Does a Solo 401(k) Really Need an EIN? – Avoid This Mistake + FAQs

Yes. In most cases, a Solo 401(k) – also known as a one-participant 401(k) – needs its own Employer Identification Number (EIN) separate from your personal Social Security Number and even separate from any business EIN you already have.

A Solo 401(k) plan is essentially a trust under IRS rules, and the IRS treats the plan as a distinct entity for tax and reporting purposes.

While there is no explicit law forcing owner-only plans to obtain an EIN, virtually all experts and official guidance strongly recommend getting one because it’s crucial for tax compliance, financial accounts, and maintaining the plan’s tax advantages.

Why Your Solo 401(k) Likely Needs an EIN (IRS Rules & Reasons)

A Solo 401(k) (one-participant 401k) is a retirement plan for a business owner with no full-time employees other than possibly a spouse. By IRS definition, a 401(k) plan’s assets must be held in a trust for the participants’ benefit.

In practical terms, this means your Solo 401(k) operates as a small trust fund separate from your personal finances. The trust aspect is why an EIN – essentially a tax ID for entities – comes into play.

According to IRS guidelines and tax experts, the Solo 401(k) plan trust is a separate legal entity from your business, so it should have its own tax identification number (EIN).

The IRS uses EINs to track things like retirement plan filings and to ensure the plan’s financial activity stays separate from your personal or business tax reporting. Here are the key IRS rules and reasons that make an EIN necessary:

• IRS Identification for Plan Filings: If your Solo 401(k) grows beyond certain thresholds, you must file specific IRS forms (like the annual Form 5500-EZ). These forms require an EIN to identify the retirement plan.

• In fact, the IRS explicitly includes having a one-participant plan as a situation requiring an EIN. For example, any Solo 401(k) plan with over $250,000 in assets must file Form 5500-EZ each year, which cannot be filed without an EIN.

• Maintaining Tax-Deferred Status: Using a unique EIN for the plan helps preserve the tax-deferred status of your 401(k) assets. If you were to use your personal SSN or your business’s EIN for the plan, it could blur the lines between personal, business, and plan assets.

• The IRS warns that without a distinct EIN, your 401(k)’s contributions and earnings might be mistakenly treated as business or personal income (taxable), defeating the purpose of the retirement plan. The EIN keeps the Solo 401(k) trust’s finances segregated, so the plan’s growth remains tax-deferred or tax-free (in the case of Roth 401k subaccounts).

• IRS Compliance and Reporting: Certain tax reporting obligations specifically call for a retirement plan EIN. For instance, if your Solo 401(k) withholds taxes (say, you take a distribution and elect tax withholding), it must report those withholdings on Form 945, which is tied to the plan’s EIN.

• Similarly, if the plan has any taxable unrelated business income (UBTI from alternative investments), it would file Form 990-T under the plan’s EIN. Even issuing a Form 1099-R for distributions or rollovers from the Solo 401(k) requires the plan/trust to be identified by its own EIN as the “payer.” In short, the EIN is needed to properly handle any tax forms related to the plan.

• Opening Financial Accounts: Practically speaking, banks and brokers usually require an EIN to open an account in the name of the 401(k) plan. Because a Solo 401(k) trust is not you personally, financial institutions want a tax ID for that entity (just as they would for a company or any trust).

• Without an EIN, you might not be able to open a dedicated 401(k) bank account or a brokerage account to hold the plan’s assets. (Some large brokerage firms have workarounds and may temporarily let you use your SSN to set up the plan, but even then, an EIN is recommended as soon as possible for reasons above and below.)

• Plan Audit Trail and Fiduciary Responsibility: Having a separate EIN creates a clear paper trail that this is a qualified plan. It reinforces that plan assets are held in a trust for retirement, not intermingled with personal funds. This separation can be important if ever the IRS or Department of Labor examines your plan.

• It shows you took the proper steps to establish the 401(k) as a standalone entity and proves you maintained your fiduciary duty. Using an EIN for the plan is a simple but critical step to demonstrate you’re keeping the plan in compliance and not treating it as just another personal account.

Note that federal law drives these requirements uniformly across states. EINs are issued by the U.S. Treasury/IRS and are used for federal tax identification. States generally do not require a separate state tax ID for your Solo 401(k) plan.

