GBurns

AndyH I see that Bird had to answer for you. Bird, In my last post I gave some links to some of the major 529 plans. These links show the returns. In your you have cited returns for large stocks rather than returns for funds. The historical return for large stocks is irrelevant. The use of historical returns for mutual funds would also be irrelevant since you would be comparing "regular" funds to the special restricted funds that are used by most 529 Plans. If you compare what the 529 funds have managed to do you will easily see that their performance has been dismal. The cash accumulation of the special UL to which I referred will be known when he gets an illustration based on age, contributions etc. Whether is is high or higher than the projection on whatever 529 is selected cannot be known beforehand. We can only wait to see what he finds. Which is exactly my point. Look and See what is available. Death Benefit is a given. Why would you think that any uncle would keep the fact that he has set up a College Fund for his neice. Once he has told the child, Do you think he would want to disappoint the child with a pre-mature death? Or do you think that he would prefer to leave a legacy? The choice is his, and it would be ridiculous of me me presume to tell him what he must do. So once again, All that I have done is to tell him what is available so that he can Look and See what is available. I have covered in a simple way that: 1. Your comparison on rate of return is flawed. 2. Your comparison of cash accumulation is flawed. 3. Your opinion on Death Benefit is irrelevant. In addition, Your comment on Withdrawals to basis and loans is irrelevant and flawed. It does not matter which is freer ( and it is questionable as to which is but that is based on facts and circumstances not yet known), it matters which gives him more money, when and how. We do not know Why, When or How much he will need, nor his tax rate at that time of need. All of which are relevant in considering "accessibility". The rest would need that you look at such a policy and he does not yet have 1 to use to explain to you. But that might not even matter, because you are not familiar with such a policy or its possible application in this situation. Why you want to make vague unbased comments about a policy that you have never seen and know nothing about, is frightening. Why you would want to tell him not to look at it to see if it fits is disturbing. In the end it does not matter what you or I think, it only matters what dh003i thinks suits him and meets his needs. To find out what suits his needs, he will have to Look and See. All I can do is tell him what is out there and suggest that he take a Look and See. It is up to him tio decide what to do. Why would you want to stop him from Look and See?

I bet that there is no one else who has ever seen such a plan design. It is taxable income because there is a choice between cash (or cash equivalent) and a taxable benefit (a cash equivalent). The reduced premium is imputed income with a known economic benefit. It would only be non-taxable if it was a health plan benefit or excludible under some specific section of the IRC, which it is not. If it was a 1 time initial irrevocable benefit, it might fly but it is not and will not fly. Read the IRC and Treas Regs again, the rules do not apply to only highly compensated participants. J2D2 Now it should be acceptable.

Also, How can a future increase be retroactive?

There you go still evading. Anyhow, if you want anumber of threads that deal with insurance, I can give you some, not just 1. In fact, if you had read the previous posts you would have noticed that I also previously gave an insurance thread and it was evaluating the use of Variable Life from John Hancock, a well respected name. The thread from Smat Money was : http://smartmoney.com/college/investing/in...ry=variablelife I would put much more stock in an article in Smart Money, however if you read the thread you will see that no one dismissed the possible use of Life Insurance as you do with no thought. Also note that each poster gives suggestions for evaluating along with what they think might be appropriate and why. Quite different to your irrational unreasoned statements. Here is the general outlook of College Funding from the "Industry of Life Insurance" as a whole: http://www.life-line.org/life_life_planningc.html I have suggested nothing more except to limit the insurance product to 1 with special features that are more applicable than the standard run-of-the-mill street products.

If they get either a W2 or a 1099 and file a tax return, they are eligible to contribute to an IRA.

You can either pre-tax through the cafeteria plan or pay after tax (even through payroll deduction) and take the deduction on your 1040. Take your pick. The difference is that pre-tax is a salary reduction while after tax is a salary deduction. Pre-tax can only be done on a payroll and then only through a cafeteria plan. After tax can be out of pocket or even deducted from the payroll just like your union dues or credit union contribution. Pre-tax has the immediate tax benefit whereas after tax must wait on your tax return to be filled out.

J2D2 Since teachers in Home Ec Dept cannot be treated differently to teachers in the Chemistry Dept since they are all teachers with the same employer etc, Janitors would be no different. The difference to your scenario is the working for the same employer. In your scenario there would be 2 different employers. Don Levit, Just like the "Association" in VEBA does not have the same meaning as the "Association" in AARP, that is not what the "Voluntary" in VEBA means.

