Abusive Tax Shelters & 419 Plans Lawsuits
412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS.
The IRS has various task forces auditing all section 419, section 412(i), and other plans that tend to be abusive. Most insurance agents sell these plans. The IRS is looking to raise money and is not looking to correct plans or help taxpayers. The IRS calls accountants, attorneys, and insurance agents “material advisors” and also fines them the same amount, again unless the client’s participation in the transaction is reported. An accountant is a material advisor if he signs the return or gives advice and gets paid
The IRS has various task forces auditing all section 419, section 412(i), and other plans that tend to be abusive. Most insurance agents sell these plans. The IRS is looking to raise money and is not looking to correct plans or help taxpayers. The IRS calls accountants, attorneys, and insurance agents “material advisors” and also fines them the same amount, again unless the client’s participation in the transaction is reported. An accountant is a material advisor if he signs the return or gives advice and gets paid
At one time in the late 1990s OnlineAdviserTM service received more questions on the topic of 412(i) plans than any other type of retirement plan. This is a bit odd because 412(i) plans are a tiny and relatively obscure method of designing a retirement plan. The simple most likely explanation for this level of activity is that we were one of the few firms offering independent advice on the topic and small business people were able to locate us easily. In more recent years 412(i) pension plans have primarily been marketed by few insurance companies that specialize in this product.
This article is meant to address some general questions surrounding the issues of usefulness and suitability of these retirement plans.
The term "412(i)" comes from the section of the tax code that allows a pension plan to be run without the usual rigorous accounting and documentation. In return for this concession, the plan investments must be completely held by an insurance company. In effect, these are "hybrid" plans, with some characteristics of defined benefit plans and some characteristics of defined contribution plans. The basic intention is to enjoy the benefits of a pension-type retirement plan without the usual costs and paperwork that usually characterize traditional pension plans.
The most common and most effective use of a 412(i) pension retirement plan is in a small business with one older high income employee. This individual has fewer years until retirement and therefore can design a pension plan that requires a high contribution. Higher contributions mean more of the earnings are tax-deductible. The tax deduction might be more than twice the amount allowed by other types of retirement plans. In financial planning lingo, this is the stereotypical "doctor's plan", envisioning one older high income professional with a few part-time employees with relatively high employee turnover.
Other situations where a 412(i) plan may be useful:
1) An investor wants to invest in fixed or variable annuiti
At one time in the late 1990s OnlineAdviserTM service received more questions on the topic of 412(i) plans than any other type of retirement plan. This is a bit odd because 412(i) plans are a tiny and relatively obscure method of designing a retirement plan. The simple most likely explanation for this level of activity is that we were one of the few firms offering independent advice on the topic and small business people were able to locate us easily. In more recent years 412(i) pension plans have primarily been marketed by few insurance companies that specialize in this product.
This article is meant to address some general questions surrounding the issues of usefulness and suitability of these retirement plans.
The term "412(i)" comes from the section of the tax code that allows a pension plan to be run without the usual rigorous accounting and documentation. In return for this concession, the plan investments must be completely held by an insurance company. In effect, these are "hybrid" plans, with some characteristics of defined benefit plans and some characteristics of defined contribution plans. The basic intention is to enjoy the benefits of a pension-type retirement plan without the usual costs and paperwork that usually characterize traditional pension plans.
The most common and most effective use of a 412(i) pension retirement plan is in a small business with one older high income employee. This individual has fewer years until retirement and therefore can design a pension plan that requires a high contribution. Higher contributions mean more of the earnings are tax-deductible. The tax deduction might be more than twice the amount allowed by other types of retirement plans. In financial planning lingo, this is the stereotypical "doctor's plan", envisioning one older high income professional with a few part-time employees with relatively high employee turnover.
Other situations where a 412(i) plan may be useful:
1) An investor wants to invest in fixed or variable annuiti
Get sued! Lance Wallach, Managing Director, is the nation's leading expert on "employee benefit plans", "tax problem resolution" and IRS audits defense. Mr. Wallach's team of highly experienced tax attorneys, CPAs, and ex-IRS agents have helped his clients save hundreds of thousands of dollars successfully defending them in lawsuits and "IRS audits".
Today's IRS audits are both targeted and coordinated Today's IRS audits are both targeted and coordinated Question: Are the IRS audits coordinated?
Get sued! Lance Wallach, Managing Director, is the nation's leading expert on "employee benefit plans", "tax problem resolution" and IRS audits defense. Mr. Wallach's team of highly experienced tax attorneys, CPAs, and ex-IRS agents have helped his clients save hundreds of thousands of dollars successfully defending them in lawsuits and "IRS audits".
Today's IRS audits are both targeted and coordinated Today's IRS audits are both targeted and coordinated Question: Are the IRS audits coordinated?
