a qualified plan account? - would the financial institution have opened the account, but insisted on a completely different protocol and different forms signed and attested to? - would the folks who sold them the real estate have refused to sell to a qualified plan? [There are investment rules I have no knowledge of personally but I know there are different reporting requirements under certain circumstances.] If so, is the Plan Sponsor now on the hook for misleading them in some way? Good luck and let us know what happens.

A checking account may be a plan asset. The checking account should be set up in the name of the plan (e.g. XYZ solo (k) Plan); not merely the company. You, generally, must contain a Chinese wall between the plan's assets and any other assets of the Company. A checking account that is properly set up by the plan can accomplish that. Good Luck!