Federal EIN for sole prop

[rcline46]

Searched and searched and searched! no luck.

Sole prop establishes a 'solo' 401(k). Does not yet have to file 5500-EZ.

I know he needs to get a Federal EIN, but when? When he first needs to file the 5500-EZ?

If sooner, I need a cite cuz a broker is fighting me and I can't find anything other than instructions to the EZ!

Can someone help?

[Belgarath]

You could possibly refer him to the footnote #1 on page 2 of the SS-4 itself. But this may be a hard sell if no forms are being filed, and no distributions are being made.

[wsp]

Are assets considered segregated if they are using the ein of the sole prop to establish the account? If not, boy I'd hate to have to explain to the sole prop why 10 minutes wasn't spent establishing an EIN for the trust after he found out the hard way that one was needed.

[Belgarath]

Wsp - Rcline and I are talking about the Employer id #. The Trust id# is a separate thing, (or EIN for the trust, whatever terminology you choose to use - we find it less confusing for our clients to discuss the issue in terms of TIN's and EIN's) and yes, I agree they would want a separate TIN regardless of what they choose to do for an EIN. The investments would be registered under the TIN.

[Guest Pensions in Paradise]

Your answer is found by combining all of the above responses.

The plan must obtain it's own trust ID number (TIN) in order to properly segregate the assets. In fact the broker will need the TIN to open the brokerage account!!

In order to obtain a TIN, the plan sponsor must have an employer ID number (EIN). The plan sponsor cannot use his/her social security number to obtain a TIN.

So yes, the sole prop must obtain an EIN now so that he/she can also obtain a TIN.

[WDIK]

In order to obtain a TIN, the plan sponsor must have an employer ID number (EIN). The plan sponsor cannot use his/her social security number to obtain a TIN.

I have obtained quite a few TIN's with the online application system while only using a SSN.

[wsp]

I was basing my response off of the fact that a broker was involved. Why does a broker care if an EIN is obtained for the Sole Prop? Seems to me that's the Accountant's responsibility. And the Accountant will tell you that it's not necessary but is generally done right away as a matter of principal. You just never know what the future will hold.

But if an EIN needs to be provided for any return, statement, or document that requires an EIN and the plan document requests it...don't you need it to even establish the plan? Or do you use the SSN for that as well?

Taking it a step further, if you can establish the plan without one but need one for a filing...can the broker guarantee that no filing would need to occur prior to the account reaching 100k? If Sole Prop dies after establishing and funding account but prior to 100k what do you put on 1099-R?

I honestly have no clue...seems silly to even have to ask these questions over a 10 minute form.

[Belgarath]

We have, on rare occasions, had a client or CPA who got in a snit and refused to file for an EIN. That's their right, but we just tell them to go elsehwere for their plan administration. Life is too short, and a plan that starts on this kind of basis is generally a losing proposition from the start!