412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS
412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS
Captive Insurance Problem
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419,412i, Captive Insurance,Section 79 Problems
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Captive
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On May 8, 2014, the IRS released Rev. Rul. The ruling provides guidance to the growing number of employers electing to insure or re-insure employee benefits through captive insurance arrangement. The ruling considers an arrangement by a corporation (CORP-X) to provide health insurance benefits to CORP-X’s retirees through a captive arrangement. The benefits are provided on a voluntary basis (CORP-X has no obligation to provide the benefits) through a Voluntary Employees Beneficiary Association (VEBA) plan funded by CORP-X. The VEBA acquires insurance coverage for the retiree health benefits from an unrelated insurance company. The IRS ruling states that the participation of the unrelated insurance company in the arrangement is a condition of an exemption from certain prohibited transaction provisions of ERISA. The unrelated insurance company reinsures 100% of the risk with a captive insurance company wholly-owned by CORP-X. The re-insurance contract is the captive’s only contract. While the IRS has never defined “insurance” in its code or regulations, the IRS follows the definition of insurance set forth in the US Supreme Court case of Helvering v. Le Gierse, 312 U.S. 531, 539 (1941). In that case, the court held that in order for an arrangement to constitute insurance for federal income tax purposes, the arrangement must include risk shifting and risk distribution. In the most recent ruling, the IRS takes the position that the risk being insured is a benefit provided to the retired employees and their dependents; specifically, the risk being insured is not CORP-X’s risk. Therefore, the risk being insured by the captive is considered to be 100% “unrelated” to the risk of CORP-X (the captive’s parent). As 100% of the risk in the captive is unrelated, the arrangement satisfies the test for risk distribution. As a result of such risk distribution and other facts set forth in the ruling, the IRS concludes that (i) the reinsurance contract between the captive and the unrelated insurance company is an insurance contract, and (ii) the captive is an insurance company.
The Truth About Section 79 Permanent Insurance Plans
ReplyDeleteSection 79 plans are a part of the employee benefit section of the Internal Revenue Service code (IRC). This code (IRC code Section 1.79) has been a part of the IRC since it was initially adopted in 1953. The President of the United States at that time was Dwight D. Eisenhower.
Section 79 permanent insurance plans are sold within the United States by large national life insurance companies, all of whom have internal legal and compliance departments whose role is to ensure that the products sold by those companies are legal and comply with the rules and spirit of the law. Section 79 permanent insurance plans are sold legally in all 50 states of these United States of America. For the protection of consumers, each state has an insurance department that reviews and approves all company and agent licensing and products sold within that state. (see National Association of Insurance Commissioners at this link).
So, here’s the truth about Section 79 Permanent Insurance Plans:
• This is a legal insurance product, covered in the IRS Code number 1.79.
• All group life insurance is covered under this IRS Code. Most governmental agencies, non-profit organizations and large Fortune 1,000 companies have section 79 as an employee benefit.
• This is not a new code. The IRC 1.79 has been in the code since 1953.
• All Section 79 products are fully vetted by major national insurance companies, their lawyers and compliance staffs, for sale in all 50 states. These are companies with long and successful histories of selling insurance products in the United States since the mid-1800’s.
• Every state insurance department has fully vetted these Section 79 products and approved them for sales in their states. These products are legal for sale in all 50 states.
• Section 79 plans are not “listed transactions.” Here is a list of all listed transactions according to the IRS – http://www.irs.gov/Businesses/Corporations/Listed-Transactions---LB&I-Tier-I-Issues
No need to be fearful due to the innuendo of an internet spammer; for REAL information about Section 79 plans, contact Business Planning Group at (888)545-2205 or visit our website at BusinessPlanningGroup.com/truth .
419_412i Plan Plan Abuses
ReplyDelete412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS.419 Plan, 412i Plan
Friday, August 8, 2014
19, 412i, Captive Insurance and Section 79 Problems By Lance Wallach, CLU, CHFC…
19, 412i, Captive Insurance and Section 79 Problems By Lance Wallach, CLU, CHFC…
Posted by Lance Wallach at 8:05 AM
Labels: Lance wallach, Lance Wallach Expert Witness, section 79, Section 79 Plans, Section 79 Scams
1 comment:
Bill ShadrachOctober 19, 2014 at 9:58 PM
The Truth About Section 79 Permanent Insurance Plans
Section 79 plans are a part of the employee benefit section of the Internal Revenue Service code (IRC). This code (IRC code Section 1.79) has been a part of the IRC since it was initially adopted in 1953. The President of the United States at that time was Dwight D. Eisenhower.
Section 79 permanent insurance plans are sold within the United States by large national life insurance companies, all of whom have internal legal and compliance departments whose role is to ensure that the products sold by those companies are legal and comply with the rules and spirit of the law. Section 79 permanent insurance plans are sold legally in all 50 states of these United States of America. For the protection of consumers, each state has an insurance department that reviews and approves all company and agent licensing and products sold within that state. (see National Association of Insurance Commissioners at this link).
So, here’s the truth about Section 79 Permanent Insurance Plans:
• This is a legal insurance product, covered in the IRS Code number 1.79.
• All group life insurance is covered under this IRS Code. Most governmental agencies, non-profit organizations and large Fortune 1,000 companies have section 79 as an employee benefit.
• This is not a new code. The IRC 1.79 has been in the code since 1953.
• All Section 79 products are fully vetted by major national insurance companies, their lawyers and compliance staffs, for sale in all 50 states. These are companies with long and successful histories of selling insurance products in the United States since the mid-1800’s.
• Every state insurance department has fully vetted these Section 79 products and approved them for sales in their states. These products are legal for sale in all 50 states.
• Section 79 plans are not “listed transactions.” Here is a list of all listed transactions according to the IRS – http://www.irs.gov/Businesses/Corporations/Listed-Transactions---LB&I-Tier-I-Issues