As long as you have the federal EIN, you’re covered for opening accounts and federal filings. (Your business itself might have state-level tax registration, but the 401(k) trust doesn’t typically need state registration because it’s a tax-exempt entity.

Only if the plan trust were to, say, earn income subject to state tax or own property might there be state filings, which is uncommon.)

EIN Requirements by Business Structure (Sole Prop, LLC, S-Corp, etc.)

One common point of confusion is whether needing an EIN for a Solo 401(k) depends on your business type. The short answer: regardless of business structure, the Solo 401(k) plan itself should have a separate EIN. However, the steps and reasons can vary slightly based on your situation:

• Sole Proprietors (No LLC, No Corporation): If you’re a one-person business operating under your own name (or a DBA) and have no existing EIN for the business, you might wonder if you can just use your Social Security Number. Technically, a sole proprietor without employees isn’t required to have a business EIN for taxes; but for a Solo 401(k), using your SSN is not advisable and often not accepted when setting up plan accounts.

• As a sole proprietor, you should obtain a new EIN specifically for the Solo 401(k) trust. This EIN will be used on all plan documents and bank accounts, while you can still file your business taxes under your SSN if you choose.

• Single-Member LLC (Disregarded Entity): Single-owner LLCs often have the option to use the owner’s SSN for tax purposes if they have no employees (the LLC is a “disregarded entity”). If you don’t already have an EIN for your LLC, you will still need to get a separate EIN for the Solo 401(k).

• If your single-member LLC does have its own EIN (perhaps you got one for opening an LLC bank account or other reasons), do not use the LLC’s EIN for the 401(k) plan. The plan trust must have its own, distinct EIN – the company’s EIN and the plan’s EIN must be different. The IRS makes it clear that the business and the retirement plan are separate entities and should not share an EIN.

• Multi-Member LLC or Partnership: If your business is a partnership or multi-member LLC, it almost certainly already has an EIN (since partnerships file a tax return and need an EIN). You still need a separate EIN for the Solo 401(k) trust.

• Even if the plan only covers the partners (to qualify as a one-participant plan, it would mean the business owners and their spouses only, no common-law employees), the plan is independent from the partnership itself. You should apply for a new EIN for the 401(k) plan. Don’t try to reuse the partnership’s EIN.

• S-Corporation or C-Corporation: All corporations have corporate EINs. If you’re an S-corp owner or C-corp owner with no other employees, you can sponsor a Solo 401(k) through the corporation. But the 401(k) plan trust needs its own EIN, distinct from the corporation’s EIN.

• The corporation (as the employer) will be listed as the plan sponsor in documents and on filings like Form 5500-EZ (using the corporate EIN for the sponsor line), while the plan’s EIN will be used to identify the plan/trust itself. The same principle applies: two separate entities (the company and the plan trust) = two separate EINs.

• Sole Proprietor using large brokerage (e.g. Schwab): Some brokers let you open a Solo 401(k) with just an SSN, but you should obtain a plan EIN anyway. It will be needed for later filings (Form 5500-EZ) and provides privacy (so you’re not exposing your SSN).

• Business Plans to Hire Employees in Future: If you anticipate growing into a regular 401(k) with employees, establish the EIN now. If you cease to be one-participant, you’ll file a final 5500-EZ and perhaps transition the plan, but the trust EIN remains part of that record.

To summarize how EIN needs play out in different scenarios, see the comparison table below.

Solo 401(k) EIN Requirements in Different Scenarios:

As shown above, every scenario results in needing a unique EIN for the Solo 401(k) itself. The EIN is free and easy to obtain online, so there’s little downside (we’ll cover pros/cons next).

The key is not to mistakenly think that just because you personally or your business already has an EIN, the 401(k) doesn’t need one. It does need its own.

Pros and Cons of Obtaining a Separate EIN for Your Solo 401(k)

Most advisors consider getting a Solo 401(k) EIN as a best practice with virtually no negatives. But for completeness, let’s break down the potential benefits and drawbacks:

Overall, the “cons” are minimal and mostly about a small amount of paperwork. The advantages (compliance, clarity, and protection) far outweigh any inconvenience. Obtaining an EIN for your Solo 401(k) is a smart, one-time setup step that will benefit you in the long run.

