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Updated about 1 month ago on . Most recent reply presented by

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Art Webb
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W9 Help for SDIRA

Art Webb
Posted

I'm getting conflicting advice on how to fill out my W9 for my SDIRA in which the bank custodian refuses to provide their EIN for the form. Many say not to use personal SSN or SDIRA LLC EIN. This is a single member LLC owned by the IRA. Some have said to check Other in box 3a and put in "SDIRA" and "Bank EIN withheld by bank custodian" and leave both number boxes empty. Appreciate best answer by a tax CPA if possible. Thanks all !

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Dmitriy Fomichenko
#1 New Member Introductions Contributor
  • Solo 401k Expert
  • Anaheim Hills, CA
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Dmitriy Fomichenko
#1 New Member Introductions Contributor
  • Solo 401k Expert
  • Anaheim Hills, CA
Replied

@Ned Carey,

The reason you MUST NOT use your SSN when investing IRA funds is that the income of IRA is tax-sheltered (deferred or tax-free with Roth) and you don't want to pay tax on this income. And you shouldn't!

Here is a simple example:

You buy a rental property inside your IRA and complete the W-9 form using your SSN. The property is rented for $2,000 per month. At the end of the year, your property manager issues a 1099 to YOU and YOUR SSN reporting $24,000 income, which you now must report on your tax return and pay taxes on. Good luck trying to provide to the IRS that this is not taxable income!

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