How to handle the tax forms from the property manager and the bank?

[Zehua Zhou]

I just set up my solo 401k under uDirectIRA, and the LLC that will be 100% owned by the 401k, and ready to buy real estate using the LLC.

My question is regarding taxation. 

Should I give my LLC's EIN number or my 401k custodian's EIN number to the property manager? They will still issue me 1099-MISC forms. That form clearly shouldn't be issued against my own SSN. uDirectIRA sent me an instruction to use their trust company's EIN and address. I wonder if the tax forms would be mailed there, and then that trust company will file to IRS to explain it is tax exempt? Or will it be issued against my 401k's EIN and I'll just ignore these forms?

Same question for the Bank account, as the bank needs to issue the 1099-INT form. 

I talked to a business attorney and she said she wasn't sure how taxation works here and wants me to do thorough research.

[Dmitriy Fomichenko]

@Kevin S.

If you are getting an average return of 7% in your 401k and have an option of converting that to self-directed and then invest in real estate and as a result, get 20% return - does it make sense to switch? 

Buying real estate inside a qualified retirement account is not about tax write-offs. You can't do that since you don't own the property; your IRA/401k does. And your IRA/401k is a separate legal entity from you. Compared to the stock market, real estate investing offers better return on investment and lower risk. That is why many invest in RE with their 401Ks.

As far as the RMD is concerned, you have to plan for it. If you have a portfolio of, say, five rentals in your 401k when you are in your sixties that produce $7,000-$10,000/mo in passive income (rental cash flow) - then you simply take the rental income as your RMD without touching the properties. If you don't have enough income to satisfy the RMD, you may have to liquidate the assets or distribute them to yourself as "in-kind distribution".