Do I need an EIN for my LLC to open a Solo 401k or can I use my SSN as a sole proprietor?
I've been working as a freelancer for a few years now and finally making enough money that I want to set up a retirement account. My accountant mentioned that a Solo 401k would be a good option for me given my income level, but I'm getting confused about the requirements. I currently operate as a sole proprietor and just use my SSN for everything. I've been thinking about forming an LLC for liability protection but haven't pulled the trigger yet. My accountant told me I could open a Solo 401k with just my SSN as a sole proprietor, but when I was researching online, I found some websites saying I would need an EIN for the company sponsoring the plan. So which is it? Can I open a Solo 401k right now using just my SSN as a sole proprietor? Or do I need to form an LLC and get an EIN first before I can set up this type of retirement account? I'd really appreciate some clarity on this since I want to maximize my tax-advantaged savings for 2025.
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Kingston Bellamy
Yes, you absolutely can open a Solo 401k as a sole proprietor using just your SSN! I work with self-employed clients on this exact issue all the time. The confusion happens because while the Solo 401k plan itself will eventually need an EIN (this is for the plan, not your business), you don't need an LLC with an EIN to establish one. As a sole proprietor operating under your SSN, you can establish a Solo 401k and then apply for an EIN specifically for the retirement plan. Think of it this way: your sole proprietorship (using your SSN) is the "employer" sponsoring the retirement plan. The plan itself is a separate entity that needs its own EIN for reporting purposes, but that's something you'll set up during the account creation process. Most major brokerages that offer Solo 401k plans (like Fidelity, Vanguard, Schwab) will even help you apply for the plan EIN as part of their setup process.
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Joy Olmedo
•Wait, that's confusing. So I need an EIN for the plan but not for my business? How does that work exactly? And if I do eventually form an LLC, would I need to change anything with the Solo 401k?
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Kingston Bellamy
•You're right that it sounds a bit confusing! The Solo 401k itself is considered a trust that requires its own EIN for IRS reporting, even though your business doesn't need one. You'll file this using Form SS-4 and checking the box for "Banking purpose" rather than for a new business. If you eventually form an LLC, it depends on how you set it up. If it's a single-member LLC taxed as a disregarded entity, practically nothing changes - you can keep your existing Solo 401k. If you change to an LLC taxed as an S-Corp or something else, you might need to update your plan documents, but the account itself can usually stay intact.
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Isaiah Cross
I went through exactly this situation last year! I was also super confused about the Solo 401k requirements. After tons of research, I ended up using https://taxr.ai to analyze my specific situation. Their system reviewed my income sources and business structure (I was also a sole proprietor using just my SSN) and confirmed that I could open a Solo 401k without forming an LLC or getting a business EIN. The tool explained that while an EIN is required for the 401k plan itself, it's different from a business EIN. They provided me step-by-step guidance for opening my Solo 401k with Fidelity, including when and how to apply for the plan's EIN through the IRS website. Saved me so much confusion!
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Kiara Greene
•How exactly does this taxr thing work? Does it connect to your financial accounts or is it just a questionnaire? I'm interested but kinda paranoid about giving access to my financial info.
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Evelyn Kelly
•I'm skeptical that a website could give better advice than an actual financial advisor on something this complex. How detailed was the guidance compared to what you'd get from a professional?
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Isaiah Cross
•It doesn't connect to your financial accounts at all. It just asks a series of questions about your business structure, income sources, and retirement goals. Then it analyzes tax regulations that apply to your specific situation and creates a personalized report. The guidance was surprisingly detailed - comparable to what I got when I double-checked with a financial advisor later. It included specific form numbers, filing deadlines, contribution limits based on my income, and even comparison charts between different retirement options like SEP IRAs versus Solo 401ks. I was impressed by how it explained exactly when I would need the EIN and for what purpose.
