Is cd's purchased thur Sub S a pension plan

[fritsharon]

I have a Sub S Corporation owned by husband and wife being the only shareholders. The husband has purchased 40,000 in annuities and 40,000 in cd's for pension plan through corporation. The annuity I know is ok but not sure about cd's and what forms are needed to be filed through corporation.

[JohnH]

I'm not even sure sure about the annuities, and you should not be either. Depending upon how this transaction is structured, the purchase of the annuities and the cd's may be income to the shareholder. Both depend upon the form and substance of the transaction. I think you have some research to do regarding this entire matter.

[taxmom34]

I'm not sure but I thought cd's could be purchased at a bank and you have to set it up as an IRA. I never dealt with corporations when working as tax preparer so, I have no knowledge of how those cd's could be set up as a pension in an S corp.

[Burke]

First things first. A business that wants to set up a pension plan needs to do that paperwork first. A written plan is necessary. Download Pub 560 for a complete review, also Instructions for Form 5500-EZ, etc.