Anyone familiar with the "Dolgoff Plan"?

[Guest smhjr]

A client has asked me to take a look at it. It's pretty complicated so I was wondering if anyone here has heard of it.

[GBurns]

What is the big deal, it has been around for ages and there are variations on this type of non-qualified deferred compensation arrangement?

The questions should be Whether it delivers the purported tax and other benefits promised ? and Whether the new 409A rules affect it and How?

[Lori Friedman]

I believe that "Dolgoff Plan" is the proprietary name of a specific product, not a generic term for a type of retirement arrangement. There's a website called www.thedolgoffplan.com

Ralph Dolgoff's own story is interesting. He's a former professional basketball player turned accountant, and he was instrumental in developing the American Basketball Association. Mr. Dolgoff created a long-term annuity retirement arrangement to help entice players to sign with ABA teams. That plan, or at least a descendent of it, still exists today.

[GBurns]

The "Dolgoff Plan" is a NQ deferred compensation plan. NQ Deferred Compensation Plan is a generic term. The use of annuities and/or life insurance to secure the availability of the promised compensation is "generic" and not patentable.

Whatever is is that is claimed to be proprietary by the "Dolgoff Plan" is no restriction on having a NQ DC Plan using annuities and/or life insurance.

Do you know what is claimed to be proprietary other than the name?

smhjr,

Have you found out anything else about the "Dolgoff" or any other plan?

[Guest smhjr]

I had the whole 23 page proposal that the client was given explaining to them the "Dolgoff" design. It's just that when the sales people can it up in such a nice presentation and bombard you with that much information it is difficult to understand exactly what they are doing. From what I can tell they go over all of the deductions that the company receives over the years but did not address the taxes that would be paid by the individual when they receive the money.

I can't say for sure if it's a nice plan or not. It's tough to digest and the client I believe has already made their decision. They stopped returning my phone calls. Either they are closed for the holiday season or decided to go with this plan.

I just can't see how a client that doesn't deal with these things on a daily basis could possibly understand what they are getting themselves into. A basic deferred comp plan isn't too difficult to digest, but this proposal is a tough one. They are using mutual funds, margin loans, life insurance and a partner buying out another partner all in their proposal. I'm not sure I understand it all yet, but I think it's time to move on to another project

[GBurns]

A salesman selling a Plan whether NQ or Q usually makes nothing (or nothing directly) from the sale of the Plan concept itself. The money is made off the providing of the PD, enrollment, possibly something from the Administrator from the set up fee, but the vast majority from whatever the money will be invested in.

Since it would be either suspicious or limited by incidental amount rules etc to use all life insurance, annuities etc are put into the mix. Quite often this is explained as diversification, tiering, layering etc. In many cases commission maximization is the bulk of the planning, of course, colored by the need to show you sufficient return and tax deductions to make the whole scheme palatable.

The result is that a simple concept is make complex so that expertise and proprietary claims can be made.

It is the old saw, If you can't dazzle them with brilliance, baffle them with ...

If you really want to help your client, just call a few advanced market salesmen at any of the larger agencies or financial planning firms and see how quickly they can bombard this same client with a similar plan using product names that might even be the same but with different results. Tell them about the competition and you will see that their needed investment amount (premiums) and the returns will be made better than what the "Dolgoff" guys have shown even if the exact same products are used.

If you have difficulty in finding some of these advanced market salesmen, let me know what city and state your client is in and I will give you some names. I do not get any commission or any reward other than satisfaction but maybe a new acquaintance or someone who might do me a favor one day.

[david rigby]

I just can't see how a client that doesn't deal with these things on a daily basis could possibly understand what they are getting themselves into.

Ah! The sales process!