Plan Trust Tax ID vs Employer Tax ID, can they be the same?

[RayJJohnsonJr]

When installing a new plan, I have always obtained a new tax ID for The Plan Trust. I'm taking over an existing plan and it appears the employer tax ID and the plan tax ID are the same number. 

Has anyone one else seen this?

[ESOP Guy]

They maybe running it that way but they really can't be the same.  But if the plan isn't issuing 1099-R under its name it isn't a huge deal.  Sure the bank accounts should be under the trust's EIN but I have seen a lot of plans that never get an EIN.   If there are 1099s for the plan's earnings being sent to the company and they aren't reporting it you would think that would be an issue but it sounds like it isn't.  

 

Your way is the better process but I have seen what you are seeing.  

[CuseFan]

I've seen both. I thought I read on this forum that IRS will inactivate an EIN/TIN after X number of years of inactivity. If that's the case, what would be the reason to get a separate TIN for a solo owner plan upon start-up, for example, where the lone participant maybe 10-20 years or more from retirement distributions? Also, if inactivated, does/can the same number get reactivated when requested, is it gone forever, recycled elsewhere (that would be a problem), does the sponsor have to apply for new TIN when it's actually needed? Just trying to understand the necessity or best practice aspect versus wasted or duplicate efforts. 

[RayJJohnsonJr]

My concern was the same as ESOP Guy. 1099 reportable income resulting from invested Plan Assets being applied to the business Tax ID looks like taxable income to the business.  Somehow, it's never been an issue though. So I think I'll leave it as is.

Go figure.

[EBP]

I was taught the same as you - get a separate EIN for the trust - and I did so for many years.  However, the firm I joined ten years ago never got separate numbers and I know others who never did. We had a lot of discussion about this, and we did get some separate numbers, but I don't think this is such a big deal anymore. These days, the big recordkeepers issue 1099s under a separate number that they maintain, so it's not a concern as far as differentiating the employer number from the trust number.

As others point out, I've never seen it be an issue either.

[Larry Starr]

I didn't see one single CORRECT answer.  A retirement plan uses a trust to hold the assets.  The trust is required to have it's own tax ID.  PERIOD. Yes, of course you can ignore it and continue to hope that the IRS will never match income to tax IDs, but that doesn't change the answer.  Ray, continue to do it the right way, regardless  of what others have said.

[shERPA]

Actually there is old IRS guidance allowing the use of the EIN,  but being three years retired now, I no longer remember the cite.  I think it dates back to the 80s, so it’s probably obsolete given all the identification laws and rules that have come since then. That said, it’s far better to get a separate TIN.  Not only is it technically correct since the trust is a separate entity from the employer, but using the EIN can have disastrous consequences if the employer gets into hot water with the IRS over things like unpaid payroll taxes.   The IRS can levy (seize) employer accounts for unpaid taxes AND they identify accounts to levy by the ID number on the account.  Imagine trying to unwind the mess created if the IRS were to hoover up plan assets for unpaid payroll taxes.   This actually happened to the client of a TPA I knew way back in the day.  Over the years I had a handful of clients get in arrears on tax payments, (stuff happens) but they managed to avoid IRS levy action.  
 

Jim Norman

P.S. Hi Larry!  

[RayJJohnsonJr]

Thanks everyone for great posts. Combined, they put this situation in the proper perspective.

 

As fo me, I'm leaving the 2 very old Plans using 'ER ID as is. New Plans get Trust Tax ID's.

[Bill Presson]

Larry Starr AND Jim Norman in the same current thread?

It's a post-Festivus miracle!