What is everybody doing about 04#s for new plans?

[Guest JBarn]

Once and for all what is everybody doing about 04#s for new Plans? Some Providers and TPAs tell me you need them,some Providers and TPAs say you don't! I stopped about 6 months ago but now I'm not so sure. Any help?

Thanks.

[Fredman]

At the risk of sounding stupid...

What's an '04#'?

[KIP KRAUS]

Is it some kind of new IRS numbering system for qualified plans? I give up.

[mwyatt]

I recognize a fellow Massachusetts practitioner when I see one. "04" is referencing the Employer Identification Number. The IRS is requiring that plans get a separate EIN for the plan itself. This number should be used for identification on any brokerage accounts and for transmitting distributions from the plan. (If you think about it, using the plan sponsor's EIN on the brokerage account is asking for trouble when the IRS's computers are finally up to snuff. We had a client with a corporate audit recently where the reviewer was asking about a bunch of dividends, etc. from the plan showing up as unreported on the 1120. For this reason alone a separate EIN for the Plan makes a tremendous amount of sense).

[Guest Ray Williams]

We automatically request an EIN for any plan we administer. Another reason for using a seperate EIN is that if you have substantial plan deistrutions, and report them unders the EMployers' EIN, the Employer may be required to make more frequent and/or electronic tax deposits.

The IRS is confused enough without is adding to the confusion.

[Guest JBarn]

The answers about distributions alone make sense to me for obtaining seperate 04# for new Plan (in fact we used to do it but stopped based on info from fellow TPAs and Providers),but does the IRS REQUIRE it? Any cites? Is anyone not doing it and why not?

Thanks for help.

[Wessex]

The trust (not the plan) is required to have an EIN number. See Section 6109 of the Code, Section 301.6109-1, of hte regulations, and Rev. Proc. 89-29.

[John A]

Wessex,

What is the consequence of a trust not having an EIN number and thus using the plan sponsor's EIN number as the trust number? I have seen many Schedule Ps filed using the plan sponsor's EIN number as the trust number, and I do not recall ever hearing that it created a problem.

[Wessex]

John A -- I am not aware of any consequences either. I think, however, that it would be possible for the Service to argue that the Schedule P was not properly filed for the trust and thus the statute of limitations had not begun to run for the plan year in question. This is just my opinion; I haven't heard of the Service taking this position.

[Guest P Stahm]

I had a plan that did not apply for a trust identification number. We recently processed a distribution that included federal tax withholding. When the deposit was made with the employer's identification number the IRS responded with a letter automatically assigning the trust with an identification number, and moving the tax deposit to the new number. This leads me to believe that even if for no other purpose, you must have a separate trust identification number for reporting distributions. I agree with previous statements that it is imperative to have plan assets titled and identified with the plan's trust number and not the employer's.