Pension Plans Funded With Cash-Value Life Ins Policies Could Wipe Out Small Businesses

Many small business owners across the nation are worried that they won’t be able to pay the huge fines assessed by the Internal Revenue Service (IRS) on pension plans funded with cash-value life insurance policies. In most cases, the plans were created by insurance companies and their sales representatives as illegal tax shelters – much to the surprise of hard working, small business owners who simply wanted to provide for their futures and those of their employees.

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412(i) Pension Plan Fraud: Schemes Motivated By Big Insurance Commissions

Scams & schemes involving Internal Revenue Code Section 412(i) pension plan fraud have taken many business owners by surprise. Told by insurance companies that contributions to their employee retirement plans could be up to ten times more than a traditional plan, and that withdrawing up to 80% of funds could be done on a pre-tax basis, business owners say that they were taken’ all for big insurance company commissions.

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Pension Plan Schemes: Was Your Company Duped?

While we were all fascinated by the Bernie Madoff Ponzi scheme debacle, another scheme involving Internal Revenue Code Section 412(i) pension plans is equally controversial, yet much less publicized – and the companies involved are saying they were duped by insurance agents and pension plan designers.

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IRS Says 412(i) Pension Plans Must Be Reported; Co’s Filing For Bankruptcy

The Internal Revenue Service (IRS) says that 412(i) pension plans are reportable transactions and participants must file Form 8886 or face hundreds of thousands of dollars in fines. Unfortunately, it’s forced many of the small companies in high tax brackets who unknowingly participated in these tax shelter retirement plan schemes to file for bankruptcy.

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