Roth Solo 401k : 1099-INT

9 Replies

If I invest funds from my Roth Solo 401k into a bank savings account that allows me to open the account in the trust's name with the trust EIN, and the bank issues me a 1099-INT at year end, will this 1099 create an issue or confusion with the IRS?  Would I just file this 1099 form in my records and do nothing else?

Richard,

Assuming that everything was setup properly the 1099-INT will be issued to the 401k Trust EIN, not to you. You don't need to do anything with that, IRS would know that this EIN is associated with the tax-exempt entity. 

Originally posted by @Richard Howell :

If I invest funds from my Roth Solo 401k into a bank savings account that allows me to open the account in the trust's name with the trust EIN, and the bank issues me a 1099-INT at year end, will this 1099 create an issue or confusion with the IRS?  Would I just file this 1099 form in my records and do nothing else?

Make sure that the bank has the plan's EIN. If they issue a 1099 to your SSN, the interest becomes taxable to you, and it's hard to get the bank change the 1099 after it has been issued.

@Richard Howell

If the account is opened as you describe (in the name of the trust, using the trust's EIN), the 1099-INT should be in the trust name and you can just keep it with your other 401k records. As others have mentioned, if the 1099 is issued to you for an account that was supposed to be opened for your 401k, this is an issue that should be addressed with the bank.

Do you always have a separate EIN/TIN for the plan or is it the company EIN that is used?

Originally posted by @Dmitriy Fomichenko :

Richard,

Assuming that everything was setup properly the 1099-INT will be issued to the 401k Trust EIN, not to you. You don't need to do anything with that, IRS would know that this EIN is associated with the tax-exempt entity. 

My Solo 401k has 2 components; a Traditional 401k bucket which is not tax-exempt and then a Roth 401k bucket which is tax-exempt.  However my 401k Trust has only one tax ID EIN.  So if the IRS receives a 1099-INT to my EIN; how would they know it is for the tax exempt portion of the entity?  Or do they just see that the EIN is associated with a 401k plan so they know not to expect an tax return to match up to there database with the associated 1099 filed?

Much appreciated!

Richard, that is correct. The interest earnings would not be taxable now regardless which type of account earns it. Solo 401K is tax exempt entity. 

@Richard Howell

Whether the investment happened within the pre-tax or the Roth subaccounts, taxation would not be due at this point. You're right, one subaccount is tax-deferred while qualified distributions from the other are tax-free, but the immediate result of the 1099 is the same either way- no taxation.