Solo 401K, EIN, 1099s

Forum|Forum|5 years ago
January 21, 2021
1 reply
1 view

Hello.

I am thinking about getting a Solo 401(k), and my understanding is that this will require me to have an FEIN.

I currently do 100% 1099 contract work, and use SSN.

I believe I am considered a sole proprietor - I have no employees, and do all the work myself. I file joint annual tax returns with my spouse whose income all comes from his employer on a W-2.

My hang up here is the FEIN.

If I generate an FEIN through the IRS, would I then need to issue myself (to my SSN) a 1099-NEC from my FEIN?

How does switching from SSN to FEIN change my annual tax process?

Thank you so much for helping get me started.

Not A Product Question

MinhT1

Level 15

The FEIN is only required in certain states when a sole proprietorship starts hiring employees.

As a sole proprietor, even if you do not have employees, you can choose to apply for an EIN which you could use to fill forms W-9 instead of using your SSN. Having an EIN does not change your tax filing obligations in any way.

As a sole proprietor, you do not pay yourself and do not issue form 1099-NEC to yourself.

For your information, please read this IRS document about the retirement plans for self-employed people.

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LinUSAAuthor

Level 2

Hi, Minh, and thank you for the reply and sharing the link.

It looks like in order to open a Solo 401k I would be required to get an EIN, regardless of state?

If I do switch over to an EIN, I'm just not clear on how the EIN will link to my income when I file taxes using my SSN.

The only reason I would do the EIN is to have the ability to create the Solo 401k.

Thank you for any additional expertise you may have to share.

ThomasM125

Level 15

When you prepare your schedule C to report your self-employment income, you will do so both under your social security number and also your EIN number. The EIN number will appear in box C but your social security number will appear at the top of the form.

So, the IRS will still credit your income and self-employment tax to your social security account, the EIN number is just there to link whatever reports your use it for to your schedule C.

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