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  1. 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?
  2. 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?
  3. If a company wants to convert from an S to a C so that the owner/seller can make a 1042 election, will the owner have to then wait three years to meet that holding requirement of 1042? Or does their ownership of the S stock (assuming for three years) tack over? I could have sworn that the ownership "tacks" but I can't find much support out there. If anyone has some support, I would appreciate it. Thanks!
  4. I made 200K as a self-employed consultant for Year 2015. I formed a single-owner S-Corp and pay myself 100K as W2 wages and the rest 100K is passed to me as dividends that I believe is not subject to payroll tax. I want to put away $25K as part of retirement savings. I opened up a Solo-401K with ETrade and I am allowed to contribute $18K as 'employee pre-tax salary deferral' and 'employer' can contribute upto $25K (25% of my W2-wages) as profit-sharing. My question: Does it matter what split I use to make up a total of $25K for my 401K? My CPA suggests that the split be salary deferral: $1K and employer contributed profit-sharing: $24K 1. Do I save any FICA or self-employment tax by having 'pre-tax salary deferral: 1K and employer profit sharing:24K' versus say 'salary deferral: 18K and employer profit sharing contribution: 7K'. My CPA claims I can save some on FICA by having 1k:24k split but I don't understand how and he don't have much experience with s-corp/solo 401k 2. Is it legal and OK to have 'Salary deferral: 1K and profit sharing:24K'? My solo 401k plan document from etrade says Employer Profit Sharing Contributions will be allocated to all Qualifying Participants using a pro rata allocation formula. Its a single-employee s-corp. My CPA has to run the appropriate payroll for whatever salary deferral I chose, so am stuck and racing against time at this point. Any help is much appreciated.
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