The IRS has various task forces auditing all section 419, section 412(i), and other plans that tend to be abusive. Most insurance agents sell these plans. The IRS is looking to raise money and is not looking to correct plans or help taxpayers. The IRS calls accountants, attorneys, and insurance agents “material advisors” and also fines them the same amount, again unless the client’s participation in the transaction is reported. An accountant is a material advisor if he signs the return or gives advice and gets paid
ReplyDeleteThe IRS has various task forces auditing all section 419, section 412(i), and other plans that tend to be abusive. Most insurance agents sell these plans. The IRS is looking to raise money and is not looking to correct plans or help taxpayers. The IRS calls accountants, attorneys, and insurance agents “material advisors” and also fines them the same amount, again unless the client’s participation in the transaction is reported. An accountant is a material advisor if he signs the return or gives advice and gets paid
ReplyDeleteAt one time in the late 1990s OnlineAdviserTM service received more questions on the topic of 412(i) plans than any other type of retirement plan. This is a bit odd because 412(i) plans are a tiny and relatively obscure method of designing a retirement plan. The simple most likely explanation for this level of activity is that we were one of the few firms offering independent advice on the topic and small business people were able to locate us easily. In more recent years 412(i) pension plans have primarily been marketed by few insurance companies that specialize in this product.
ReplyDeleteThis article is meant to address some general questions surrounding the issues of usefulness and suitability of these retirement plans.
The term "412(i)" comes from the section of the tax code that allows a pension plan to be run without the usual rigorous accounting and documentation. In return for this concession, the plan investments must be completely held by an insurance company. In effect, these are "hybrid" plans, with some characteristics of defined benefit plans and some characteristics of defined contribution plans. The basic intention is to enjoy the benefits of a pension-type retirement plan without the usual costs and paperwork that usually characterize traditional pension plans.
The most common and most effective use of a 412(i) pension retirement plan is in a small business with one older high income employee. This individual has fewer years until retirement and therefore can design a pension plan that requires a high contribution. Higher contributions mean more of the earnings are tax-deductible. The tax deduction might be more than twice the amount allowed by other types of retirement plans. In financial planning lingo, this is the stereotypical "doctor's plan", envisioning one older high income professional with a few part-time employees with relatively high employee turnover.
Other situations where a 412(i) plan may be useful:
1) An investor wants to invest in fixed or variable annuiti
At one time in the late 1990s OnlineAdviserTM service received more questions on the topic of 412(i) plans than any other type of retirement plan. This is a bit odd because 412(i) plans are a tiny and relatively obscure method of designing a retirement plan. The simple most likely explanation for this level of activity is that we were one of the few firms offering independent advice on the topic and small business people were able to locate us easily. In more recent years 412(i) pension plans have primarily been marketed by few insurance companies that specialize in this product.
ReplyDeleteThis article is meant to address some general questions surrounding the issues of usefulness and suitability of these retirement plans.
The term "412(i)" comes from the section of the tax code that allows a pension plan to be run without the usual rigorous accounting and documentation. In return for this concession, the plan investments must be completely held by an insurance company. In effect, these are "hybrid" plans, with some characteristics of defined benefit plans and some characteristics of defined contribution plans. The basic intention is to enjoy the benefits of a pension-type retirement plan without the usual costs and paperwork that usually characterize traditional pension plans.
The most common and most effective use of a 412(i) pension retirement plan is in a small business with one older high income employee. This individual has fewer years until retirement and therefore can design a pension plan that requires a high contribution. Higher contributions mean more of the earnings are tax-deductible. The tax deduction might be more than twice the amount allowed by other types of retirement plans. In financial planning lingo, this is the stereotypical "doctor's plan", envisioning one older high income professional with a few part-time employees with relatively high employee turnover.
Other situations where a 412(i) plan may be useful:
1) An investor wants to invest in fixed or variable annuiti
Get sued!
ReplyDeleteLance Wallach, Managing Director, is the nation's leading expert on "employee benefit plans", "tax problem resolution" and IRS audits defense. Mr. Wallach's team of highly experienced tax attorneys, CPAs, and ex-IRS agents have helped his clients save hundreds of thousands of dollars successfully defending them in lawsuits and "IRS audits".
Today's IRS audits are both targeted and coordinated
Today's IRS audits are both targeted and coordinated
Question: Are the IRS audits coordinated?
Get sued!
ReplyDeleteLance Wallach, Managing Director, is the nation's leading expert on "employee benefit plans", "tax problem resolution" and IRS audits defense. Mr. Wallach's team of highly experienced tax attorneys, CPAs, and ex-IRS agents have helped his clients save hundreds of thousands of dollars successfully defending them in lawsuits and "IRS audits".
Today's IRS audits are both targeted and coordinated
Today's IRS audits are both targeted and coordinated
Question: Are the IRS audits coordinated?