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Updated 7 months ago on . Most recent reply

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34
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Zehua Zhou
6
Votes |
34
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How to handle the tax forms from the property manager and the bank?

Zehua Zhou
Posted

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.

Most Popular Reply

User Stats

34
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6
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Zehua Zhou
6
Votes |
34
Posts
Zehua Zhou
Replied
Quote from @Dmitriy Fomichenko:

@Zehua Zhou

You have a flawed setup. A 401k does not require a custodian or a third-party administrator (TPA), and you don't need an LLC to have checkbook control for your 401k. You just need the right provider to set it up better. We set Solo 401k plans for our clients in the form of a trust instead of using a custodian. The trust will have its own EIN, and as a trustee, you control it. This way, you will eliminate the custodian completely with its fees, red tape, etc. The end result - are you truly in the driver's seat of your 401k!

As trustee of the plan, you can open a bank account in just a few hours at one of our preferred banks. If you need a brokerage account at Fidelity, you open Fidelity's Investment-Only Non-Prototype Retirement account for the 401k; there is no need for the LLC. Your structure is complex and not cost-effective. Try to always remember and apply the KISS principle (keep it simple).


 Hi Dmitriy,

     Thank you for your suggestion! I am losing trust with uDirectIRA at this point because after I made multiple calls, no one there was able to explain to me how this works end to end. I see you work for senseFinancial. I left a message via the Contact Us form on your website. Can you please give me a call tomorrow to talk more about this?

Yours sincerely,

Zehua

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