Guest NPaleveda Posted October 2, 2001 Posted October 2, 2001 Has anyone had experience administering Fully Insured Plans under 412i ?
Guest NPaleveda Posted October 4, 2001 Posted October 4, 2001 Has anyone come across PLR 8721115 as authority that Universal Life cannot go into a 412i plan? Has anyone an opinion on whether a 412i plan can be funded solely with life Insurance contracts?-What about heavily loaded contracts?-NP
Guest Ralph Amadio Posted October 4, 2001 Posted October 4, 2001 Yes, depending on the fully insured plan utilized, they are relatively simple and follow rules that go back to substantially before ERISA. Most are group or individual annuities or "retirement income" plans that have an incidental death benefit. What specific administrative issues are you trying to address?
Belgarath Posted October 5, 2001 Posted October 5, 2001 Yes, I've seen this PLR used as the basis for not allowing universal life in 412(i) plans. It depends upon how far you want to push the envelope, but I wouldn't recommend using UL. You can make an argument that the PLR wasn't thought out all that well - for example, a whole life policy that has a level premium will lapse if the premium isn't paid, so the "guarantees" are only good insofar as you pay the required premium. A UL will do the same - given payment of a certain premium, there will be guaranteed cash value at a given date, such as age 65. But, a UL isn't by definition a "level premium" policy, and this appears to be the issue on which the IRS focused. Since the IRS issued this PLR, and since there is nothing specifically ALLOWING UL in a 412(i), it seems the prudent course of action not to allow it in a plan you administer.
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