If you have made many investments from your 401(k) plan or your 401(k) LLC, invariably you have had that pesky response for a completed W-9 form. You know it is not difficult to complete, but we are talking about completing the W-9 for your 401(k) or 401(k) LLC (if you have). The entity receiving investment funds from your plan and paying returns to your plan may (and will) require you to provide this form for your plan. You initially balk at the request by possibly believing that they do not need this from you as your 401(k) or its LLC does not pay taxes on the returns realized as your 401(k) is a tax-deferred (pre-tax) or tax-free (if Roth or after-tax) entity.
What is a W-9?
First, a W-9 is not submitted to the IRS. It is a form used by businesses to receive information from individuals, businesses or other entities that they work with and make payments to. They utilize the information provided on the W-9 to prepare a 1099-MISC or 1099-R forms indicating payments were made to you (or, in the case of the 401(k), to your plan).
Who Prepares the W-9?
Must I Complete the W-9 for My 401(k), If Requested?
Of course, if you are asked to do so. The entity making this request will need it for their tax purposes. Remember, this form is not submitted to the IRS as it is merely used by the entity to prepare the eventual 1099-MISC or 1099-R forms.
But, How do I Complete the W-9 Form for My 401(k)?
If you are preparing a W-9 for your 401(k) plan, you can complete as shown below:
Line 1 — You will enter the name of your 401(k) plan or the 401(k) LLC (the LLC where your 401(k) is the only and sole member of the LLC). It is important that, if you have both, you will only complete the W-9 for the entity making the investment, not both).
Line 2 — Nothing.
Line 3 — You can check “other” and indicate that it is a “Tax Exempt Qualified Retirement Plan.”
Line 4 — Enter an exempt payee code of 1.
Line 5 — Enter your address.
Line 6 — Enter your city/state/zip code.
Part 1 (TIN) — Enter the TIN for the 401(k) plan (or the LLC) in the “Employer Identification” number boxes.
Remember, don’t be afraid to complete the W-9. Yes, it is true that your tax-deferred 401(k) plan will not owe taxes from the plan’s investment returns until you take distributions in retirement years; however, that does not mean you won’t complete the W-9 for the entity that accepted your investment.
As always, the information provided is intended to be educational in nature. It is not intended, nor should it be interpreted as, any form of tax, legal, financial advice. You must always consult with your respective professional in all such matters.