Owner-Employees Dodged a Bullet

Last update on: Oct 17 2017

Owners of small corporations had their personal financial planning saved by a recent Supreme Court decision.

A federal appeals court had ruled that an owner of an incorporated small business was an employer and not an employee. Therefore, the owner was not eligible to participate in the pension plan. The case came up in a bankruptcy case. Creditors of the physician who owned the professional corporation wanted to include the doctor’s pension account it in the bankruptcy estate. The bankruptcy court and appeals court agreed, ruling that since an owner-employee could not participate as an employee in the company’s pension plan, his account was not protected in personal bankruptcy.

The Supreme Court disagreed, ruling that a working owner of a corporation may be a pension plan participant if the plan covers one or more employees other than the owner and his or her spouse. Still unanswered is whether an owner who is the only employee of a corporation may participate in the corporate pension plan. Yates v. Henson, 541 U.S. ____ (2004), No. 02-458.


November 2020:

Congress Comes for your Retirement Money

A devastating new law has just been enacted, with serious consequences for anyone holding an IRA, pension, or 401(k). Fortunately, there are still steps you can take to sidestep Congress, starting with this ONE SIMPLE MOVE.

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