Common Mistakes to Avoid with Solo 401(k) EINs

When setting up and operating your Solo 401(k), watch out for these common mistakes related to EINs and plan administration:

• Using the Wrong EIN (or None at All): A frequent mistake is attempting to use your business’s EIN or your personal SSN as the 401(k) plan’s tax ID. Avoid this. As discussed, the plan should have its own EIN, not shared with the business.

• Using the wrong identifier can lead to reporting errors (e.g., your 401(k) contributions might be misreported as business payroll) and can confuse the IRS. Always use the Solo 401(k) trust’s EIN for any plan-related bank accounts or IRS filings.

• Not Getting an EIN Early On: Some solo business owners delay getting the EIN because they heard it’s “not required unless…” or because their financial institution didn’t insist on it initially.

• Procrastinating here is a mistake. If your plan grows or you need to change something, you might find yourself scrambling to obtain an EIN at the last minute (for example, just before a tax filing deadline). Apply for the EIN when you establish the plan – it’s quick, and you can avoid any compliance rush later.

• Failing to File Required Forms: Having an EIN means the IRS expects certain filings under that EIN when applicable. The most common is Form 5500-EZ when your plan’s year-end assets exceed $250,000 or when you terminate the plan. Don’t neglect this thinking “it’s just me, I don’t need to file.” If you hit the threshold and fail to file a 5500-EZ, the IRS/DOL can assess penalties.

• Mark your calendar to evaluate this each year. (Note: If your plan stays small, under $250k, you generally have no annual filing – the EIN just sits on record until needed. But keep the EIN info handy for when you eventually do need it.)

• Mixing Plan Funds with Personal/Business Funds: This is a broader mistake, but it ties into EIN usage. Every Solo 401(k) should have its own bank or investment account (or several) under the plan’s name and EIN. A mistake would be depositing 401(k) contributions into your personal or business account.

• Not only does that break IRS rules, it also defeats the separation created by having an EIN. Always contribute to the plan’s account and never pay personal expenses from the plan account.

• Using the EIN Incorrectly on Forms: When you do fill out forms, ensure you put the correct EIN in the right place. For example, on a 5500-EZ, there’s a field for the plan sponsor’s EIN (your business’s EIN or your SSN if sole prop without EIN) and a field for the plan’s trust EIN. Make sure to fill both as directed. Another example: if you as the plan administrator send a Form 1099-R for a distribution rollover, you’ll put the plan’s EIN as the “payer” and the recipient’s SSN as the payee.

• Double-check these details; using the wrong number in a field could trigger IRS correspondence to clarify the mismatch.

• Forgetting to Update Plan Documents if Business Changes: If you started your Solo 401(k) as a sole proprietor and later incorporate or form an LLC, that’s fine – you can continue the same Solo 401(k) plan. Just be sure to update your plan documents to reflect the new sponsoring employer (and new business EIN if any), and notify the IRS by properly listing the new sponsor on the next Form 5500-EZ you file. The plan’s trust EIN usually stays the same, but your business EIN (as sponsor) might have changed, and you want all records aligned. Failing to update this could cause confusion in records down the road.

Avoiding these pitfalls will ensure your Solo 401(k) runs smoothly and retains its compliant status. If ever in doubt, consult a tax professional or your plan provider – a quick question now can prevent an expensive mistake later.

Key Terms and Entities Defined

Understanding the terminology around Solo 401(k)s and EINs will help clarify why things are done a certain way. Here are key terms and concepts in this context:

• Solo 401(k) (One-Participant 401k): A 401(k) retirement plan that covers only a business owner and no full-time employees other than the owner’s spouse. It follows the same rules as any 401(k) (contribution limits, etc.) but is exempt from certain complex testing because there are no rank-and-file employees. Also called Individual 401k, Solo-k, Uni-k, or Owner-only 401k.

• Employer Identification Number (EIN): A nine-digit tax identification number assigned by the IRS to businesses, trusts, and other entities. Format is XX-XXXXXXX. It’s like a Social Security Number for an entity. The IRS uses EINs to identify the tax accounts of employers and organizations for filing and reporting purposes. In this article’s context, we refer to both a business EIN (for your company) and a plan EIN (for your Solo 401(k) trust).

