There exist a lot of different types of employer plans. These include Money Purchase Plan set-ups, the traditional 401K, and more. With each of these employer plans, though, is it necessary for them to obtain an employer identification number? The Tax ID (EIN) number is necessary since the employer plan operates as its miniature organization.
Within the employer plan, you have to do things such as take into account withholding taxes, you have to operate as a business, potentially have employees managing the employer plan, and more. When you are involved with any of these types of plans, having that unique identifier helps tie the activity of the organization for tracking purposes to tax returns and Internal Revenue Service records. When you are operating an employer plan, no matter the type of employer plan, you want to go through the steps to obtain the Tax ID (EIN) number as soon as possible in its existence. Doing so will help ensure the plan can operate effectively and in compliance with IRS expectations.