As an expert witness Lance Wallach side has never lost a case!
Specialize in 419 plans,412i plans, captive insurance plans, welfare benefit plans, section 79 plans
To learn about a simple tax-deductible plan that the IRS has opined on lately in a positive manner, please click here to learn about captive insurance companies (CICs). This week I am in Orange County giving the CWPP course and was planning on using content that I had “in the can” for this week’s newsletter. But then the IRS ruined that idea and came out with three new notices attacking the use of cash value life insurance policies in VEBAs and 419 Plans. If you haven’t heard, last week the IRS came out with what I would term as very troublesome notices that will change (maybe dramatically) how we use VEBAs (voluntary employee beneficiary associations) and 419 welfare benefit plans. Like Charitable Reverse Split Dollar, Traditional Split Dollar, Private Annuity Trusts, multiple 419A(f)6 Plans and VEBAs……….NOW single-employer VEBAs and 419(e) Plans have come under attack by the long and devastating arm of the IRS. You may remember………the good old days of 419A(f)6 plans (and multiple employer VEBAs) where reputable advisors used vendors/TPAs to administer plans to help small business clients implement “death benefit only” plans where the company would take sizable tax deductions to fund “cash value” life insurance policies owned by the 419A(f)6 trust where the death benefit, if setup correctly, would pass to the heirs income and estate tax free at an employee’s death. And then......GREED came into the picture. Because large ($100,000-$1 million dollar) annual premiums were common place with these plans, new “better” TPAs came into the business and “bent” the Internal Revenue Code (IRC) to make even more marketable/salable plans. This helped millions more in premium dollars to flow into plans I and many others considered “abusive.” And then…..the marketers of the plans flaunted it in the IRS’s face which in turn drove the IRS to ask congress to pass (which it did) very negative regulations essentially killing the use of 419A(f)6 and (5) plans as well as multiple-employer VEBAs.