• Plan Trust: The trust holding the assets of the 401(k) plan. By law, a 401(k)’s assets must be held in a trust or custodial account for the participants’ benefit. In a Solo 401(k), typically you (and/or your spouse) are the only participants and also act as the trustee(s). The plan trust is established by the plan documents when you set up the 401(k). It doesn’t necessarily require a separate trust agreement (often the adoption agreement and basic plan document serve that role). The trust is implicit in the plan – and it’s what the EIN is actually for (a “trust EIN”).

• Plan Sponsor: The employer who establishes the plan. In a Solo 401(k), the sponsor is usually your business. For a sole proprietorship, the sponsor is you as a business owner (even if not a separate legal entity). For an LLC or corporation, the business entity is the sponsor. The sponsor is responsible for adopting the plan and making contributions (as the employer) to the plan.

• Plan Administrator: In large plans, this can be a person or entity in charge of running the plan. In a Solo 401(k), you are generally the plan administrator (and also the plan trustee). This means you handle contributions, investments, and any reporting. You’ll use the plan’s EIN when acting as administrator for filings.

• Form SS-4: IRS form “Application for Employer Identification Number.” If not applying online, one fills out Form SS-4 to request an EIN. For a Solo 401(k) trust, Form SS-4 would be completed with the trust’s name (often “[Your Business Name] 401(k) Plan Trust”) and other details. The online EIN application is the digital equivalent of this form.

• Form 5500-EZ: A short annual return/report that one-participant plans must file with the IRS if the plan’s assets are $250,000 or more at year-end (or if the plan is terminated that year with any assets). It discloses basic financial info about the plan. The Form 5500 series is generally public information, which is one reason not to use an SSN on it. Solo 401(k) plans use the 5500-EZ (or sometimes 5500-SF if electing to file through the DOL system). This form requires both the sponsor’s EIN and the plan’s EIN on it.

• 1099-R: A tax form for reporting distributions from retirement plans (or rollovers). If you take money out of the Solo 401(k) or roll funds to an IRA, a 1099-R is issued. In a Solo 401(k), since there’s no financial custodian automatically doing this for you (unlike an IRA), you as the plan administrator may need to issue a 1099-R to yourself and file it. The 1099-R will show the plan/trust’s EIN as the “Payer” and your SSN as the recipient’s TIN.

• Form 945: The IRS form for reporting withheld income tax from non-payroll payments. If your Solo 401(k) withholds taxes from a distribution (for example, 20% mandatory withholding on a taxable distribution), the withheld tax is reported and remitted under the plan’s EIN via Form 945. Many Solo 401(k) owners never need this (they do direct rollovers or take no distributions until retirement), but it’s good to know.

• UBTI and Form 990-T: Unrelated Business Taxable Income (UBTI) is income a usually tax-exempt entity (like a retirement trust) earns that is unrelated to its purpose – e.g., operating a business or leveraged real estate inside the 401(k). If your Solo 401(k) invested in something that produces UBTI, the plan might owe taxes on that income.

• Those taxes are reported on Form 990-T under the plan’s EIN. This scenario is more common with self-directed Solo 401(k) investments in alternatives (like a 401(k) that owns a rental property with a mortgage, thereby generating unrelated business income). Most purely stock/bond investing 401(k)s won’t have UBTI.

• Keogh Plan: An older term that refers to retirement plans for self-employed individuals or partnerships, often profit-sharing or defined benefit plans. A Solo 401(k) is a type of Keogh plan. The IRS in some places still uses “Keogh” to mean any qualified plan for the self-employed. As noted, having a Keogh (Solo 401(k)) triggers the need for an EIN. So if you see “Keogh,” understand it includes one-participant 401(k)s.

By familiarizing yourself with these terms, you can better navigate IRS instructions and communicate with financial institutions regarding your Solo 401(k). Essentially, think of your Solo 401(k) as wearing two hats: one as part of your business (since only a business can sponsor a 401(k)), and one as a standalone trust. The EIN helps differentiate those hats.

