LLC to S-Corp and Plan Amendment?

[throwawaymycpa]

Client is a single member LLC (disregarded for tax purposes) and we're exploring a retroactive S-election to be taxed as an s-corp.  The LLC name, EIN, and address will all be the same.  We're getting advice that the plan documents need to be retro-amended, but I'm finding conflicting information.  Questions are:

1.  With the LLC name, EIN, and address staying the same, will any plan documents need to be amended?

2.  If the s-election is for the entire year and no wages are paid (nor distributions taken), how should the prior year contributions be treated?  Withdrawn as excess?

[justanotheradmin]

I'm going to assume you have already considered the impact/issue of not 2018 paying wages (reasonable W-2 compensation) to an employee in an LLC with an S-corp election. 

1. Depends on the document - Many have entity type (LLC, S-Corp, C-Corp etc), but not TAX type. If the document differentiates between an LLC with or without an S-Corp election, then yes, an amendment might be needed. If it does not, no amendment would be needed. 

2. Generally no. If there is anyone (other eligible employees) who has not reached their 415 limit, the money is allocated to those people as an employer contribution. This is a separate issue from the employer's ability to deduct the contribution assuming it exceeds the 25% deduction limit. Money that is in the trust as of the last day of the plan year must usually be allocated to the participants for that year. The exception is usually forfeitures, which can be allocated the follow year. I'm sure this particular issue has been discussed a number of times on the message boards, so there are probably some citations, and discussions of reversions to employer, and prohibited transaction issues that you'll want to read up on.