QUESTION:
as far as investment, should I try to minimize the possibility of 1099s?
In other words…if I open brokerage/investment accounts should they be 401K
accounts (in the name of the self-directed 401K Trust), which, to my knowledge,
do not send out 1099s, or will just plain-Jane brokerage accounts work (even in
my name) without issue? If I open 401K accounts and then move money out
of them will they then report, I guess on a 1099, the withdrawal? I’m I
making sense here?
ANSWER: Any
account that is opened for holding the self-directed 401k funds must be titled
in the name of the 401k using its EIN. Therefore,
the brokerage accounts would not by tilted in your personal name but rather in the
name of the self-directed 401k. If titled in your name directly, adverse tax
implications will develop. Further, when establishing brokerage accounts for
the self-directed 401k, special brokerage forms apply which your self-directed 401k provider can provide along with a cover letter. By proceeding in this
fashion, no taxable implications or 1099 reporting arises when making
investments as the investments will be titled in the name of the self-directed
401k.
Regards,
EO in South Carolina
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