Company has been using Business EIN for Trust

[Dennis Povloski]

Client never got a separate tax id for their retirement plan trust. Plan investment accounts have been opened using the company EIN.

Should they order a tax id for the trust now? If so, are there any issues/extra steps to address when changing the plan's tax id number?

[J Simmons]

Since the plan trust is already using the ER's EIN, one EIN option that is accepted by the IRS, I would not engender the confusion mid-stream that would go along with now getting a separate EIN for the plan trust. Also, you might have quite a time getting the investment institutions to change the ownership on the accounts.

[Tom Poje]

if the plan's assets are under a seperate EIN, then in the case of lawsuits, bankruptcy etc against a company they are still protected. however, if everything is under the company EIN, my understanding is that you don't have the same safeguard in place.

[Dennis Povloski]

Yikes!

Of course the plan that brought rise to the question is a law firm!

Can you point me in the direction of something where I could do more research Pojemeister?

Thanks!

[movedon]

Yes, please elaborate, Tom. That's a new one on me.

[Tom Poje]

I have no idea. I just remember reading something about the EINs awhile back and figured it made sense about the reason to obtain a seperate trust EIN. by the way, there is certainly no reason why that number doesn't change depending on the scenario. for example if assets were at INVESTMENT HOUSE 1 and you have switched to INVESTMENT HOUSE 2, you would swith the EIN that goes on the schedule R when a distribution is made. But you are asking the wrong idiot about EINs and the like...

Asking me that type of question is like looking for a penny in the corner of the round room. (oh, the rest of you folks don't know the story behind that comment.)

[Tom Poje]

Maybe it was this benefits link post (I have no idea how to actually point to the post, its the best I can do)

http://benefitslink.com/boards/index.php?showtopic=40880

[J Simmons]

I agree it is cleaner to obtain and use an EIN for the plan trust separate from that of the ER.

However, I do not think that the IRS would win on a levy against the ER as the taxpayer and the ER's assets. The qualified retirement plan trust document and proper titling of the account to show that it is part of the plan trust would satisfy any judge that I've been in front of. After all, it is not a rabbi trust that we're talking about. It is a true trust that is subject to and required to have an express provision reflecting the anti-alienation clause, that it is expressly for the benefit of the employees and their beneficiaries, and only allows reversions to the employer when assets exceed the promised benefits--in a DC plan such as a 401k plan (this forum), that's rare if ever.

[K2retire]

As I understand it the risk is that the IRS or other creditors would send information to the investment house attaching all assets of a particular EIN. It is then left to the plan's fiduciaries to get the endeavour to get the assets back by explaining that they were really plan assets, not employer assets.

[J Simmons]

As I understand it the risk is that the IRS or other creditors would send information to the investment house attaching all assets of a particular EIN. It is then left to the plan's fiduciaries to get the endeavour to get the assets back by explaining that they were really plan assets, not employer assets.

Yes, and the plan TEEs would have two targets to do so: (a) the financial institution that handed over assets titled properly in the name of the plan trust, and (b) the IRS. It sounds as though others' experience has perhaps been different, but I have not known of a financial institution handing over qualified plan assets on a levy of the ER's assets even though the ER's EIN was used by the plan trust.

[Guest Form5500Guru™]

Each of the following should have a separate and different EIN:

• 
  

The employer/plan sponsor

• 
  

The plan administrator (if different from the plan sponsor)

• 
  

The trust fund

• 
  

The plan of a sole proprietor

The trust EIN is used on Form 1099-R, Distributions from Pensions, Annuities, Retirements or Profit Sharing Plans, IRAs, Insurance Contracts, etc., to identify the plan asset payer separately from the employer. If the trustee is an entity, such as a bank or trust company, that entity mwill most often use its own EIN on Form 1099-R. The trust EIn will also be used to identify plan assets with the asset holder, such asd an investment or trust company, pr to open a bank account or conduct other transactions that require an EIN.