Author Topic: Whether to shut down my sole proprietor S Corp…..  (Read 371 times)

Mako52

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Whether to shut down my sole proprietor S Corp…..
« on: October 29, 2020, 10:11:58 AM »
I’m the sole owner and employee of an S corporation.  It had a great run for a few years but the business model is no longer viable to the extent it once was. 

The S corp is currently paying my HDHP health insurance for myself and teenage children but I can’t deduct it on my personal return because the company didn't file an S corp return 1120S with income in 2019.  The company has been able to pay premiums into 2020 because it had cash reserves on 12/31/19.
 
I have a SEP IRA and individual 401k with a major brokerage but have not contributed in over a year due to poor profitability.  Not sure what the implications are there.  I assume the 401k would roll over into a Traditional IRA. 

Currently have $20k in my H.S.A. which I could use to pay the $850/mo premiums if I fire myself from the company and can get COBRA coverage with the existing insurer.  I cannot withdraw from HSA to pay for the premiums while I'm an employee.  Looking at whether I can get on spouse’s health insurance at work. 

Also don’t know what the implications are for getting state unemployment benefits…..how difficult is it for a “downsized” S corp owner to get benefits? 

I'd prefer not to make a hardship withdrawal on the 401k or loan the company money to fund health insurance. 

I’d welcome any suggestions.  Thank you. 
« Last Edit: October 29, 2020, 02:18:09 PM by Mako52 »