Most accountants, attorneys, and financial advisers have been pitched the concept of a 419 welfare benefit plan (WBP) or a voluntary employee benefit association plan (VEBA). WBPs have been around in one form or another for nearly 20 years (preceded by VEBAs).
In the last five years, they have been promoted as "the" income tax reduction plan for small-business owners and professionals like doctors and lawyers. And like many heavily marketed plans, caveat emptor. The advantages of such plans are increasingly problematic, and the IRS is casting a wary eye on some of the more aggressive uses of WBPs.
This article will explain what a WBP is, how it was traditionally proposed to advisers and their clients, and the common ways it is now marketed. There are pros and cons to whether you would want to offer such a plan to your clients. Most important, I'll tell you about a WBP that actually does comply with the recent IRS regulations on these plans.
What is a WBP? The short technical answer is that a WBP (outlined under 419A(f)6)) is a multiple-employer plan that has 10 or more separate employers as members. The members are allowed to fund the plan for particular "welfare benefits" for their employees. The main welfare benefit comes in the form of a death benefit for members.
Why would a small employer want to use a WBP? Small employers set up or join an existing WBP and then take a tax deduction (up to several hundred thousand dollars a year) for the purchase of life insurance policies that would for the most part benefit the owners and employees of the member companies.
How does a WBP benefit the owners of a small business or professional practice? The life insurance is tax deductible. And if an employee dies when the WBP is in place, the death benefit will be paid free of income and estate tax to the beneficiaries of the policy. …
The information provided herein is not intended as legal, accounting, financial or any other type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.
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Lance Wallach speaks and writes about benefit plans, and has authored numerous books for the AICPA, Bisk Total tape, and others. He can be reached at (516) 938-5007 or wallachinc@gmail.com. For more articles on this or other subjects, feel free to visit his website at www.taxadvisorexperts.org.
Lance Wallach, the National Society of Accountants Speaker of the Year, speaks and writes extensively about retirement plans, Circular 230 problems and tax reduction strategies. He speaks at more than 40 conventions annually, writes for over 50 publications, is quoted regularly in the press, and has written numerous best-selling AICPA books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Business Hot Spots. He does extensive expert witness work and has never lost a case. Contact him at 516.938.5007 or visit www.taxadvisorexperts.org. Read 1 comment
IRS tax relief firm, Lance Wallach, speaking Lance Wallach showcases his expert knowledge in IRS tax relief. Monday, March 10, 2014
412i-419 Plans: KENNETH ELLIOT: Sea Nine VEBA Important 412i-419 Plans: KENNETH ELLIOT: Sea Nine VEBA Important: KENNETH ELLIOT: Sea Nine VEBA Important : As of August 23,2013, the IRS has closed audits of 12 Sea Nine VEBA plan-participating taxpayers w...
IRS tax relief firm, Lance Wallach, speaking Lance Wallach showcases his expert knowledge in IRS tax relief. Monday, March 10, 2014
412i-419 Plans: KENNETH ELLIOT: Sea Nine VEBA Important 412i-419 Plans: KENNETH ELLIOT: Sea Nine VEBA Important: KENNETH ELLIOT: Sea Nine VEBA Important : As of August 23,2013, the IRS has closed audits of 12 Sea Nine VEBA plan-participating taxpayers w...
Qqurbani online Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I'll be subscribing to your feed and I hope you post again soon. Big thanks for the useful info.
Most accountants, attorneys, and financial advisers have been pitched the concept of a 419 welfare benefit plan (WBP) or a voluntary employee benefit association plan (VEBA). WBPs have been around in one form or another for nearly 20 years (preceded by VEBAs).
ReplyDeleteIn the last five years, they have been promoted as "the" income tax reduction plan for small-business owners and professionals like doctors and lawyers. And like many heavily marketed plans, caveat emptor. The advantages of such plans are increasingly problematic, and the IRS is casting a wary eye on some of the more aggressive uses of WBPs.
This article will explain what a WBP is, how it was traditionally proposed to advisers and their clients, and the common ways it is now marketed. There are pros and cons to whether you would want to offer such a plan to your clients. Most important, I'll tell you about a WBP that actually does comply with the recent IRS regulations on these plans.
What is a WBP? The short technical answer is that a WBP (outlined under 419A(f)6)) is a multiple-employer plan that has 10 or more separate employers as members. The members are allowed to fund the plan for particular "welfare benefits" for their employees. The main welfare benefit comes in the form of a death benefit for members.
Why would a small employer want to use a WBP? Small employers set up or join an existing WBP and then take a tax deduction (up to several hundred thousand dollars a year) for the purchase of life insurance policies that would for the most part benefit the owners and employees of the member companies.
How does a WBP benefit the owners of a small business or professional practice? The life insurance is tax deductible. And if an employee dies when the WBP is in place, the death benefit will be paid free of income and estate tax to the beneficiaries of the policy. …
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ReplyDeleteinShareaxadvisorexperts.org or call 516-938-5007.
The information provided herein is not intended as legal, accounting, financial or any other type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.
Share This Article With a Friend
Lance Wallach speaks and writes about benefit plans, and has authored numerous books for the AICPA, Bisk Total tape, and others. He can be reached at (516) 938-5007 or wallachinc@gmail.com. For more articles on this or other subjects, feel free to visit his website at www.taxadvisorexperts.org.
Lance Wallach, the National Society of Accountants Speaker of the Year, speaks and writes extensively about retirement plans, Circular 230 problems and tax reduction strategies. He speaks at more than 40 conventions annually, writes for over 50 publications, is quoted regularly in the press, and has written numerous best-selling AICPA books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Business Hot Spots. He does extensive expert witness work and has never lost a case. Contact him at 516.938.5007 or visit www.taxadvisorexperts.org.
Read 1 comment
IRS tax relief firm, Lance Wallach, speaking
ReplyDeleteLance Wallach showcases his expert knowledge in IRS tax relief.
Monday, March 10, 2014
412i-419 Plans: KENNETH ELLIOT: Sea Nine VEBA Important
412i-419 Plans: KENNETH ELLIOT: Sea Nine VEBA Important: KENNETH ELLIOT: Sea Nine VEBA Important : As of August 23,2013, the IRS has closed audits of 12 Sea Nine VEBA plan-participating taxpayers w...
IRS tax relief firm, Lance Wallach, speaking
ReplyDeleteLance Wallach showcases his expert knowledge in IRS tax relief.
Monday, March 10, 2014
412i-419 Plans: KENNETH ELLIOT: Sea Nine VEBA Important
412i-419 Plans: KENNETH ELLIOT: Sea Nine VEBA Important: KENNETH ELLIOT: Sea Nine VEBA Important : As of August 23,2013, the IRS has closed audits of 12 Sea Nine VEBA plan-participating taxpayers w...
Qqurbani online Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I'll be subscribing to your feed and I hope you post again soon. Big thanks for the useful info.
ReplyDelete