How to Obtain an EIN for Your Solo 401(k) Plan (Step-by-Step)

Securing an EIN for your Solo 401(k) is a straightforward process, and it’s free. You can do it online through the IRS website in about 10 minutes, or via fax/mail with Form SS-4 (online is by far the quickest). Here’s a quick step-by-step overview, using the online method, which most people prefer:

Step 1: Begin the IRS online EIN application.

Visit the IRS’s official site for EIN application (look for the “Apply for an Employer ID Number” page). Click “Apply Online Now.” The application will walk you through a series of questions.

The first question asks about the legal structure of the entity applying. Important: Do not select Sole Proprietor, LLC, or Corporation for the 401(k)’s EIN. Instead, scroll and choose “View Additional Types, Including Tax-Exempt and Governmental Organizations,” as shown in the online instructions. This is because a Solo 401(k) trust doesn’t fit the standard business categories – it falls under a specialized category for retirement plans.

Step 2: Select the retirement plan category.

After choosing “Additional Types,” you’ll see a list of entity types not covered earlier. From this list, select “Employer Plan (401k, Money Purchase Plan, etc.)” – this option is specifically for retirement plan trusts. By picking this, you are telling the IRS you’re applying for an EIN for a qualified retirement plan (like a pension or 401(k) trust). This is the correct category for a Solo 401(k) plan’s EIN. (Selecting this ensures the IRS knows the entity is a plan trust and may help route any future correspondence correctly.)

Step 3: Input identifying information.

The online system will then prompt you for details such as: the name of the plan (you can use something like “<Your Last Name> Solo 401(k) Plan” or your business name + “401(k) Plan Trust”), the name of the plan sponsor (your business), the business address, and the name of the responsible party (that’s you, as the owner/trustee).

For “county and state where the plan is located,” use your business’s location or your residence if you’re a sole proprietor. It will also ask for the start month/year of the plan – typically use the month and year you adopted/signed the plan documents.

Step 4: Verification and EIN issuance.

Continue through the prompts (verify the information entered is correct). Towards the end, the system will ask if you want to receive the letter online – choose yes to get it immediately.

Upon completion, the IRS will generate your new EIN and provide a confirmation letter (Form CP 575) that you can download or save. That’s it – you now have an EIN for your Solo 401(k) plan.

A few additional tips while obtaining and using the EIN:

• One EIN per Plan: You only need one EIN for your Solo 401(k) plan. Even if you (and your spouse, if applicable) are both participating, it’s one plan/trust, thus one EIN. Do not apply multiple times. (If you ever think an application didn’t go through, you can call the IRS EIN hotline to confirm before trying again.)

• Keep the EIN Letter: Save the PDF or printout of the EIN assignment letter you get. Banks or brokers may ask for documentation of the EIN (though usually just giving the number and the plan name suffices). The letter is also good to have for your records in case any questions arise.

• No Ongoing EIN Filings Needed: Getting an EIN does not impose any annual tax filing on the trust by itself. Remember, the plan is tax-exempt. You don’t file a business tax return for the 401(k) trust like a normal business. The EIN is only used for specific forms (5500-EZ, 1099-R, etc., as needed). Don’t let the existence of an EIN trick you into thinking you have to file a separate 1041 or something – you don’t, unless the plan has unrelated taxable income (then 990-T).

• Most Solo 401(k) plans will only use the EIN for informational filings (which are not annual in many cases). If you never exceed $250k in assets and never have taxable income in the plan, you might not use the EIN on a tax form for years – and that’s fine.

• EIN for Plan vs. EIN for Business: If you also need an EIN for your business itself (for example, a sole proprietor deciding to get one, or a new LLC), that is a separate application.

• Be careful to distinguish the two when applying. Often, plan providers will handle the trust EIN for you (some include it as part of their setup service). But if you’re DIY, don’t accidentally apply under the wrong category. Use the steps above to get the right EIN for the plan, not a duplicate EIN for your business.

Obtaining the EIN is usually a one-time event when you set up your Solo 401(k). Once you have it, you’ll use it whenever needed for the life of the plan. It’s an essential piece of establishing your retirement plan’s identity in the eyes of the IRS and financial institutions.

