How can I transfer shares of my single member LLC?

Full question:

Can a Washington State single member LLC transfer half the shares to his spouse so that they both can make IRA contributions? (Under a single member LLC one can make contributions to a SEP IRA, and IRS filing is easy). My tax adviser writes, 'I might suggest would be to transfer half of your US LLC shares to your wife and then she would report half the income. Then, you could both contribute to a self employed 401 K and this would achieve a higher overall contribution to a retirement plan than the $40 K you are limited to for 2009. You might discuss this with your investment adviser: could both of you contribute to a 401 K even if you jointly own the LLC? Is this true? What are the precise benefits? I assume that it would no longer be a single member LLC. If indeed possible as suggested, is there any downside? Personal info: Married, filing jointly, 2009 combined income est. $306 K, LLC income is $200 K (thus the potential $40 K SEP IRA contribution). Many thanks for all details.

• Category: LLC
• Date: 04/07/2025
• State: Washington

Answer:

Typically, ownership of a LLC, including single member LLCs, is handled through the operating agreement. The agreement may spell out how the LLC would add members, how those new members would buy into the company, etc.

The LLC operating agreement may vary in complexity, and typically contains the following information:

* Company name and address information
* Registered agent information
* Name and address information for each LLC member
* LLC management structure and operation
* Items contributed by each Member
* Fair market value of each item contributed
* Date of company dissolution
* Accounting method
* Tax treatment for your LLC
* Sample LLC operating resolutions
* Appointment of LLC officers
* Designation of a final capital pay-in date