Aside from the fact that you are still evading the issue and still not presenting any reasoning, you still misunderstand the issue and seem to have very limited knowledge of the issues. A reasonable and rational person looks at the facts before making a decision. Since the poster is starting from scratch, then every possible thing should be looked at and evaluated so that an informed decision can be made. To make a decision without rationale, as you have done, is neither prudent nor rational. In addition I never advocated selling anything for a 7 year old. I advocated looking at all that might be available. By the way, what has been the rate of return on the 529 that the poster might buy? And What will the future returns be? Since you do not know which 529 the poster might be limited to, you also do not know how limited the investment choices of that particular 529 will be. Since you do not know which 529 etc you cannot even guess at what the performance of that fund has been. I am curious to know which 529 this poster would have chosen if 529 was the choice. Then we could see how good that 529 has been so far. Here is an example ofwhat can be very easily found out about 529 performance so far: http://www.smartmoney.com/taxmatters/index...?story=529plans Here is how 1 of best as rated by Kiplinger's, has performed: https://uii.s.upromise.com/displayServlet?s...1&d.px=upromise Here is Fidelity: http://personal.fidelity.com/planning/coll...rch&kw=529_Plan Not all that impressive are they? Just as you hypothecated a 1% return on UL, the same can be done on any mutual fund or 529 plan also. But by doing so you have evidenced ignorance of life insurance especially UL. UL and many insurance products have a minimum guarantee which is more than 1% anyhow. Since you do not even have the basics of UL understood, How in heavens name can you feel free to make such comments without feeling foolish?

"If you are only applying a premium rebate for COMPLETEING the questionairre" Then wouldn't this be taxable income to the employee? It would not be excludable as a benefit from an accident and health plan or anything else. Don Levit What creates the eligible classification between those getting Plan 1 versus those getting Plan 2? "similarly situated" is not related to the benefits but to the eligibility and availability of whatever the benefits might be. For example all Janitors in the same geographical area on the same shift etc get the same benefits absent a CBA. You cannot give some Janitors greater benefits than other Janitors if they all do the same thing in the same manner in the same place etc. That is what "similarly situated" relates to.

While I admit that a higher deductible is not the same as a higher "premium" I think that it would still fail for the same reasons since it is all part of the cost. Since the employees will no doubt be paying their share of the costs through a section 125 Cafeteria Plan, the Proposed Regs also come into play in addition to IRC 125 in particular 125(g)(2) which refers to there being a uniform relationship to compensation. See Proposed Treas Regs 1.125-2 Q&A 7 and 1.125-1 Q&A 17 among others. Section 125 plans have to meet certain discrimination tests, including benefits and eligibility. It should be very hard to pass these tests if you have a disparity in premium, cost or deductible charged to a bunch of employees who cannot be classified into any reasonable job related category. You would also have a problem with COBRA and IRC 4980B(f)(4) etc. If the law requires that COBRA premiums be the same for similarly situated employees, How would you rationalize charging some employees less of an increase for COBRA than when the same employees were not on COBRA which is what could very well happen under your scheme.

All that was posted is that "The company is being bought out ". Whether this is by an individual, a group of individuals or by another entity is not known. It is not known that the company is being taken over and if there will be any stock in an acquirer that will be exchanged. Since she has stock, Has she been made an offer for her stock? Has she evaluated whether her stock will be worth more or less after? In any case, Can she even liquidate this stock on the open market, anyhow?

First, the employer is not the health plan, whether self funded or not. So it is important who asks and who receives the health questionnaire. It should not be the employer except for the distribution and collection of the forms. Second, there are both state and federal laws that protect personal health information (PHI) from those have no need to know it. Employers as general rule have no need to know it and are not covered entities under HIPAA. Covered entities are those that are recognized by law as having a need to know PHI such as a health plan and a service provider. Third, the potential for misuse, abuse and unlawful dissemination is so great, most would not do what you are thinking of doing. Fourth, even if the information was made available to you, making health care decisions and employee benefits decisions based on this (or lack of this) information would most likely be discriminatory. Charging different rates for similarly situated employees is not allowed.

