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.
