Sole Proprietor Incorporates

[Guest amm19]

A sole proprietor has incoporated for the plan year, which coincides with the calendar year. I have searched prior posts and have seen two different approaches suggested for handling of the plan document/5500:

1-simple plan amendment to change the sponsor

2- new corporation executes new adoption agreement, final 5500 for sole, new 5500 for corporation

What are everyone's thoughts on this? What have you done historically in this instance?

Thanks in advance to all who respond.

[mbozek]

The incorporated entity is a successor employer under IRC 414(a) which can adopt the current plan and continue all service credited under the prior employer.

[Guest mkimball]

I agree