I did not respond not because there were just too many vague issues, but because I am tired of pointing out to people that they are allowing slick sales pitches to cloud their judgement. You posted "Of course he would not cite any." If the salesman cannot give any cites or cannot substantiate his position, Why are you wasting your time trying to prove his case for him? You do not know enough about what he is presenting so you will never have a valid conclusion. If you cannot prove him wrong, he will have won by default, because if there is nothing wrong then logically it must be right. A salesman and any one presenting a position bears the uonus of proving their position. If he/she cannot then Show them the door!! Questions: What allows your client to contribute to his brother's trust? What type and purpose of trust? The trust is going to form the LLC but "the plan" will buy stock, What is this "the plan"? Aside from the points raised by Bird, Will the client's attorney be willing to render his opinion approving the transaction in writing? If yes, is the client familiar with the IRS rules regarding opinion letters and tax shelter penalties? If No, then there is your answer. As you said, it smells, but clearing the air should be done by the promoters of the scheme, then you determine its validity. Let them provide the proof.

Many providers dictate the TPA. Many "packagers" dictate the TPA. Many "packagers" and investment sources will only accept their own documents. It does not matter whose documents are used, the investment provider usually dictates the TPA. I am referring to small plans which therefore are the majority e.g Principal, ADP, Manulife, Nationwide, Paychex, Standard, Lincoln, Vanguard, Fidelity etc etc. Is it really normal for a TPA to have services only? I cannot imagine that any meaningful number would leave themselves at the mercy of others. A short (not too short) questionnaire is very much in order and needed. Have you quantified how much business you have lost by not getting the business from CFPs etc who behaved as you posted? Have you evaluated why you have whatever business that you have? It could very well be that being agressive will not cause you to lose anything. It might only get rid of a habit that was only wasting your time. Even though you wish to do administrative work, your services still have to be marketed and sold. Just like the bigger CPA firms have marketing and sales people so should you. You cannot wait for people to walk through your door. You cannot be at the mercy of others.

While there are 419 Plan designs that might pass scrutiny by the IRS, I have not seen one that I think would. But since I have not seen everything and my opinion is just my opinion, I suggest that you do some research yourself and you will see that there is even disagreement among the various promoters as to what works and whose design works. If they cannot come to a consensus, that should tell you volumes. You might want to start here although it could do with some updating: www.irs.gov/pub/irs-tege/eotopicj92.pdf Also: http://www.assetprotectiontheory.com/pensions.htm

"Would you advocate an annuity purchase for a 7 year old?" What does an annuity have to do with this issue? Assuming that there is some relevance to the isuue, What is the purpose, For accumulating college funds or for holding a lump sum settlement or award until college age?

The reason why you did not get the business might very well be that the CFP had no power to give you the client's business in the first place. Have you ever looked to see who the client used and why? Or better yet, What was the selection process used by the client? Many Salesmen have the habit of engaging in puffery and over preparation. I have seen many reps evaluating TPAs when the product provider that is eventually selected has a pre-approved short list that must be used. Why they wasted the time was just because they did not read first even when it is a provider that they use often. I heard questions related to this everytime I attend a Nationwide seminar as if any TPA could be used and as if the rep can dictate which TPA. While in reality you do have to answer questions in order to get business, you should have your own questionaire with questions with which to find out who they normally use and whether they are authorized to place this particular case with you. Then based on the responses you can qualify each case to see how far you want to go.

I was amending my post while you were responding. I never said that life insurance was the best, I only suggested that a special UL might be considered. The fact that you "never heard even an insurance agent say with a straight face that a life insurance policy is the best long term investment when accumulating funds is the objective" is simple. You never heard them addressing this particular issue with a specialized product. That is why I pointed out that it needed not only a special UL but also a good agent (in other words 1 who knows of this type of UL). The 3 reasons that you listed are just as applicable to sellers of 529s and Pre-paid Tuition PLans. Every provider has expenses and needs to make a profit. 529s have sales reps who get paid whether commission or salary, which has no other place to come from but from the person contributing. It does not matter whether it is a salesload, 12(b)1 or whatever, it is still a reduction of the contribution. No one sells 529s for free, those agents are paid.