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Evelyn Kelly
Wanted to follow up about my experience with taxr.ai after I posted my skeptical comment yesterday. I decided to try it since I was in a similar situation (sole proprietor considering an LLC and confused about retirement options). The analysis really was comprehensive. It pointed out that as a sole proprietor, I could immediately open a Solo 401k with just my SSN, and even calculated my maximum contribution limits based on my specific income. It explained exactly when I'd need an EIN (for the plan itself when filing Form 5500 if my assets exceed $250,000) and walked through the process. What I found most helpful was the comparison between keeping my sole proprietorship vs forming an LLC for retirement purposes. Turns out there's basically no difference for a Solo 401k if the LLC is a single-member disregarded entity. Now I can make a clear decision without the confusion.
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Paloma Clark
After struggling to get clear answers about Solo 401k requirements from the IRS website (tried calling them 6 times and kept getting disconnected!), I tried https://claimyr.com and it was actually amazing. They got me connected to a real IRS agent in about 20 minutes instead of the hours I was waiting before. The agent confirmed exactly what some others here mentioned - you CAN open a Solo 401k as a sole proprietor using just your SSN. The retirement plan itself will need its own EIN, but that's separate from whether your business has one. They explained that forming an LLC doesn't change the ability to open a Solo 401k at all. If you're still confused or want official confirmation, check out their demo here: https://youtu.be/_kiP6q8DX5c to see how it works. Was definitely worth it to get a straight answer from the source.
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Heather Tyson
•How does this actually work? Like do you still have to call the IRS yourself or does the service somehow get you to the front of the line? Seems too good to be true considering how impossible it is to reach the IRS.
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Raul Neal
•Yeah right. No way this actually works. I've tried everything to get through to the IRS and nothing works. If this were legit, everyone would be using it. Sounds like an ad to me.
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Paloma Clark
•You still call the IRS yourself, but they use some kind of system that keeps dialing and navigating the phone menu until they find an agent. When they get one, you get a call and they connect you. You're still talking directly to the IRS, they just handle the waiting and menu navigation part. I was skeptical too, trust me. I've spent whole afternoons on hold with the IRS before giving up. With this, I literally just filled out what I needed help with, went back to work, and got a call when they found an agent. The whole thing took about 20 minutes instead of hours on hold.
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Raul Neal
Have to come back and eat my words. After dismissing that Claimyr service as fake, I was still desperately trying to get answers about Solo 401k requirements directly from the IRS. After wasting another day failing to get through on the phone, I gave in and tried the service. It actually worked exactly as described. Got connected to an IRS tax specialist in about 30 minutes. They confirmed that as a sole proprietor, I can absolutely open a Solo 401k with just my SSN. The agent explained that the plan itself will need its own EIN (different from a business EIN), which I can apply for using Form SS-4. The agent also mentioned that if I later switch to an LLC taxed as a sole proprietorship, nothing would change regarding my Solo 401k eligibility. Saved me days of frustration and uncertainty!
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Jenna Sloan
I opened a Solo 401k last year as a sole proprietor. Here's what I learned: 1. Yes, you can open it with just your SSN as a sole prop 2. The 401k plan itself needs an EIN, not your business 3. Most brokerages help you apply for the plan EIN 4. Fidelity, Vanguard, and Schwab all have good options 5. Forming an LLC doesn't change much for the Solo 401k if it's still taxed as a sole prop The main advantage of Solo 401k over SEP IRA is higher contribution limits. I was able to put away almost $65,000 for 2024!
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Christian Burns
•Thanks for sharing this! Quick question: when you say the 401k plan itself needs an EIN, at what point in the process did you apply for that? Did you get it before opening the account or was it part of the brokerage application?
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Jenna Sloan
•I applied for the plan EIN right after opening the account. Fidelity (where I opened mine) had a section in their application that asked if I already had an EIN for the plan. Since I didn't, they provided instructions for getting one. I applied for the plan EIN online at the IRS website - it was actually pretty easy and I got the EIN immediately. Just had to select "Banking Purposes" as the reason rather than "Started a new business." Then I provided that EIN to Fidelity to complete the setup. The whole process took about 2 days total.
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Sasha Reese
I think everyone's overlooking something important here - the contribution limits! As a sole proprietor with a Solo 401k, you can contribute WAY more than with an IRA: - Employee contribution: up to $23,000 for 2025 - Employer contribution: up to 25% of your compensation - Total max: $69,000 for 2025 (not including catch-up contributions if you're over 50) This is why the Solo 401k is such a powerful option for self-employed people, regardless of whether you're using your SSN or an EIN. I've been maxing mine out for years and it's amazing for tax savings.
