sole prop becomes an LLC during plan start up...

I'm working on setting up a new combo plan for a one-person sole prop business.  Halfway through, I realize that there is no EIN for the sole prop business.  The sole prop rightly does not want to use their SSN on the plan documents, so I recommended that he get an EIN for his sole prop.

Then I get is an email from the CPA saying that they created an LLC (taxed as a sole prop) effective 12/1/24 and got an EIN for that, and that should be the plan sponsor.

I'm not sure this solves the problem.  Can I say that ALL the 2024 income is counted under the LLC?  I guess it will depend on what's on the Schedule C.  And can I even use the full 2024 limits if the LLC is the only sponsor of the plan (I get tripped up on the pro rating rules, even when following along the EOB)?  I thought of having the original sole prop also adopt the plan... but then I'm back to where I started with the sole prop not having an EIN so I have to use the SSN on the plan document (though not on the 5500-EZ, so maybe that's a little better).  All my projections are of course based on his full year expected compensation.

Is there a solution here?  Or is it not a problem at all?

Thanks.

 

1 man LLCs taxed a sole-proprietor report income on Schedule C just like regular self employed. the LLC just gives an extra layer of protection as to what assets folks can go after.

If you are worried, have the LLC adopt as lead employer and have his prior sole prop adopt as participating employer. That way you have the EIN from the LLC for Plan doc and 5500 but pick up all the income/service for 2024 and can use full plan year. It will all collapse back to him.