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Hello, Thank you in advance for any guidance you can provide and/or pointing us in the right direction. Spouse owned a "Sole Proprietor" business with her name as the business name and created a Solo401k through Vanguard in 2019. In CY2021, her Solo401k balance exceeded the $250k threshold (due to rolling funds into the plan), so we filed (CY2021) 5500-ez with the IRS using her "Sole Proprietor" name and EIN in ~July 2022. On 1/1/2022, spouse changed the business structure from "Sole Proprietor" to an LLC (filing as an S-Corp) with a different name (call it XYZ LLC) and a new EIN where she has several (1099) independent contractors who she pays (not employees). In ~July 2023 (we were late), we reached out to Vanguard to discuss what we needed to do related to this change in business structure and completed forms for "restating the plan" with the new "XYZ LLC" name and EIN number (filed with Vanguard in July 2023). With restating the plan, would Vanguard have notified the IRS that our business structure (name and EIN) have changed? We filed (CY2022) 5500-ez with the IRS using her "XYZ LLC" name and EIN in ~July 2023. QUESTIONS Were/are we allowed to continue using the same "Solo 401k" when she changed her business structure (and name) and we restated the plan? Or should we have closed out the previous (Sole Prop) Solo401k through Vanguard, filed a 5500-ez closing it out and then opened up a new (XYZ LLC) Solo401k under the new business name? I am now wondering how the IRS would know that we changed the business name and EIN? Will/would they consider the Sole Prop. to not have filed a 5500-ez for CY2022 and we'd be subject to the severe penalties that go with not filing a 5500-ez form? If there is a problem here, given our situation, what do you recommend as next steps?

The plan sponsor for a law firm 401k plan is set up as an LLC taxed as a partnership - equally owned (1/3) by three different Affiliated/Participating employers all taxed as an S-corp. The LLC employees a few non-owners, and each of the 3 S-corp partners are 100% owners of his or her respective firm. Since the three affiliated, participating employers (S-Corps) pay their owners W-2 compensation, the W-2 compensations are eligible for deferrals and contributions for the plan. For Pre-tax deferral contributions, payroll deductions are withheld for the owners (W-2 comp) and funded by the individual S-corp. It's a Safe Harbor match plan with a Plan Year/annual determination period for the match. Since the pre-tax deferral contribution will be deducted via payroll and funded from the owners' individual S-corp, does the corresponding Safe Harbor match need to also be funded from the individual S-corp. - or does the match need to be funded by the LLC taxed as a partnership?

Hi to All, In calculating the potential maximum contribution for the partners in a LLC, which number on a K-1 for Form 1065 is used as the equivalent of a regular employee's W-2 wages for purposes of calculating a contribution? We are working on a plan where a prior administrator in past years has used Item 14A, "Self-employment earnings (loss)" as the magic number for the year upon which to make calculations. We'd like to know if this is the correct approach. Maybe I should clarify that Item 14 does not automatically come with the letter A attached. Whoever prepared the form has put that in there, which according to the list of codes, means that the number is ""Net earnings (loss) from self-employment". Thanks as always for your comments.

I have a client that recently converted s corp (solely owned ) to an partnership llc (store manager of 16 years). This happened 1/18/2018. They had been contributing to a simple ira 3% match. Store manager (who has been taking a payroll check of $65,000/yr) just told me that she is only taking draws, stopped getting a payroll check upon conversion 1/18/18. She is telling me that company tax preparer has no issue with her not taking a paycheck and that she needs to convert company plan to something that would allow her to make pretax contributions without having to take a paycheck (earned income)? they have not hired someone else to fulfill the responsibilities in the operation. Any ideas? Can the partners make pretax contributions and company match 3% on draw? Is there something I'm missing about her moving to partnership status.stopping the $65k/yr earned income via payroll and only receiving a draw of the exact $65k and not having an explanation of who is the workload? Thanks in advance for any guidance.

For the A-org test, if the purported FSO is an LLC that has elected to be taxed as a corporation and that is not a professional service corporation (or a professional service LLC), would it fail to be an FSO as a "corporation" that is not a professional service corporation since it is being treated as a corporation for tax purposes? Or would it have to actually be incorporated under state law (and not just treated as a corporation for tax purposes) to be considered a corporation for purposes of this rule?

We have a client who owns two companies and both have employees including himself. One is a corporation; the other is a LLC. He has W-2 wages of about $190,000 from the corporation and over a million from the LLC. Both companies are adopting employers to the same retirement plan and all employees are covered for both entities. Question: In calculating the maximum benefit he can have for 2017, are we allowed to use both his W-2 wages plus enough K-1 income to get him up to the maximum we can take into account for the year of $270,000? Our gut reaction is "yes" but one of us has some doubts. We are grateful for any help!

My wife and I are independent consultant and both own 50% each of our LLC. What would be the best retirement plan to setup for the LLC to contribute to a plan and use that as a tax deductible business expense to the LLC before profit. The LLC is taxed as a Corp. and we do not issue any W2's to anyone, We issue 1099's for contractors to pay their taxes via their individual 1040's, if there is any profit as a result of the LLC we will issue W2s to ourselves, but its very little. [edited for better clarity] The LLC make about $10,000 - $15,000 per year. Would like to have the flexibility to contribute when times are good and not when there is no profit.