Receiving a 1099 or K-1 issued to your IRA or Solo 401(k) is normal. These forms require different handling depending on which type you received, but in most cases, no tax filing is needed.
When an investment pays income, the payer is required to report it to the IRS regardless of whether the recipient is taxable. Because your IRA or Solo 401(k) is a tax-exempt entity, that income is not taxable to you personally, but the reporting still happens.
If you completed a W-9 using the correct taxpayer information for your plan, the form should be issued to the plan, not to you individually.
Retain it with your plan records. Do not include it on your personal tax return (Form 1040).
The income reported on a 1099-DIV, 1099-INT, or 1099-NEC belongs to your tax-exempt plan. The IRS does not expect to see it on your personal return, and including it would be incorrect. File the 1099 with your plan documents and move on.
K-1s require a bit more attention. A K-1 is issued by partnerships, funds, and syndications to report your plan's share of income. Depending on the nature of that income, your plan may have a tax filing obligation.
Two situations can create a filing requirement:
The first is Unrelated Business Taxable Income (UBTI). If the underlying investment engages in an active trade or business (such as a restaurant, car wash, or dealer activities), the income passing through to your plan may be considered UBTI.
The second is Unrelated Debt-Financed Income (UDFI). If the investment uses debt financing (a mortgage or other leverage), your plan's proportionate share of that leveraged income may be taxable as UDFI.
Review Box 20V on the K-1. That is where UBTI is reported. If there is a value in that box, share the K-1 with your CPA or tax professional to determine whether your plan owes tax.
Only when the combined UBTI and UDFI from all investments exceeds $1,000 in a tax year. In that case, your plan must file Form 990-T (Exempt Organization Business Income Tax Return) and pay any tax owed from plan funds.
If you have any doubt about whether a K-1 creates a filing obligation, have your CPA review it before the filing deadline.
Can I just ignore the 1099 or K-1 since my plan is tax-exempt?
You can set aside a 1099 after filing it with your records, no action needed. A K-1 requires review before you set it aside. If Box 20V shows UBTI, your plan may have a Form 990-T obligation.
What if the 1099 or K-1 was issued to me personally instead of my plan?
The income should be reported to your Solo 401(k) or IRA, not to you as an individual. If it was issued incorrectly, contact the payer and request a correction. Providing updated taxpayer information for the plan at the start of each investment relationship is the best way to prevent this.
Does filing Form 990-T affect my personal taxes?
No. Form 990-T is filed by the plan and paid from plan funds. It does not intersect with your personal return in any way.
This information is provided for educational purposes only and should not be interpreted as tax, legal, or investment advice. Readers are encouraged to consult a qualified professional who can offer guidance based on their personal situation.