412(i) Plan Audit from Hell (PART 2)

[RayJJohnsonJr]

Number 2 it is.

I'm sorry, I'm not seeing the coincidence. Where is it?

[J Simmons]

The coincidence is that Lance Wallach uses this board to advertise the fear mongering and there has been a recent flurry by him in such posts here, and rene having such an issue--right now. Quite the coincidence.

[WDIK]

Mr. Wallach has posted and reposted this same article scores of times on nearly every forum of BenefitsLink to the aggravation, irritation, annoyance and consternation of many forum members and in violation of forum rules and administrator requests.

I'm surprised you missed it, Rene.

[RayJJohnsonJr]

Mr. Wallach has posted and reposted this same article scores of times on nearly every forum of BenefitsLink to the aggravation, irritation, annoyance and consternation of many forum members and in violation of forum rules and administrator requests.

I'm surprised you missed it, Rene.

I formally apologize for reposting it. I am sorry I had not previously seen it. I guess my question is, if it's true, can enough people read it? Is anyone taking action? People are being steamnrolled. Is he wrong or is this not an outrage?

[J Simmons]

The IRS has been very clear about what the abusive tax shelters are. The IRS has made clear what uses of 412i are abusive. The IRS has made clear what uses of 419A are abusive. That there are advisors that continue, in the face of these warnings, to promote to employers, unsuspecting and otherwise, these abusive tax shelters is in my opinion the outrage. These charlatans have left a slash-and-burn wake out of which employers fear legitimate employee benefit plans, sometimes terminating their legitimate 401a and 401k plans, 125 cafeteria plans, etc. Other charlatans, for their own gain, then engender fear among legitimate advisors.

[vebaguru]

rene-

On the assumption that you may be exactly who you appear to be, I will answer that there are several good tax litigation firms who represent similarly situated clients. They are likely to prevail in cases that are not egregious. However, IRS is likely to prevail where a plan is clearly abusive.

j simmons-

Since 412(i) plans necessarily involve at lease 1 life insurance company, one can hardly accuse them of "slash-and-burn" tactics. They do not have the privilege of hiding from the actions of their agents/brokers who are likely to say almost anything to make a good insurance sale. But the carrier inevitably ends up making the client whole after the IRS is through with its own abusive treatment. Just get a good plaintiff's attorney.

[J Simmons]

j simmons-

Since 412(i) plans necessarily involve at lease 1 life insurance company, one can hardly accuse them of "slash-and-burn" tactics. They do not have the privilege of hiding from the actions of their agents/brokers who are likely to say almost anything to make a good insurance sale. But the carrier inevitably ends up making the client whole after the IRS is through with its own abusive treatment. Just get a good plaintiff's attorney.

I agree ... if the life insurance company is yet in business. I've been asked to help a couple of 412i victims and when we investigated, found that the insurance companies were no longer in business. In other instances where the insurance company is yet in business, with some legal pushing they have, like you said, 'made the client whole'.

[RayJJohnsonJr]

OK, here's where we are now: The IRS Actuary says(maybe conceding that DC to DB conversions are allowable): if you did a DC to DB conversion of $500,000, which created a new DB benefit, and the DB is a 412(i), the transfer flunks the 412(i)(2) requirement of level premiums. I think that is an inexperienced, uneducated position. But what code or regulation prooves that it does not violate the 412(i)(2) level premium requirement(other than common sense)?

Thanks Everybody,

Rene

[Mike Preston]

Interesting. I think I'd just respond that the premiums paid by the plan with respect to the transferred benefit are level: $0 and that it therefore satisfies the regulation.