Belgarath Posted June 7, 2017 Share Posted June 7, 2017 Having a brain cramp. Suppose an owner of an LLC taxed as an s-corp sells the business. Plan is a calendar year Safe harbor plan. My understanding is that all employees terminated employment as of the sale date. (Is an LLC that is taxed as an S-corp automatically "dissolved" as of the sale, or does it continue to exist as a legal entity, until "dissolved"?) If the former owner wants to maximize contributions, do you see any problem with having the plan termination date of 12/31/2017, so there is no short plan/limitation year, and therefore no prorating of limits? Link to comment Share on other sites More sharing options...
Bird Posted June 7, 2017 Share Posted June 7, 2017 Assuming it was an asset sale, and not a purchase of the entity itself by the buyer, the old entity can continue through 12/31. No problem at all. K2 1 Ed Snyder Link to comment Share on other sites More sharing options...
A Shot in the Dark Posted June 7, 2017 Share Posted June 7, 2017 Depending upon the length of the revenue stream generated by the sale the assets, the employer may choose to keep the Plan in existence well beyond the end of the the current year. For example, may be the asset purchase agreement is structured as an installment sale, whereby the payment for the assets is stretched over more than one year. Perhaps the client would like to continue to use the plan. Link to comment Share on other sites More sharing options...
Mike Preston Posted June 7, 2017 Share Posted June 7, 2017 Not if the sale proceeds are used to fund the plan... Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now