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Practice Sale - New Cash Balance Plan

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  • Practice Sale - New Cash Balance Plan

    Hello,

    I intend to sell my practice via an asset purchase agreement next year, so my practice will continue to collect outstanding AR but I will no longer generate new revenue post sale. At the time of sale, all the employees will be let go and hired by the buyer. 5he employees will have worked less than 1000 hours for the year by the time the practice sale occurs.

    I hope to start a solo 401K next year in place of my current SEP IRA and would like to know if starting a cash balance plan would make sense to help reduce the tax burden from the practice sale. Would I be able to front load contributions to the cash balance next year and then keep it open for 5 years after which I roll it over into an IRA?

    Thanks in advance for any insight!

  • #2
    I assume Kon or spirit rider will weigh in, but I guess I don't understand how you can fund a 401k or a cbp if you have no new revenue?

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    • #3
      Originally posted by G View Post
      I assume Kon or spirit rider will weigh in, but I guess I don't understand how you can fund a 401k or a cbp if you have no new revenue?
      I will be generating new revenue during Q1 of 2022 and would plan to open the solo 401k and cash balance plans during that time. My employees would not hit the 1000 hour work requirement for the year by the time of the sale, so I would not need to include them in either plan. I would probably still have old AR trickling in through the rest of 2022 and I presume 2023 even though I would not be generating any new revenue through my practice.

      Thanks!

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