Pension Transfer Trust Plan

PAL · January 28, 2008

Does anyone know anything about the "Pension Transfer Trust Plan" or a "pension liquidity trsut plan"? Based on the brochure I'm looking at, for a small fee of under $7,000, you set-up a c-corp, become an employee of the c-corp, set-up a 401(k) plan, transfer your old company 401(k) plan assets into your new c-corp 401(k) and then you use all of the 401(k) money to purchase stock in the c-corp so that you now have the cash on hand, tax free. An example they gave related to $100,000 in a 401(k) plan said:

"..the buyer can get the down payment for his new business and keep the $45,000 check to the IRS as cushion for additional operating money".

It doesn't feel right to me. Comments anyone?

PAL

WDIK · January 28, 2008

This sounds like another mutation of the ERSOP. Last week at the Los Angeles Benefits Conference, it was noted that while there may be ways to legally accomplish such a design the arrangements are also on the IRS radar as possible abusive tax avoidance schemes.