- Your Corporation must retain its C-Corp status as long as your retirement (401k) monies are invested in the Corporation.
- If a CPA recommends that you convert your C-Corp to S-Corp, an LLC or any other entity type, do not agree to do so without talking with us first. If 401k monies are invested in your Corporation, conversion to S-Corp status will result in a prohibited transaction, taxes and penalties.
- The reason a "C" corporation must be used, as opposed to an "S" corporation or LLC, is that the regulations that apply to this strategy (the strategy of investing retirement monies into a Corporation) require stock (not membership or other interest) ownership by the Qualified Retirement Plan (401k, etc.).
- Even though Limited Liability Companies (LLC) can select to be taxed as a “C” corporation, “S” corporation, partnership, disregarded entity, they do not qualify because the entity structure only allows membership interest and no stock ownership.
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Article ID: 68, Created: 6/14/2021 at 10:57 AM, Modified: 8/3/2021 at 11:33 AM