Applying for an EIN for a DB Plan Trust

[Guest AK1321]

Hey Everybody,

When applying for an EIN for a Defined Benefit Plan Trust using the online EIN application at http://www.irs.gov/businesses/small/articl...=102767,00.html, for nearly every Plan sponsored by a Sole Proprietor, my application will not go through. I am then told to call into the IRS to get the EIN by phone. When I do this, I am occasionally given an EIN for the Plan Trust, but most of the time I am told that DB Plans sponsored by Sole Proprietors do not need an EIN for the Trust. I do not know how this is possible since the Plan assets need to be legally separated from the company sponsoring the Plan, and since on Form 1099-R for distributions there are sections for the EIN of the payer (Trust) and the EIN of the recipient (Sponsor). I was wondering if anybody else has run into this problem when applying online or by phone for a DB Plan Trust sponsored by a Sole Proprietor.

Any help would be greatly appreciated.

[mming]

Since the entity applying for the ID# is the plan and not the sponsor, check the 'trust' option in the first screen instead of 'sole prop'.

The inconsistency I find is that the application sometimes won't go through unless you answer the questions regarding 'principal activity of business' and 'line of merchandise sold; specific construction work done; products produced; or services provided', which technically are n/a.

[Guest Judy S]

The question has come up in our office of whether you now need to get TIN's for retirement plan trusts since the Schedule P is no longer required. Also, we find many employers who file withheld taxes electronically using the employer's EIN since that is what they use to file payroll taxes. If we do the 1099 using the TIN, they invariably get a notice saying the IRS did not receive the withheld taxes and are then told to use the EIN on the 1099's since that is what was used for the 945. This kind of stuff is a real time waster for us.

So--do we need to get TIN's for retirement plan trusts?

How do you control the submission of the withheld taxes so that the TIN is used to submit them?

[Guest AK1321]

The option that I choose on the first screen is 'Other', then 'Employer Plan', instead of just selecting 'Trust' right from the start. After that is where I run into problems with Sole Proprietors because it then asks me to choose either 'Individual' or 'Existing Business'. The 'Individual' option asks me for the individual's name and SSN, while the 'Existing Business' option asks me for the business name and EIN of the business. When selecting 'Existing Business', for some reason, the application will not accept nearly all Sole Proprietors with an EIN for their business who are applying for a Defined Benefit plan. Would this be because Sole Proprietors are usually identified by their SSN instead of an EIN?

Would it be acceptable to select the 'Individual' option and input the owner and his/her SSN, which would basically link the DB Plan to the owner's SSN, not the EIN of the business?

[Guest AK1321]

The question has come up in our office of whether you now need to get TIN's for retirement plan trusts since the Schedule P is no longer required. Also, we find many employers who file withheld taxes electronically using the employer's EIN since that is what they use to file payroll taxes. If we do the 1099 using the TIN, they invariably get a notice saying the IRS did not receive the withheld taxes and are then told to use the EIN on the 1099's since that is what was used for the 945. This kind of stuff is a real time waster for us.

So--do we need to get TIN's for retirement plan trusts?

How do you control the submission of the withheld taxes so that the TIN is used to submit them?

Judy,

I guess that I have the same question as you about whether or not and EIN is needed for a retirement plan trust sponsored by a Sole Proprietor. I am getting mixed signals from people at the IRS.

[mwyatt]

It is an open question. I remember back in 1997 we made a concerted effort to obtain Trust EINs for our clients. Most of our clients are small, with sporadic distribution patterns. What we found several years down the road when they reported a distribution using the Trust EIN is that it would bounce back from the IRS. Turns out that the IRS was unilaterally cancelling out numbers that they thought were dormant (not sure why, as reusing numbers is a freaking nightmare). Anyone else ever had that experience?

[Bird]

The option that I choose on the first screen is 'Other', then 'Employer Plan', instead of just selecting 'Trust' right from the start. After that is where I run into problems with Sole Proprietors because it then asks me to choose either 'Individual' or 'Existing Business'. The 'Individual' option asks me for the individual's name and SSN, while the 'Existing Business' option asks me for the business name and EIN of the business. When selecting 'Existing Business', for some reason, the application will not accept nearly all Sole Proprietors with an EIN for their business who are applying for a Defined Benefit plan. Would this be because Sole Proprietors are usually identified by their SSN instead of an EIN?

Would it be acceptable to select the 'Individual' option and input the owner and his/her SSN, which would basically link the DB Plan to the owner's SSN, not the EIN of the business?

That's what we've been doing - "Other" "Employer Plan" and "Individual." It is the individual acting as trustee who is getting the number. Works like a charm.

Turns out that the IRS was unilaterally cancelling out numbers that they thought were dormant (not sure why, as reusing numbers is a freaking nightmare). Anyone else ever had that experience?

Yes. We're told they stopped; I'm not sure.