TIN's no longer required?

[Guest Jim Hunzelman]

A friend of mine who works for a small local TPA was told by an IRS representative that separate TIN's for retirement plans and trusts were no longer needed and that plans should, instead, use the plan sponsor's EIN to report withheld taxes and distributions.

The reasons given were (a) form 945 identifies withheld taxes as coming from a qualified plan, thus eliminating the need for a separate EIN for the trust, and (B) TIN's that are not used for an (unspecified) number of years become inactive and are purged from IRS records. The IRS representative also asked my friend why she thought TIN's were ever needed for retirement plans and/or trusts.

The IRS representative refused to give more specific information (Rev Proc, PLR, form instructions, etc.) stating that she was "too busy" and that my friend should "look it up herself". It sounds to me like my friend has run into a representative who does not have a very good understanding of retirement plans.

Since I work primarily in the small plan area, the IRS representative's second point concerns me a bit. It is not unusual for some of my clients to go several years without making a distribution. If their TIN is purged because they haven't used it to report distributions, I would expect problems when they attempt to use it.

Anyone else been told that separate TIN's are no longer needed or that some TIN's are purged?

[Guest TrustMe401k]

We too have n into an IRS agent who wondered why we were requesting TIN's for plans. We are still requesting them for all of our plans. I think the IRS has done a poor job of informing its agents of the requirement. Look at the SS-4 and it clearly has Trust and "creating a pension plan" on the form.

As for the agents attitude, so much for the kinder, gentler IRS.

[richard]

The California IRS agents give us no problems when we request TINs for pension/profit sharing trusts.

I suggest you thank the agent for his/her time, and dial again. Odds are you'll get another agent!

[Guest]

We request new EINs for all of the Trusts of which we are the Trustee.

Technically, the Trust is a separate legal entity, and as such requires its own ID number.

Look at the directions on Schedule P regarding the Trust number.

The comment regarding 945, the form is for other types of withholding also, i.e. backup withholding.

Question, if you use the corporate ID, what ID does the trust provide for its investments, won't that confuse the IRS to include the investment income onto the business?

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[Guest Jim Hunzelman]

Thanks for your comments. I agree that TIN's are needed for investments, that the SS-4 instructions say the numbers are neeeded, etc.

I found out today that the IRS representative told my friend that it was during an IRS training session that the statement was made that TIN's were no longer required. If she correctly understood the training session, it sounds like all of us may have some interesting letters to write.

By the way, this same IRS representative is insisting that the trustees refile 1099-R's (and 1096) with the plan sponsor's EIN rather than the trust EIN. Reason: the TIN is no longer valid because it has not been used for some time and separate TIN's are not needed in any event.

Personally, I'm going to continue obtaining the TIN's for my clients.