I'm facing a very similar situation and this thread has been incredibly helpful! One thing I wanted to add that might be relevant - have you checked if your pension plan has any special provisions for "hardship distributions" that might avoid the 10% penalty? Some defined benefit plans include hardship exceptions that are broader than the standard IRA/401k rules, especially during plan terminations. These might include things like unexpected medical expenses, home repairs, or even job loss-related expenses that wouldn't normally qualify for penalty relief. Also, regarding the timing question that came up earlier - if your company is doing layoffs or offering voluntary separation packages alongside the pension termination, you might want to coordinate the timing of these events. Sometimes taking a separation package in the same tax year as the pension distribution can create additional deductions that help offset the tax impact. I'd definitely echo what others have said about getting the actual plan documents rather than relying on HR summaries. In my experience, HR departments often don't fully understand the tax implications and focus more on the administrative process. The plan administrator or the company that's handling the termination usually has much more detailed knowledge about the specific tax treatment and available options.

I've been through a similar pension termination situation recently, and one thing I wish I had known earlier is that you should request a detailed tax projection from your plan administrator before making your decision. Many administrators can provide estimates showing exactly how much you'd owe in taxes and penalties for different distribution scenarios. At 43, you're almost certainly going to face the 10% early withdrawal penalty on any cash you take, but the total impact depends heavily on your current tax bracket and state tax situation. What really opened my eyes was learning that the standard 20% federal withholding often falls short of your actual tax liability when you factor in state taxes and the penalty. If you absolutely need some cash now, I'd strongly recommend the partial distribution approach others have mentioned - take only what you truly need and roll the rest over. Even keeping $10,000-15,000 working in a tax-advantaged account could make a significant difference over the next 20+ years until retirement. Also, don't let the $18,500 amount fool you into thinking this isn't a big decision. After taxes and penalties, you might only net around $11,000-12,000 in cash, but that same $18,500 could potentially grow to $60,000+ by retirement if rolled over and invested appropriately. The opportunity cost of taking the cash is substantial.

I'm dealing with a very similar situation right now! I made the exact same mistake when filing for my LLC's EIN - indicated individual ownership instead of having it owned by my existing business entity. Reading through all these responses has been incredibly helpful, especially the specific advice about Form 8832 and the importance of that detailed written statement. One thing I'm curious about that I haven't seen mentioned - has anyone dealt with this situation where the parent entity (LLC #1) has multiple members? In my case, the first LLC has three partners, and we want the second LLC to be owned by that first LLC. I'm wondering if this adds any complexity to the Form 8832 process or if it's still straightforward since we're just changing from individual ownership to single-member LLC ownership (with the parent LLC as the single member). Also, I appreciate everyone sharing the realistic timelines. 6-8 weeks seems to be the consensus, which helps me plan accordingly. The stress of thinking I'd completely messed up the business structure is real, so it's reassuring to see this is both fixable and more common than I initially thought!

I'm currently going through this exact same situation and wanted to share what I've learned so far after consulting with a tax attorney. One important detail I haven't seen mentioned yet - if your LLC #2 has already received any income or made any business transactions under the incorrect multi-member classification, you'll want to be extra careful about the effective date you specify on Form 8832. The attorney advised me to request the change be effective from the date the EIN was issued (if within the 75-day window) to avoid any period where the tax treatment doesn't match the intended business structure. Also, I discovered that some states have additional requirements when you change federal tax classifications. In my state (California), I need to file a separate form with the Franchise Tax Board to notify them of the federal election change. It's worth checking if your state has similar requirements to keep everything aligned. The stress of realizing you've set up the wrong ownership structure is definitely real, but seeing all these success stories here gives me confidence that Form 8832 will resolve it. Planning to submit mine next week with a very detailed written statement based on all the great advice in this thread. Thanks everyone for sharing your experiences!

