Ownership structure and other issues

Hi

Having a discussion with someone and need outside expert opinion. I never came across with a situation like this.

Sub-S corp XYZ is owned by Joe 100%. No salaries taken.

LLC partnership is owner 100% by XYZ.

LLC has Joe and Mary (husband/wife) as w-2 employees. 

LLC is setting up a DB plan

LLC has income and will cover the deductible contribution and transfer the balance of the profits to XYZ. This is the way the structure was explained to me.

Q1: Is the LLC DB covered by PBGC? Not a professional entity so technically not an exempt category of business.

Q2: Is the above structure kosher? I am assuming the deduction is fine with the LLC

Anything else I am not thinking of?

Thank you

I can't answer Q1 so I'll leave that to others.

But I don't see anything specifically not kosher other than I'm not sure what they're trying to accomplish unless it's hiding the real ownership.

The LLC can't be a partnership, though, with just a single owner.

I'm guessing LLC is disregarded entity and Joe is considered owner and so you have an exempt owner/spouse plan, but interested in what others more knowledgeable in these intricacies think.

1 hour ago, CuseFan said:

I'm guessing LLC is disregarded entity and Joe is considered owner and so you have an exempt owner/spouse plan, but interested in what others more knowledgeable in these intricacies think.

I guess it would be a disregarded entity, but XYZ is the owner, not Joe.

If there is any doubt as to whether a plan (or potential plan) is covered by PBGC, you can request a coverage determination for free.

Thank you all.