Author Topic: Setting up Health Insurance & 401ks for a C Corp  (Read 370 times)

barrelomonkeys

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Setting up Health Insurance & 401ks for a C Corp
« on: October 04, 2018, 09:19:21 PM »
Background: DH started a company last year (C Corp) while working as a postdoc.  Grant funding came through, DH will now be employed full-time by startup for the next 2 1/2 years with several other funding sources in the wings.  DH's postdoc position officially ends at the end of this month with the switch to begin the 1st of November.  Plan is to continue collaboration with the University and hire a postdoc in ~6 months. Pay is set at $75k with an additional 40% allocated for payroll, insurance, etc.. We've got 3 kids.

Problem:  The headache here is that technically DH is the only employee of the company, but he won't be in the near future since we're hiring that postdoc.  In setting up both Health Insurance and any sort of retirement plan, we would most likely have to switch everything in ~6 months.  We are in a state that doesn't allow group health plans with only 1 employee, so from what I understand, we need to buy on the marketplace.  I understand that HRAs are limited at $10,250 per year, although an HDHP for a family like ours runs ~$15,000/year.

Questions:
-Would we be able to deduct any amount spent (either without an HRA, or above what we would allocate in an HRA) on premiums for a self-employment health insurance deduction even though this is a C corp?
-Should we set up a solo 401k and then switch over when we add that postdoc?  Do we become ineligible for a solo 401k as soon as we hire someone? (Don't know if the grant allows any of that 40% mentioned above to go to retirement).

Any advice on how to set up things so that it won't be a huge headache in 6 months would be greatly appreciated.

SeattleCPA

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Re: Setting up Health Insurance & 401ks for a C Corp
« Reply #1 on: October 05, 2018, 07:30:29 AM »
Here are my "default" ideas:

Quick and Easy Small Business Fringe Benefits

To summarize, though, look at a Simple-IRA and a Qualified Small Employer Health Reimbursement Arrangement, and then as needed top off the benefits package with appropriate "working condition" fringe benefits.

This won't be perfect. But it may be good enough to work for everybody...

barrelomonkeys

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Re: Setting up Health Insurance & 401ks for a C Corp
« Reply #2 on: October 05, 2018, 07:22:55 PM »
Thanks for the link!  I had looked into SIMPLE IRAs at one point, but I'm not sure if any of that 40% can be matched with the grant funding.  Looking into it currently.

Honestly, the whole HRA business looks like a complete headache (submitting every medical expense to be checked for compliance? man!).  Is there really no better way to get healthcare for a business party of one?

Thanks again for the advice.