Death of Sole Proprietor

[Guest AMck]

A sole proprietor sponsors a defined benefit plan, and the sole proprietor dies prior to the end of the plan (calendar) year without contribution to the plan. In this situation, can the estate contribute to the plan on behalf of the sole proprietor?

[A Shot in the Dark]

AMck:

What sort of business was the sole prop?

Is the business still in existence?

Is someone still running the business?

Are their assets in the business?

[GBurns]

Doesn't a sole proprietorship cease as a business at the death of the sole proprietor ?

[J Simmons]

A sole proprietorship does cease upon his/her death, but the business may be continued by his/her probate estate, at least for a time.

In any event, the business from January 1 to the date of death would be reported as a Schedule C to Form 1040 for that year for the decedent.

The OP asked if the estate, as the successor in interest of the business, could make a DB contribution for that sole proprietor (for January 1 through date of death, I am assuming)? It would seem if there are any death benefits possible for a survivor of the decedent (such as a surviving spouse's annuity or a lump sum to anyone), the answer would be yes to the extent necessary to fund the death benefits in light of the DB plan's existing funding. If there is no death benefit possibility for the sole proprietor's survivors, then I would think the answer is no.

[D Syrett]

What is the valuation date? Eg., If it is a beginning of year valuation, funding would be based on the the proprietor being alive at that point.