412i Plans

Make sure you get fitted for the appropriate colored sportcoat. And you must repeat after me, "Phil, is that you?"...

Ground hog day in case you are wondering. An insurance salespersons dream. And the commission.....Oooooh.

By the way. The 412I for the right situation, can be a useful retirement plan, but it must be funded for at least five years. So if your client's income has a possibility of varying, then it might be the end of your career. A chargeback of the highest magnitude....

But I am sure you can find a vendor that will tell you the latest and greatest. My suggestion is to google springing cash values and abusive tax shelters. Then find a CPA that will listen, because you are going to need one.

Malcolm,

You'll get no intelligent answers on this board. This group is comprised of refugees who couldn't make the final cut of "Boiler Room". They are a bunch of script kiddies who hawk stocks and bonds under the guise of financial planning.

If a topic has anything to do with insurance, they $#!+ their pants and bleat how it must be a bad thing and that brokerage is the only solution to the problem.

Better to go to the boards on www.financial-planning.com for a real answer. They're mainly fee-heads, but they'll be surprisingly objective. Hell, www.f**kedcompany.com would be a more credible source than this glorified jones-bash of a board.

[quote=PantsGoBrown]

Malcolm,

You'll get no intelligent answers on this board. This group is comprised of refugees who couldn't make the final cut of "Boiler Room". They are a bunch of script kiddies who hawk stocks and bonds under the guise of financial planning.

If a topic has anything to do with insurance, they $#!+ their pants and bleat how it must be a bad thing and that brokerage is the only solution to the problem.

Better to go to the boards on www.financial-planning.com for a real answer. They're mainly fee-heads, but they'll be surprisingly objective. Hell, www.f**kedcompany.com would be a more credible source than this glorified jones-bash of a board.

[quote=PantsGoBrown]

Malcolm,

You'll get no intelligent answers on this board. This group is comprised of refugees who couldn't make the final cut of "Boiler Room". They are a bunch of script kiddies who hawk stocks and bonds under the guise of financial planning.

If a topic has anything to do with insurance, they $#!+ their pants and bleat how it must be a bad thing and that brokerage is the only solution to the problem.

Better to go to the boards on www.financial-planning.com for a real answer. They're mainly fee-heads, but they'll be surprisingly objective. Hell, www.f**kedcompany.com would be a more credible source than this glorified jones-bash of a board.

[/quote]

Mr. Dirty Pants-

Insurance products are made to make money. Mostly for the broker and the insurer. That will never change.

Any plan that allows the employer extraordinary deductions, far beyond the norm, is ripe for scrutiny by the IRS. Imagine a professional deducting 300K from income and five years later buying out the plan at 50% value, then converting to a variable , and ulitmately taking out principle first and then loans later (do you see any tax benefits here?)..Check out abusive tax shelters (ask a CPA) and you will see that 412 and 419 plans are newsworthy. 

So, Mr. Dirty-Pants...not bad knowledge for an IR.

PS. Reared in the insurance industry in the early 90's.

[quote=PantsGoBrown]

Malcolm,

You'll get no intelligent answers on this board. This group is comprised of refugees who couldn't make the final cut of "Boiler Room". They are a bunch of script kiddies who hawk stocks and bonds under the guise of financial planning.

If a topic has anything to do with insurance, they $#!+ their pants and bleat how it must be a bad thing and that brokerage is the only solution to the problem.

[/quote]

I still chuckle when I hear some blowhard in a loud sport coat who sells across a kitchen table say "personal retirement account"....

http://www.irs.gov/newsroom/article/0,,id=120409,00.html

IR-2004-21, Feb. 13, 2004

WASHINGTON — Today, the Treasury Department and the Internal Revenue Service issued guidance to shut down abusive transactions involving specially designed life insurance policies in retirement plans, section “412(i) plans.” The guidance designates certain arrangements as “listed transactions” for tax-shelter reporting purposes.

A “section 412(i) plan” is a tax-qualified retirement plan that is funded entirely by a life insurance contract or an annuity. The employer claims tax deductions for contributions that are used by the plan to pay premiums on an insurance contract covering an employee. The plan may hold the contract until the employee dies, or it may distribute or sell the contract to the employee at a specific point, such as when the employee retires.

“The guidance targets specific abuses occurring with section 412(i) plans,” stated Assistant Secretary for Tax Policy Pam Olson. “There are many legitimate section 412(i) plans, but some push the envelope, claiming tax results for employees and employers that do not reflect the underlying economics of the arrangements.”

“Again and again, we’ve uncovered abusive tax avoidance transactions that game the system to the detriment of those who play by the rules,” said IRS Commissioner Mark W. Everson. “Today’s action sends a strong signal to those taking advantage of certain insurance policies that these abusive schemes must stop.”

Good info, thank you.