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Muhammad Hobbs
•That's actually really helpful info, thanks! Do these contribution limits work the same whether you have an LLC or operate as a sole proprietor? And is there a minimum income required to open one?
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Sasha Reese
•Yes, the contribution limits work exactly the same whether you're a sole proprietor or an LLC (assuming single-member LLC taxed as a sole proprietorship). The only thing that changes contribution amounts is your actual income. There's no specific minimum income required to open a Solo 401k, but you do need to have self-employment income to qualify. The more you earn, the more you can contribute, especially on the "employer" portion. Just be aware that some brokerages have their own minimum balance requirements for opening accounts, but that's separate from IRS requirements.
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Callum Savage
This is such a helpful thread! I'm in a similar situation and was totally confused about the EIN requirements. Just to make sure I understand correctly: I can open a Solo 401k right now as a sole proprietor using my SSN, and then I'll need to get a separate EIN specifically for the retirement plan itself (not for my business). Is that right? Also, when you all mention "Form SS-4 for banking purposes" - is that different from the SS-4 you'd file when starting a new business? I want to make sure I'm checking the right boxes when I apply for the plan EIN. One more question - if I decide to form an LLC later for liability protection, would I need to transfer the Solo 401k to the LLC or can I keep it under my original sole proprietorship structure? Some of the comments mention it depends on how the LLC is taxed but I'm still a bit unclear on the details.
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Tyrone Hill
•Yes, you've got it exactly right! You can open a Solo 401k right now as a sole proprietor using just your SSN. The plan EIN is completely separate from a business EIN. For Form SS-4, it IS the same form but you'll check different boxes. For the plan EIN, you select "Banking purposes" rather than "Started a new business" - this tells the IRS it's for a retirement plan, not a business entity. Regarding the LLC question - if you form a single-member LLC that's taxed as a disregarded entity (which is the default), you typically wouldn't need to transfer anything. The Solo 401k can stay exactly as it is because from a tax perspective, nothing changes. However, if you elect to have the LLC taxed as an S-Corp or partnership, then you might need to update the plan documentation. Most people stick with the default disregarded entity status specifically to avoid these complications! I'd recommend checking with your brokerage when you're ready to form the LLC - they can walk you through any paperwork updates needed, but in most cases it's minimal or none at all.
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Axel Far
This thread has been incredibly helpful! I'm actually a tax preparer and see this confusion all the time with my self-employed clients. Just wanted to confirm what everyone's been saying and add a few practical tips: You absolutely CAN open a Solo 401k as a sole proprietor with just your SSN - I help clients do this regularly. The plan EIN is totally separate and you'll apply for it after opening the account. A few things to keep in mind: - Make sure you have legitimate self-employment income (1099s, business income, etc.) - The contribution deadline is your tax filing deadline (including extensions) - You can actually contribute for 2024 up until April 15, 2025 if you haven't already - Keep good records of your contributions for tax preparation One last tip: if you're making good money as a freelancer, definitely run the numbers on a Solo 401k vs SEP-IRA. The Solo 401k almost always wins for contribution limits, but the SEP-IRA can be simpler if you ever plan to hire employees. Most of my self-employed clients without employees go with the Solo 401k for the higher limits. Good luck with your retirement planning!
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Selena Bautista
•This is exactly the kind of expert insight I was hoping to see! As someone new to both freelancing and retirement planning, I really appreciate you breaking down the practical aspects. Quick question about the contribution timing - you mentioned I can still contribute for 2024 until April 15, 2025. Does that mean I could potentially open a Solo 401k in the next few weeks and still make contributions that would reduce my 2024 tax liability? I'm just getting my tax documents together now and realizing I might have missed a huge opportunity to lower my tax bill if I could have been contributing to a retirement account all year. Also, when you say "keep good records of contributions" - is there specific documentation I should be maintaining beyond what the brokerage provides? I want to make sure I'm doing everything correctly from the start.
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