EIN, Solo 401k, E*Trade

[ezmoney]

Hi guys,

I had opened a solo 401k account (as well as solo 401k Roth) with E-Trade back in 2018 as I had 1099 independent contractor income sufficient enough to meet the max contribution (employee and employer profit sharing). In 2018 I did not need to do any voluntary after-tax contributions.

However, this year in 2019 I have not earned enough 1099 income to maximize my employer profit sharing by a large margin (I mainly received W-2 income instead), and would like to do voluntary after-tax contributions with conversion to Roth (ie. mega backdoor Roth). Hence I would need to get a self-directed 401K plan through a TPA or one of those websites such as solo401k.com. I did earn enough 1099 income in order to put in about 20k as voluntary after-tax contribution, hence I find it worth it to get a self-directed plan.

Unfortunately when I first open the account in 2018 with E-Trade, they did not tell me to get an EIN, so I used my own social security number. I believe I read up on this later and technically we don't need to get an EIN to have a solo 401k, although it's preferred.

My question is does anybody know if I can just call up ETrade and change the social security number that I have currently into an EIN? Would I have to amend my taxes for 2018 for this change?

Thanks!

[jacoavlu]

it doesn't matter. Your SSN was fine for your existing plan
if you amend your plan to use a document that allows after tax contributions, the document seller will assist in setting up an EIN and with application to establish new accounts

[ezmoney]

So is it safe to assume I can start the self directed plan without an EIN and use the SSN instead?

[jfoxcpacfp]

You would not have to amend your taxes. It's my understanding ET has started pushing for EINs for their solo-k's. I think technically, you are supposed to have a separate EIN for your plan, but many custodians overlook it. I recommend it b/c it is one less place to have your SSN in front of a bunch of eyeballs.

[jacoavlu]

So is it safe to assume I can start the self directed plan without an EIN and use the SSN instead?

as I said. If you engage one of the commonly referenced document sellers for a plan document that allows after tax contributions, part of their package will be obtaining an EIN in the name of the trust that they will establish for your plan. Your amended plan will use the EIN. Your existing plan assets you will rollover to the new accounts

[ezmoney]

Thank you all for your help! It is quite appreciated!

I just got my EIN and I called E-Trade, they said I would have to create a new account with the EIN, but they weren't sure if I could just transfer the current SSN based solo 401k directly into the new EIN based solo 401K without tax consequences.

Sounds like based on Jacoavlu's comments I should be able to rollover without any significant issues or needing to amend my 2018 tax return!

[jacoavlu]

Thank you all for your help! It is quite appreciated!

I just got my EIN and I called E-Trade, they said I would have to create a new account with the EIN, but they weren't sure if I could just transfer the current SSN based solo 401k directly into the new EIN based solo 401K without tax consequences.

Sounds like based on Jacoavlu's comments I should be able to rollover without any significant issues or needing to amend my 2018 tax return!

why are you getting a new EIN? What name did you use for the EIN? What exactly is it you plan to do now?

amending your 401k to allow for after tax contributions should start with an engagement with your chosen document provider (mysolo401k.net etc) or TPA.

[ezmoney]

Ah ok, so I inferred from your prior response that the document provider would make me get an EIN and that I could roll over from the SSN solo 401k to EIN solo 401k without tax consequences, hence I decided to pursue that route.

So I will contact document provider (in this case mysklo401k.net) then create a new solo 401k account with EIN and rollover the assets from SSN based solo 401k at E-Trade. Based on what I am reading here that should work out. Thanks again!

[ezmoney]

My apologies I misinterpreted what you guys were saying regarding EIN. It makes sense now that the plan provider will obtain a new EIN anyways. I think I'm set! Basically a big old moot point with my question.

[jacoavlu]

if you’re going to run with a semi custom 401k for mega backdoor Roth, you have to be really careful not to get yourself into trouble. You don’t know what you don’t know.

Some good points in this thread

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=292833

[southerndoc]

Fidelity let me open with my business EIN. They told me if I got an EIN for the plan, all I had to do was send them a letter and they would change it. No new account required. Not sure if this is IRS-legit, but that's what I was told. I have since amended the plan to Vanguard.

I went to the IRS website and was going to apply for an EIN for my plan. When I followed the steps, it basically told me as a sole proprietor that a separate EIN isn't required.