C Corp to S Corp - Possible impact on Defined Contribution Plan?

Can anyone tell me what impact (if any) changing from a C corp to and S corp might have on the company's profit sharing plan.  The owner is the only employee.  

just make sure the w-2 wages are paid to allow the contributions he/she wants to make. The S corp K-1 doesn't count.

Thank you.  w-2 wages were paid.  A contribution was made by the company, but he did not make an employee contribution.  The accountant  (who knows the corporate plan allows profit sharing contributions and was the one making the case for switching from C to S) now says he's uncomfortable without a statement of "some sort" that the contribution is deductible on the S-corp return.  My understanding is that if it's deductible on the C-corp return, it should be deductible on the S-corp return.  Am I missing something?

And the tax filing deadline is one month earlier for  S-Corp than a C-Corp which effects the latest date to make a tax deductible contribution for the prior year.

And you probably need to amend the plan to have the new entity take over, especially if there is a new Tax ID number.

5 minutes ago, nsfpsp said:

Thank you.  w-2 wages were paid.  A contribution was made by the company, but he did not make an employee contribution.  The accountant  (who knows the corporate plan allows profit sharing contributions and was the one making the case for switching from C to S) now says he's uncomfortable without a statement of "some sort" that the contribution is deductible on the S-corp return.  My understanding is that if it's deductible on the C-corp return, it should be deductible on the S-corp return.  Am I missing something?

Shouldn't the CPA know these things? If not you might want to discretely suggest to your client they might want to look at other CPAs.

Thanks, Lou.  Excellent points.  CPA neglected to point out the earlier tax filing deadline and made no mention of needing/not needing a new Tax ID number.

Re your second comment, I certainly expect a CPA to know these things.  I've broached the topic of other CPAs discreetly in the past.  In 2023, I am giving up discretion...a late New Year's resolution.

You probably have a pre-approved IRS document like mine that has a check mark for "S-Corp" as type of entity. Maybe send him that page.

Changing from a C corp to an S corp shouldn't require a new TIN. I doubt they created a new entity. They likely just filed form 2553 and elected to be taxed as an S.

And the CPA should definitely know the deduction of plan contributions, good grief.

CPA told client that tax structure of an S corp is more advantageous than a C corp if income is unpredictable.  And that appears to be the extent of the information provided. Client just now forwarded Form 2553, so you are correct.  That is what was filed.  Meeting with client tomorrow.  Thanks for validating my concerns about this CPA.

It's not really a big deal and I think most new small corps would be set up as S rather than C. C corps take some careful planning to zero out profits (to avoid double taxation) and most folks can't or won't do it right. There used to be an advantage for C corps in health insurance deductions but that is not relevant now.

19 hours ago, Bill Presson said:

Changing from a C corp to an S corp shouldn't require a new TIN. I doubt they created a new entity. They likely just filed form 2553 and elected to be taxed as an S.

And the CPA should definitely know the deduction of plan contributions, good grief.

Thanks, learned something new. My general experience has been a Partnership or Sole Proprietorship than decides to become an S-Corp and in those cases I've always seen a new EIN provided by the client or CPA.

Wait until you get to the discussion about taxable fringe benefits for S-corp owners who own 2% or more of the company.  You will need to be careful on how the plan defines compensation for various plan purposes.  There is a good article on what is or is not taxable to these owners here:

https://www.troutcpa.com/blog/common-fringe-benefits-rules-for-2-s-corp-shareholders-and-changes-under-the-cares-act

If the CPA already is having issues, I don't envy you discussing this with him.