By the way 7yr vet.  I wouldn't exactly say that being in this business 7 years makes you a "vet" unless you work at a firm where the average tenure is about 2.5 years.  Never-the-less, I appreciate your input. 

[quote=stanwbrown]

http://www.irs.gov/newsroom/article/0,,id=120409,00.html

 

Treasury and IRS Shut Down Abusive Life Insurance Policies in Retirement Plans  

IR-2004-21, Feb. 13, 2004

WASHINGTON — Today, the Treasury Department and the Internal Revenue Service issued guidance to shut down abusive transactions involving specially designed life insurance policies in retirement plans, section “412(i) plans.” The guidance designates certain arrangements as “listed transactions” for tax-shelter reporting purposes.

A “section 412(i) plan” is a tax-qualified retirement plan that is funded entirely by a life insurance contract or an annuity. The employer claims tax deductions for contributions that are used by the plan to pay premiums on an insurance contract covering an employee. The plan may hold the contract until the employee dies, or it may distribute or sell the contract to the employee at a specific point, such as when the employee retires.

“The guidance targets specific abuses occurring with section 412(i) plans,” stated Assistant Secretary for Tax Policy Pam Olson. “There are many legitimate section 412(i) plans, but some push the envelope, claiming tax results for employees and employers that do not reflect the underlying economics of the arrangements.”

“Again and again, we’ve uncovered abusive tax avoidance transactions that game the system to the detriment of those who play by the rules,” said IRS Commissioner Mark W. Everson. “Today’s action sends a strong signal to those taking advantage of certain insurance policies that these abusive schemes must stop.”

[/quote]

[quote=Malcolm]

Good info, thank you.

By the way 7yr vet.  I wouldn't exactly say that being in this business 7 years makes you a "vet" unless you work at a firm where the average tenure is about 2.5 years.  Never-the-less, I appreciate your input. 

[/quote]

At Jones, anyone with 4 yrs under their belt IS considered a vet.

I know Merrill uses these plan quite a bit, the tickets are big, there are several rulings that allow for these plans, I am sure the insurance provider can get you up to speed, but my understanding is they are good to go… good luck.

[quote=7yrvet]

Mr. Dirty Pants-

Insurance products are made to make money. Mostly for the broker and the insurer. That will never change.

Any plan that allows the employer extraordinary deductions, far beyond the norm, is ripe for scrutiny by the IRS. Imagine a professional deducting 300K from income and five years later buying out the plan at 50% value, then converting to a variable , and ulitmately taking out principle first and then loans later (do you see any tax benefits here?)..Check out abusive tax shelters (ask a CPA) and you will see that 412 and 419 plans are newsworthy. 

So, Mr. Dirty-Pants...not bad knowledge for an IR.

PS. Reared in the insurance industry in the early 90's.

[/quote]

Translation: I can not offer anything outside of brokerage products. Therefore all nonbrokerage products are BAAAAAAAAAAAD.

You sheeple never cease to amaze me.

Even Stan's lame post admitted that most 412i plans are legit.

If you can't offer both insurance AND brokerage, WAYSA?

I looked at 412i plans a couple of years ago.  Dentists, for example, are a natural target market.  I backed away from the idea not because they are bad, but rather the more research I did the more clear it became that the IRS wanted to make them go away.  I just had this awful vision of the IRS regulating them out of existence in a few years, and suddenly having a cadre of irate dentists telling the horror story around town.  And we all know the bad guy wouldn’t be the IRS.

[quote=PantsGoBrown][quote=7yrvet]

Mr. Dirty Pants-

Insurance products are made to make money. Mostly for the broker and the insurer. That will never change.

Any plan that allows the employer extraordinary deductions, far beyond the norm, is ripe for scrutiny by the IRS. Imagine a professional deducting 300K from income and five years later buying out the plan at 50% value, then converting to a variable , and ulitmately taking out principle first and then loans later (do you see any tax benefits here?)..Check out abusive tax shelters (ask a CPA) and you will see that 412 and 419 plans are newsworthy. 

So, Mr. Dirty-Pants...not bad knowledge for an IR.

PS. Reared in the insurance industry in the early 90's.

[/quote]

Translation: I can not offer anything outside of brokerage products. Therefore all nonbrokerage products are BAAAAAAAAAAAD.

You sheeple never cease to amaze me.

Even Stan's lame post admitted that most 412i plans are legit.

[/quote]

"Lame"? The IRS is an agency you might want to listen to. And while they did say most were legit, they made it clear they were targeting the ones with the biggest bang for the buck.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Say, just where do you get those jackets, anyway? And are hair plugs required, or just desirable?

Stan-

Don't forget the gel...dude....Just for the record, I may have a situation in the near future where 412 might fit.

No qualms from the firm everyone hates on these forums, as long as the pro's sign off.