Solo 401(k) vs. Other Retirement Plans: EIN Requirements

It’s useful to compare how Solo 401(k) EIN requirements stack up against other common self-employed retirement arrangements. Different plan types have different rules for tax IDs and reporting:

• Solo 401(k): Needs its own EIN (for all the reasons discussed). The plan is a qualified trust. Plan filings: Possibly Form 5500-EZ annually (if ≥$250k in assets), and other forms like 1099-R, etc., as required. Who issues tax forms to you? You do (as the plan administrator) because you effectively serve as your own “custodian.”

• Traditional or Roth IRA: No separate EIN needed for the account. IRAs are individual accounts usually held with a custodian or brokerage. The custodian’s EIN is used for tax reporting. For example, when you get a distribution from an IRA, the brokerage’s EIN is on the 1099-R, not yours. Plan filings: None by you – custodians handle IRS reporting. You simply report IRA contributions/distributions on your tax return.

• SEP IRA (Simplified Employee Pension): A SEP is funded through IRAs as well. If you’re a sole proprietor or small business with a SEP, you contribute to IRAs for yourself and any employees. No separate plan EIN is required for a SEP arrangement – the retirement accounts are IRAs (no trust entity is formed; the financial institution holding the IRA uses its EIN). Plan filings: No Form 5500 required for SEPs. You do need an EIN for your business if you have employees, to report contributions on their W-2s, but the plan itself doesn’t have an EIN.

• SIMPLE IRA: Similar to SEP, a SIMPLE IRA plan uses individual IRA accounts. No EIN for plan needed. The employer (business) may need an EIN for submitting contribution info to the institution or for payroll purposes, but the SIMPLE IRAs themselves are maintained by a custodian. Plan filings: Generally none by the employer to the IRS (no 5500 for SIMPLEs). The IRA custodians handle reporting contributions and distributions.

• Defined Benefit Plan (Solo Pension): If you set up a one-person defined benefit plan (another type of Keogh plan), it also operates via a trust. Yes, an EIN would be needed for that plan’s trust, just like the Solo 401(k). You’d file a Form 5500 each year regardless of asset size and possibly PBGC forms if it’s a certain type. But essentially, any qualified plan that isn’t an IRA requires an EIN for the plan trust.

To put it succinctly: IRAs (including SEP and SIMPLE IRAs) do not require you to obtain an EIN for the plan, because the financial institution’s EIN serves that role. In contrast, employer-sponsored qualified plans (401(k), pension, profit-sharing) do require an EIN for the plan’s trust, even if only one participant, because you are effectively acting as the institution/custodian. The Solo 401(k) falls in the latter category.

For example, many people debate between a Solo 401(k) vs. a SEP IRA for self-employed retirement savings. One factor is administration: a SEP IRA is a bit simpler (no trust, no potential 5500 filings), while a Solo 401(k) has more moving parts (but also more features, like higher contributions in some cases and Roth options).

The need for an EIN is one reflection of that: a Solo 401(k) has a formal structure that requires its own ID, whereas a SEP is just a contribution arrangement into IRAs. This isn’t a disadvantage, just a difference to be aware of.

Below is a quick comparison table:

As the table shows, needing an EIN is a hallmark of qualified plans that aren’t held by a third-party custodian. Solo 401(k)s share more in common administratively with a full 401(k) plan (just with far fewer requirements due to no employees) than they do with an IRA. So, if you’re coming from an IRA world, getting an EIN for a retirement plan might seem foreign – but it’s a normal part of operating a 401(k) plan.

Real-World Examples

Sometimes examples help illustrate how these rules play out. Here are a couple of real-world scenarios involving Solo 401(k)s and EINs:

• Example 1: Alice the Consultant (Sole Proprietor) – Alice is a freelance graphic designer with substantial 1099 income. She operates as a sole proprietor under her own name and never needed an EIN for her business. In 2025, she decides to open a Solo 401(k) to ramp up her retirement savings. Her broker allows her to provisionally set up the 401(k) account using her Social Security Number, so initially she skips getting a new EIN. Over the next few years, Alice’s 401(k) grows rapidly. By the end of 2028, her account balance exceeds $300,000.

• Now she must file Form 5500-EZ for the first time (since it’s above $250k). The form requires a plan EIN, and using her SSN is not an option. Alice ends up rushing to obtain an EIN for the plan in 2029 to file the overdue 5500-EZ, narrowly avoiding penalties.