I just went through this exact same situation about 2 months ago! Got the call from the IRS mentioning a 3176C letter and immediately started panicking, but it turned out to be totally routine. Mine was related to some business expense deductions I claimed as a small business owner. The letter itself when it arrived was actually pretty simple - just standard language saying they need extra time to review my return and would only contact me if they needed additional documentation. The whole process took about 11 weeks from the initial call to getting my refund, and I never had to send in any extra paperwork. Like everyone else is saying, definitely set up that IRS online account to monitor your transcript - it's literally the only way to see progress updates and it really helped ease my anxiety during the waiting period. Try not to stress too much about it @Mateo - based on everyone's experiences here, it sounds like these reviews are way more common and routine than they initially seem! You've got this! 🙌

I got a 3176C letter about 5 months ago and wanted to add my experience to this helpful thread! Mine was triggered by some retirement account contributions I claimed. Like everyone else has mentioned, the letter itself is much less intimidating than the initial phone call makes it sound - just standard language explaining they need extra processing time. My whole process took about 14 weeks from the call to getting my refund, and thankfully I didn't need to provide any additional documentation. The transcript monitoring through the IRS online account was definitely a game-changer for my peace of mind, even though I probably checked it more often than necessary! @Mateo, based on all these shared experiences, it really seems like this is just a routine review process that happens more often than we realize. The waiting is definitely the hardest part, but hang in there - sounds like you're in great company with everyone who's successfully navigated this! 🤞

Wait, I thought capital gains tax is like 15%? If u have a $20k gain that would be $3k in tax. R people saying u don't have to pay anything at all???

As someone who just went through this exact process, I can confirm what others have said about the Section 121 exclusion being a lifesaver! Just wanted to add a couple practical tips from my recent experience: 1) Make sure you can prove you actually LIVED in the home as your primary residence for 2 years, not just owned it. The IRS looks at things like voter registration, driver's license address, where you received mail, etc. 2) If you're cutting it close on the 2-year mark, count carefully. The IRS uses the exact date - so if you bought on March 15th, you need to wait until at least March 15th two years later to qualify for the full exclusion. 3) Keep your closing documents from when you purchased! You'll need them to calculate your basis properly when you file taxes next year. With only $20k in gains and being married, you're definitely well under the $500k exclusion limit. Sounds like you should owe zero capital gains tax if everything checks out. Good luck with your move!

I'm dealing with the exact same situation right now! Just formed my single-member LLC last month and got my EIN, but hitting the same wall with the EFIN application not recognizing it. Reading through all these responses has been incredibly helpful - sounds like the consensus is to go ahead and apply using my SSN as a sole proprietor rather than wait around. One question I haven't seen addressed yet - for those who went the SSN route initially, did you need to provide any LLC documentation during the EFIN application process, or did you just fill it out as if you were a regular sole proprietor without mentioning the LLC at all? I'm trying to figure out how much detail to include about my business structure on the application versus keeping it simple and updating later. Also really appreciate the tip about calling the Business & Specialty Tax Line first to confirm the EIN status - definitely going to do that before I submit anything. Thanks everyone for sharing your experiences, this has saved me a lot of stress and confusion!

I just went through this exact process with my single-member LLC tax prep business! The EIN recognition delay is super frustrating but totally normal. I ended up applying with my SSN as a sole proprietor and it worked perfectly. Here's what I learned: When you apply as a sole proprietor, you're still protected by your LLC structure for liability purposes - you're just using your SSN for the EFIN application because that's what the IRS system can recognize right now. Make sure to include your LLC business name in the "Business Name" field for consistency. My timeline was: EFIN application submitted on a Monday, approved the following Wednesday (8 business days), then connected with my tax software provider within 2 days after that. So I was up and running in less than two weeks total. The best part is you can easily update to your EIN later through the e-Services portal once it's fully recognized in their system. I actually just completed that update process last week and it was pretty straightforward - just had to upload my LLC documents and EIN letter. Don't let this delay stress you out too much! Many of us started this way and it doesn't cause any long-term issues. You'll be ready for tax season if you get your application in soon.