kerry

We are trying to discourage this from happening, but there are other advisors saying there should be no problem with this. In the meantime, I'm reading about codes 414b, c, m that are in place to "prevent employers from setting up multiple entities to avoid paying certain employees benefits they normally would have to pay"

I didn't think the penalties would be that harsh, but sure. I'm looking for a documented case(s) where an employer thought he could simply get a tax break by setting up a separate LLC in someone else's name so he would not have to run the cash balance plan through his main business.

Thank you for the reply. I'm wondering if there are any resources pertaining to this topic. I'm specifically looking for a documented case where an employer set up an LLC in someone else's name, then funded a cash balance plan and excluded employees from the already established business.

katieinny, I hate to resurrect such an old topic, but I'm curious of what the outcome was. I'm not seeing too much information online about excluding employees by setting up a single member llc.