• Lesson: Even if not immediately enforced, a Solo 401(k) will eventually need an EIN as it grows. Alice could have avoided a last-minute scramble (and the risk of exposing her SSN on plan documents) by getting the EIN when she first established the plan.

• Example 2: Bob’s Appliance Repair LLC (Single-member LLC) – Bob has an LLC for his one-man appliance repair business. He pays himself through LLC distributions and has no employees. Bob opens a Solo 401(k) with a financial institution that helped set up the plan documents. During setup, Bob’s provider obtains an EIN for the “Bob’s Appliance Repair 401(k) Plan Trust.”

• Bob then rolls over $50,000 from an old 401(k) into his new Solo 401(k) and starts making contributions. Come tax time, Bob needs to take a $10,000 distribution from the Solo 401(k). As the plan administrator, he issues himself a 1099-R for the $10,000.

• Because he had the foresight to get the plan EIN, Bob correctly lists the plan’s EIN on the 1099-R as the payer ID, rather than using his LLC’s EIN or SSN. The IRS receives the 1099-R and sees it came from a qualified plan trust – everything matches up with the plan’s EIN on record. Bob reports the $10,000 distribution on his tax return without any hassle.

• Contrast: If Bob hadn’t gotten a separate EIN, he might have incorrectly used his LLC’s EIN on the 1099-R, which could confuse records. Because Bob did it right, the distribution is clearly from a retirement plan and is taxed accordingly with no further questions.

• Example 3: Carla’s Upgrade to S-Corp – Carla initially ran a consulting sole proprietorship and set up a Solo 401(k) under her name, obtaining an EIN for the “Carla Consulting 401(k) Plan.”

• Two years later, her CPA advises her to elect S-Corporation status for tax reasons, so Carla forms Carla Consulting, Inc. She continues the Solo 401(k) plan, now with Carla Consulting, Inc. as the sponsor. She updates her plan adoption agreement to reflect the new corporation (essentially a plan amendment to change the sponsor). The plan’s trust EIN stays the same, since the plan itself is the same entity.

• Now each year when filing her corporate taxes, Carla attaches a note about contributions to the 401(k) (deductible by the S-corp) and if she ever needs to file Form 5500-EZ, she will list Carla Consulting, Inc.’s EIN as sponsor and the trust’s EIN as plan ID.

• Everything remains in order. Key point: Changing your business structure doesn’t require getting a new EIN for the plan – you just keep using the original plan EIN. The important thing is updating documents so the IRS knows the chain of continuity. Carla kept it clean by formalizing the change in her plan records.

Each of these examples underscores the practical importance of the EIN: whether it’s filing a required form, properly reporting a distribution, or adapting to business changes, having that separate EIN for the Solo 401(k) plan makes the process correct and efficient.

Frequently Asked Questions (FAQ)

Q: Can I open a Solo 401(k) without an EIN?
A: You can establish the plan, but you’ll almost always need to obtain an EIN for it shortly thereafter. Some brokers may set up the account under your SSN initially, but an EIN will be required for things like bank accounts or IRS filings. It’s best to get the EIN when you set up the Solo 401(k) to avoid any issues.

Q: If I’m a sole proprietor with no employees, do I really need an EIN for my Solo 401(k)?
A: Yes. Even as a sole proprietor, the Solo 401(k) trust should have its own EIN. Using your SSN for the plan can lead to tax reporting confusion and potential privacy risks.

Q: I already have an EIN for my LLC or S-Corp – can’t I use that for the Solo 401(k)?
A: No – the 401(k) needs its own. Your business’s EIN identifies the employer, whereas the Solo 401(k) is a separate trust. The IRS considers them distinct entities, each requiring an EIN. Using the same EIN for both could mix up records.

Q: How do I get an EIN for the Solo 401(k) plan?
A: Apply for one through the IRS (online is fastest). When applying, choose the category for “Employer Plan (401k, pension, etc.)” rather than a standard business. You’ll input your business as the plan sponsor and provide a plan name. The IRS will issue the EIN instantly online.

