Federal Withholding

[Guest THess]

Here I go again....

I have a plan where the investment company does not do the 1099's, 945 or 1096. Can the federal withholding checks be sent directly to the United States Treasury, or do we have to go through the EFTPS bull? This client hasn't had any distributions for 8 years (since the plan's existence) and probably won't for another 8 years.

I read that the EFTPS is not required....what are my alternatives? I don't want to have to tell the client that they have to set up a special account just for this. What steps need to be taken?

Thank you so much for all your help!

[Earl]

if the trust uses the sponsor's tax id number it is subject to the payment requirements of that number.

if the trust has its own tax id number:

Withholding Procedure: Deposit with 8109 coupon, as 945 TAXES, under the Trust Tax ID # at your Bank. However, your Bank may not accept tax deposit if check is not drawn against an account at your Bank.

ALTERNATIVE: Make check payable to United States Treasury and forward with

8109 coupon under the Trust Tax ID # to the following address:

Financial Agent

Federal Tax Deposit Processing

P.O. Box 970030

St. Louis, MO 63197

you can get a trust tax id number in two mins @:

http://www.irs.gov/businesses/small/articl...=102765,00.html

[maverick]

Earl, the other day I was looking at the Form 8109-B instructions on the December 2000 version and noticed the option for sending $$ to "Financial Agent, Fedeal Tax Deposit Processing (etc.)". That option was not on the version we had been using (October 1996), although it did include a section titled "Deposit at FRBs" (which isn't on the 2000 version).

After having problems in the past with 8109-B 945 deposits being rejected because of "inactive" (for lack of a better word) trust ID numbers, I've been depositing 945 deposits under the employer's ID #. You still have to hassle with having the custodian cut a check payable to the employer, having the ER deposit the $$ in its checking account, then cutting another check to get the withholding deposited. This Financial Agent ooption sounds too good to be true. Have you tried it?

Thanks.

[No Name]

I've been sending to "Financial Agent" for a few years. Never had any problems that I've been made aware of.

[Earl]

I have used the mail to St. Louis/Financial Agent method literally hundreds of times. I have never had a problem other than:

1. Stale Tax ID numbers. For some reason they credit it to the plan sponor's Tax ID number. That's a hassle to fix.

2. Change name of plan. It is a nightmare to change the name associated with a Tax ID number. Now that they have the web SS-4, I am getting new ones in that case. For a while I was filing 401(k) taxes under "ABC Co., Inc, Pension Plan". That's too hard to keep track of. If the name doesn't match - credit goes to the sponsor's tax ID number.

3. I try to get the sponsor to enter the tax period so I am not setting them up for a late deposit penalty if they don't get around to it for a month or so. Frequently they forget to enter anything. IRS usually guess right in applying the payment. They generate a letter telling which period they applied it to.

Apparently with name change/stale number they look up the 5500 and find the sponsor. I wish they would freakin' call up the telephone number on the coupon. Sure would save some time.

[Guest Pensions in Paradise]

Earl,

We just experienced several instances where the IRS applied the withholding to the employer's EIN because the IRS said the trust EIN was 'invalid' due to inactivity. Apparently if the plan doesn't process any distributions for several years (i.e. file Form 945), the IRS invalidates the trust id number.

My question is how you went about reinstating the trust id numbers.

Also, you mentioned that if the plan name changes and no longer matches the name on file with the IRS, the IRS will apply the withholding to the employer's EIN. Have you experienced this personally? Up to this point we have never notified the IRS, but I'm worried that we might start having problems since so many plans have converted to 401k's.

Any input you can give would be greatly appreciated.

[Guest THess]

Thank you so much for all your input. I too, had a problem with the TIN last year. Well, not me personally, but the participant couldn't get the IRS to accept her 1040 e-file. They said that the TIN was incorrect, and after checking and double checking, it was the correct TIN. I called the IRS and they said that they do not have anything to do with that, but did confirm that we had the right TIN. Somehow, the participant got it straightened out because I didn't hear back from her.

I will try and send the checks to the "Financial Agent". It seems to be a lot less hassle. I am in Illinois....can I still use the St. Louis, MO address? The only other thing I have to do, I would think, is to call the IRS and get 8109-B forms. I looked online and they said that they have to be "original" forms.

This plan has been a nightmare. If it isn't one thing, it's another. This is the only plan I have where the investment company doesn't do anything. Not only that, but you can't even use their distribution forms....you have to do a letter of instruction...and then have the trustee's go to the bank for a signature guarantee for the letter of instruction....ugghhh. What a pain in the butt. And it's a law firm, so trying to get 3 lawyers to be able to go to a bank together is almost impossible.

I surely appreciate all the replies. Thank you so much!

[Guest THess]

Okay....now I'm being a pain in the butt....I'm sorry....

With the 8109 coupon....can I send one coupon for all the withholding? This is why I ask...this investment company issues 2 checks (one for withholding and one to the participant) for each and every fund that that participant has. So in otherwords, if the participant has 10 funds, 20 checks are issued.

Also, does the financial agent charge for this service? Do you have to set something up in advance?

Thanks again!