We service a small profit sharing plan that has a trustee directed fund, subject to an annual valuation. In otherwords, an old style balance forward profit sharing plan.

Our practice for this type of plan is to have an employer file an SS-4 to obtain a TIN for the trust. Of course, clients sometimes don't file the form (even though provided signature ready), or lose the number (and coupon book if received); resulting in problems processing withholding. In this instance, the number is unknown, there is no coupon book, and we have federal withholding of about $50 to process.

I know that the employer can serve as "agent", but my questions are how is this done? Specifically, what form is sent (945 or 941) to remit the withholding, and what TIN (employer's) is used for that filing and the 1099R? Any details on this processing would be very helpful!

Thanks.

FWIW, we control the front end of the process by getting the TIN online; that way we know it right away and despite the client's best efforts to mess us up, we win that battle.

We always deposit the taxes right away, generally using Form 8109-B ("blank" - we get a supply from the IRS and fill in the TINs as appropriate).

Then we prepare a 945 at the end of the year to reconcile the deposits.

But, if your liability for the year is less than $2,500, you can just pay with the 945 filing and forget about the deposits during the year, and I think that's what I'd do in your situation.

As far as the tax ID number - I believe it is perfectly ok to run the tax deposit through the employer's bank account for the physical routing of the money, but you should still use the plan ID number for reporting...but it will probably "work" to just use the corporate ID, with the Form 945. All the employer payroll stuff goes on a 941 and I don't think they'll get mixed up. I guess that means you'd use the corporate ID # for the 1099-R too. Like I said, it's not "right" but it will probably "work."

(Having said all that, I recently learned that one of clients - the kind that complains about his fees - ignored our instructions and instead did what his accountant told him, he mingled the plan tax WH in with his employer p/r money. I told him that the accountant could do the plan reporting, since it was his idea - which means that about a year from now, they're going to come whining to us about an IRS notice of too much or too little money deposited.)

If the employer is required to use electronic deposit of withholdings with the company EIN (as most of them are these days) they may have a problem using the company number for this withholding because it sounds like it was not deposited electronically.

That's a good point, although I suspect you could still "get away" with paying the taxes with the 945, with nothing more than a scolding letter from the IRS.

Something that we have found (90% of our plans are balance forward, pooled accounting) is that if the Trust Number is not set up as a "depository account", you cannot take a 945 deposit to the bank using an 8109 (blank) coupon. On most all of ours, we instruct the client to deposit the 20% withholding check into their company checking, make a 945 deposit in that same amount using their company EIN. Then when we prepare the 1099-R, we (after verifying) reconcile to the company's EIN. We hardly ever use the Trust Number. There has never been a problem doing it this way, and it keeps it clean.

We have found that using the Trust Number actually confuses everyone, including the IRS. : ))

Please accept my thanks for all comments. Most of our plans are not balance forward so 1099R and withholding becomes an issue. This year, our "problem" totals $48. Still, it needs to be done. Again, thanks!