Q: Does obtaining an EIN for the 401(k) trust trigger any extra taxes or filings for me?
A: No, not by itself. An EIN is just an identifier. The Solo 401(k) trust doesn’t file income tax returns annually like a business would. You’ll only use the EIN for specific retirement plan filings (e.g., Form 5500-EZ if required, or 1099-R for distributions). There’s no annual tax return just because you have a trust EIN.

Q: Are there any fees to get an EIN or maintain it?
A: No, it’s free. The IRS charges nothing to obtain an EIN. There are no annual fees or anything for having an EIN – it’s simply a number. Be wary of websites that look official but charge a fee; always use the official IRS EIN application which is free.

Q: My Solo 401(k) is new and under $250,000. Do I need to file anything yearly with my EIN?
A: Generally, no annual filing is required until the plan hits $250k in assets. One-participant plans are exempt from filing Form 5500-EZ until they reach that threshold (or the year you terminate the plan). So, if you’re under the limit, you typically have no IRS form due for the plan this year. Just keep the EIN handy for when you do need to file in the future.

Q: What if I never got an EIN and now my plan is over $250k – what should I do?
A: Apply for the EIN as soon as possible, then file the required Form 5500-EZ. There’s no penalty for obtaining the EIN late, but there are penalties for late 5500 filings. Get the EIN, and submit your 5500-EZ. It’s better to file late with a proper EIN than not at all. You might also include an explanation that the plan is a one-participant plan newly obtaining an EIN.

Q: Can I use one Solo 401(k) plan EIN for two different businesses I own?
A: Usually, no – each plan needs its own EIN. If you have two separate businesses each with a Solo 401(k), those are two distinct plans, so each would have its own EIN and filings. In some cases, if your businesses are part of a controlled group or affiliated service group, they might actually share one Solo 401(k) plan (one plan covering both under one sponsor). In that scenario, there’s just one plan and one EIN. But if you truly have two independent plans, keep their EINs separate.

Q: My spouse and I are both in the plan. Do we need two EINs or one?
A: Just one EIN for the plan. A Solo 401(k) can cover the owner and the owner’s spouse. That’s still one plan, one trust. All assets are in that single trust, and it uses a single EIN. You do not get separate EINs for each participant.

Q: I’ve heard big brokers sometimes don’t require an EIN for their individual 401(k) plans. Is that true?
A: It’s true some may not ask immediately, but you still should have one. For example, large brokers might let you open the plan using your SSN (they act as custodian and use their own EIN for certain reporting). However, even with those plans, if you need to file a 5500-EZ or if you ever transfer the plan to a self-directed format, you’ll need the EIN. It’s wise to get it upfront. Also, using an EIN adds a layer of identity protection if any info becomes public.

Q: Does a Solo 401(k) trust ever need to file a tax return like a trust or partnership would?
A: Not for its regular retirement assets. The 401(k) trust is exempt from income tax on its investment earnings. It does not file Form 1041 or 1065. The only time a tax return (Form 990-T) is filed is if the plan has UBTI (Unrelated Business Taxable Income) – e.g., it operates a business or has debt-financed income. In that case, the trust would file 990-T to pay tax on the UBTI portion, using its EIN. But typical stock/bond investments don’t generate UBTI.

Q: If I close my Solo 401(k) plan, what do I do with the EIN?
A: You don’t “close” an EIN account like you might dissolve a company, but you will file a final form to close the plan. When terminating the plan, you file a final Form 5500-EZ indicating it’s the final return. After that, the EIN is basically dormant. The IRS doesn’t reuse EINs, so that number will always be associated with that (now closed) plan, but there’s nothing further you need to do with it once the plan is properly terminated.

Q: Are one-participant 401(k) plans subject to ERISA and Department of Labor rules?
A: They are exempt from many ERISA requirements. A Solo 401(k) is not subject to nondiscrimination testing or the full Form 5500 filing (with schedules) because it covers only owners/spouses. The Department of Labor still has jurisdiction, but they largely exempt one-participant plans from Title I of ERISA. You do need to follow the tax rules (IRS rules) closely, however. So, while you don’t need an ERISA bond or to provide participant disclosures (beyond yourself), you do need to ensure the plan remains only owners/spouses and file the 5500-EZ when required.