mwyatt Posted November 2, 2004 Posted November 2, 2004 Anything to report from the ASPA attendees? Hearing rumblings concerning 412i plans. What is the news?
Archimage Posted November 2, 2004 Posted November 2, 2004 I am not a DB person but I did get the feeling that the IRS is getting ready to hammer 412 plans. I went to a session titled "Abusive Tax Practices". Jim Holland of the IRS was one of the speakers. Apparently he believes that there aren't many 412 plan out there that are compliant. He mentioned that the President just signed into law that gives the IRS to fine "material advisors" $100,000 for failure to report the abusive transactions. If you have ever met or heard Jim Holland speak, he rarely has an expression on his face and he is somewhat monotone. However, in this session, he was actually very giddy and all happy about what was happening. I found it very disturbing. It made me feel very relieved to know that I am not involved with 412 plans.
david rigby Posted November 2, 2004 Posted November 2, 2004 Clarification please. Are you referring to 412(i) plans? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
Guest flogger Posted November 2, 2004 Posted November 2, 2004 What was of significance was the discussion of the effects of Revenue Procedure 2004-16 and Revenue Ruling 2004-20. These promulgations (perhaps you are already familar with them) detail the treatment of fair market value of policies, death benefits in excess of the incidental amounts, "listed transactions" (as a 412(i) plan with excess death benefit is a listed transaction), excise taxes/deductilbility of premiums that are attributable to excess death benefits, etc.
AndyH Posted November 3, 2004 Posted November 3, 2004 There are several people on these Boards that promote 412(i) plans. Of course they claim to advocate only the compliant ones. Can we coax comments from one or more of you? I am not going to name names this time, but we have not heard from any of them since the IRS scrutiny started last year. I'd be interested in hearing more about this "material advisor" thing. That could be a useful description of some of the people pushing the abusive ones.
Guest merlin Posted November 3, 2004 Posted November 3, 2004 I went to the first session on abusive tax practices. An actuary who described himself as one does a lot of work cleaning up bad 412i plans asked from the floor if that would cause him to be a "material advisor". Jim Holland's answer was "no". Another member of our firm went to the repeat session, and he said that Holland was much more explicit as to who might be a material advisor, and he seemed to include actuaries. Anybody from the 2nd session hear it the same way?
mbozek Posted November 3, 2004 Posted November 3, 2004 I thought the penalites for abusive transactions are only applicable for transactions entered into after the date the tax law was signed. The idea behind penalites for mateial advisors is to deter bogus tax opinions and advice which under prior law prevented the IRS from imposing penalites of up to 75% for substantial understatment of taxes because the taxpayer received an opinion stating that there was substantial authority under the tax law for the deduction or tax strategy. mjb
Archimage Posted November 3, 2004 Posted November 3, 2004 I admit that I don't know much about it. However, that is not the impression I got from the IRS representative.
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