I have an individual who is looking to establish a 1 life 401(k) plan for himself, as a sole proprietor. While discussing with him though, it came out that he may or not really be a sole proprietor. Apparantly he works as an employee for a company, but "does some work on the side" which is what he is looking to use as the basis his retirement plan. I think that answer in itself is enough to raise my doubts as to whether he can sponsor a plan, but I was curious as to what "requirements" or proof is needed in order for an individual/organization to sponsor a qualified plan. I would think an EIN for starters, but what other proof would you look for?

Being a sole proprietor he very well may not have an EIN at this point. If he is a sole proprietor, he will report that income on Schedule C to his Form 1040. Have you tried discussing this with his accountant? Because if the accountant is comfortable enough with the income to report it on the Schedule C, then that is all the proof you need to have him sponsor a retirement plan.

Also, see the definition of Net earnings from self-employment in Pub 560 at http://www.irs.gov/pub/irs-pdf/p560.pdf (page 5). If he has Net earnings from self-employment, then he is eligible to establish a plan based on those earnings.

…and I agree that whether he has an EIN is not a determining factor. Although the IRS recommends that an EIN is used for business purposes ( to distinguish between the business and the individual ) , many Sole proprietors use their SS# instead of an EIN.