Safe Harbor Contribution

[Guest LiMar]

The owner of a small business dies in 2012 before making the non-elective 3% safe harbor contribution for 2011 and 2012. His business was sold to a larger company after death. He was sole Trustee of the Plan, sole owner and President of the corporation, but his wife was an officer (Secretary/Treasurer) of the small corporation. We are trying to explain to her why she needs to make the 2011 and 2012 safe harbor contributions to the employees. I've asked the question as to whether the sale was an asset sale or stock sale and for copies of documentation so we can determine if the larger purchasing corporation has any liability, but I doubt they would take on that liability (I know their attorney - not in his nature).

It is my position that the safe harbor contribution is a liability of the corporation and should be paid out of the proceeds of the sale (she says it went to pay bills, there's nothing left). I further believe that as an officer of the corporation she could have some personal liability for the contribution.

My qusetions are: (1) is anyone aware of any way the corporation can get out of the safe harbor contribution due to the death of a principal? (2) is a corporate officer who is not Trustee have any personal liability to the plan or its participants for a safe harbor contribution not made?

Am I missing something here?

Thanks!!

[K2retire]

The whole point of incorporating a business is so that the owners are shielded from personal liability for corporate debts.

It is possible that the corporation received money from the sale that should have gone to pay debts rather than to the remaining share holder. It is also possible that the debts exceeded to sale proceeds.

If the corporation has been dissolved, the Secretary of State will have record of that fact.