Yes, it does merit further comment. Life insurance is a very broad term, that is why I pointed out that that a special universal life policy should be used. To have an objection to having guarantees such as the death benefit and loans, without being willing to state why, suggests a lack of reasons or reasoning. That is why further comment is suggested. However, you might just want to wait and see if anyone else chips in, especially to ask for your reasons. If no one chips in then it might either be a lack of interest in the subject matter or a lack of interest in the possible reasons. Who knows? I originally advised that some research needs to be done. Here is what Smart Money has to say: http://smartmoney.com/college/investing/in...ry=variablelife The article points out that Variable Life is not best and gives what they consider a better variation. I do not like VUL or VWL and think that a better case can be made for use of a special UL which has better guarantees, less expenses and lower (or no) early withdrawal penalties. Simple research will show that there are many who think that at least some consideration should be given to the use of Life Insurance especially since one size does not fit all in financial planning. And that is all I advised. To make statements without having any reasonable basis seems unreasonable.

You also have to check state law to see if a license to sell RE can be held by an entity rather than a natural person. If a natural person only, then commission might only be payable to that natural person and might not be assignable to the business entity. Commissions are usually only payable to a duly licensed entity.

It should be interesting to many readers to hear why.

Multiple problems. Is she a licensed agent? Is her license with the same RE Broker as her husband? Working together is not a partnership. The income cannot be split after the 1099 is issued. If you form a corporate entity "Mom & Pop Realty Company", it would only affect future earnings. Retroactivity of Plan adoption, income splitting etc would not be applicable. Since separate SE and Sch C are used, the deductibility of her expenses might not be possible since there has been no business activity. Husband might not be able to deduct the wife's expenses either. If she is a licensed RE agent with the same Broker as her husband and she has been signing contracts with her signature only, there most likely is a problem with her not getting paid. A gratuitous assigment of income to another party might not be viewed favorably if either is audited by the IRS. Such an assignment might be viewed as an attempt to limit SS taxes etc. There is also a problem in many states with the payment of commission to someone not involved in the deal and the payment to someone other than the person disclosed on the RESPA and other documents.

Not just any Universal Life plan, but 1 that is structured with low death benefit and high cash accumulation. Might even need more than 1 policy so as to avoid MEC. This will need someone other than a run of the mill agent since not many companies have such a product. Reasons: 1. Death Benefit to ensure that the money is there from day 1 just in case there is premature death of this uncle. 2. High cash accumulation. Might not be as good as some 529 plans might perform but better than many. 3. Guaranteed cash value. Better than the 529s etc. 4. Tax free withdrawals to basis. 5. Loans. 6. Possibly tax deductible. 7. No limits as to eventual useage. 8. Ability to change purpose etc. The child might get a great scholarship and need the money for something else. Or decide not to go to college and need the money for something else. It is not perfect but it offers thinngs that should be considered.

If your employer's plan allows you not to enroll, you can opt out and pay for your own HDHP and HSA. While you might be young and in good health, Can you state how long that will last? When you are not in good health can you state what your illness and the costs of treatment will be? Unless you can make such predictions, being young and in good health this month has no relevance, unless you do think that only people over a certain age get sick or injured. Have wondered why the vast majority of employers are not offering HSAs or HRAs? Have you asked your employer Why not? Are HSA qualified HDHPs even available in your state and area of your state? If available, is that coverage and provider network etc etc acceptable?

If the DB Plan has not been transferred to B, then I do not know of any other choice but termination of the DB plan. If the CBA does not allow a transfer to a successor employer, I see no option but a termination of the DB Plan. What happens on termination should be in the PD. I do not see nor understand why there is a "retained plan". There was a DB Plan at A and now a "mirror" Plan at B. If A "retains" the DB Plan, For whom is it being retained and Why? There are no participants and no future contributions, Why would the Plan Sponsor want to retain administration and reporting? Who are the participants in the "mirror" plan at Company B? Who are the employees of Company B? How come the plan participants are employed by both? How come union employees of Company A are participants in the "mirror" plan? Is there a CBA between the union and Company B? I think that all these are valid questions that should be answered as part of any decision. Cases such as you are looking for will still be only applicable after these issues are addressed. While there are numerous cases showing that a stock sale does not terminate employment, you stated that these union employees ( and I assume also the other employees) will terminate with A, anyhow. So while the termination has not yet taken place, and the DB Plan is already frozen, termination is imminent. Whatever the intent of the seller of A might be, the situation might be governed mainly by the PD and the CBA.