As an expert witness Lance Wallach side has never lost a case: United States Of America, ...

As an expert witness Lance Wallach side has never lost a case: United States Of America,                         ...: United States Of America,                                                            Oct. 9th 2013 Plantiff,                

Lance Wallach Life Insurance

Wednesday, April 30, 2014

Why You Should Stay Away from Section 79 Life Insurance Plans

I’ve had several calls lately from doctors who are being pitched Section 79 plans and are wondering if these plans are any good. The doctors are being told that Section 79 plans are the best wealth-building tool they can use to reduce their income taxes and create a tax-free retirement income

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Friday, March 28, 2014

Life Insurance

In many of Lance Wallachs CPE books he discusses 412i or 412e3 and listed transactions.

One day when you were complaining about what you pay the government, your cousin Tilly suggested that she knew a life insurance agent who could help you with your taxes. You met with him, you listened to his pitch about a deferred benefit plan, and you asked a lot of questions. He suggested a 412i plan, whatever that is. From the initial description it sounded as if you would have to fund retirement for your rotating staff which you weren’t interested in doing, but he told you that he could arrange an executive carve out. You really didn’t have the income to fund it initially but he convinced you to sell your investment real estate, declare your gain as ordinary income, and then buy the plan to offset that.

You’ve been hearing that the IRS is after “listed transactions” and you’re worried. Suddenly you’re having a tough time having cousin Tilly’s friend return your calls. The insurance company whose products fund your plan has taken your calls, but for the fourth time in as many months a representative has promised to get back to you. Honest he will!

You have gone to a new accountant and you learn that the plan was unsuited for you, it was formed improperly, and it’s going to cost you a lot more money than you have to pay the IRS not to mention the accountant and the actuary to sort it all out. Now you are worried that the problems may wipe out your retirement nest-egg and keep you working years longer than you intended.

Fortunately, there are ways to provide for your retirement that can afford you tax benefits while creating a solid retirement fund for your future so that you won’t have to be “that doctor”. However, getting there doesn’t necessarily start with cousin Tilly’s insurance agent friend or the “financial planner” you met on the golf course. If you want to avoid problems in your retirement plans, there are some things you should do.

1. Educate yourself. When you need a new car, do you go to your dry cleaner’s brother who is a car salesman to tell you what you want? Of course not. You choose some cars that interest you, you study them, and then you work with dealers to get the best car for you at the best deal. Why should your retirement planning be different? There are many types of financial advisors. There are also different types of retirement plans available and one is probably more suitable for your current financial capabilities and retirement needs. A great and easy tool is the IRS Retirement Plans Navigator.www.retirementplans.irs.gov.
2. Then find a financial advisor. There are lots of folks who want to sell you their retirement services: insurance agents, accountants, lawyers, stockbrokers and financial planners. Do research about them, search the internet, read about them, contact local professional associations, and use similar resources.
3. Interview potential advisors. There are a number of things you will want to find out, but one question is paramount – are you a fee-only advisor? A fee-only financial advisor is compensated solely by you the customer and not by some mega insurance company or broker for selling you their products. Advisors paid by insurance companies or brokers are not necessarily bad. But they do have a built-in conflict of interest you should recognize going into the relationship – they are only paid when they sell you something marketed by a company they write for. The National Association of Personal Financial Advisors provides an easy way to search for fee-only advisors. www.napfa.org.
4. When you choose an advisor, ask to see plan alternatives. Not all retirement plans are created equal. It’s nice to have options and supporting data to help you make a choice. For example, some retirement plans have significant and complicated administration requirements like IRS form 5500 filings and census testing that are additional costs to you. After you have met with your financial advisor and explained your financial capabilities and retirement needs and goals, ask your financial advisor for a comprehensive analysis of why one retirement plan is more suitable for you than some of the others (same goes for the funding products).
5. Consult with your accountant. There may be certain tax obligations and/or deductions that may make one retirement plan more or less attractive than the next. While a financial advisor can explain those to you as a part of any analysis, your accountant, who already knows your financial situat

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