Using VEBAs For Employer-Owners | LifeHealthPro

Imagine a program that allows large, flexible, tax-deductible contributions to accumulate and compound on a tax-deferred basis. Distributions are received at any age without penalties, regardless of the amount. Assets are protected from creditors' claims. There are income and estate tax-free survivor benefits. The program is fully insured and, by a favorable Letter of Determination, the Internal Revenue Service has granted a tax exemption to the Section 501(c)(9) trust.

The program also can acquire tax-deductible life insurance, provide funds to pay estate taxes and provide tax-deductible educational benefits for children.

These are some of the benefits of a Voluntary Employees' Beneficiary Association (VEBA). VEBAs are tax-exempt trusts (or nonprofit corporations) that are described in Section 501(c)(9) of the Internal Revenue Code of 1986. They require a letter of determination from the IRS granting tax exempt trust status. If the statutory requirements are met and the IRS issues a favorable Letter Of Determination, then, in general, the qualified cost of contributions by an employer to the VEBA that are ordinary and necessary expenses, are deductible for federal income tax purposes.

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VEBA Basic Concepts Revisited | LifeHealthPro

Since my last article on Voluntary Employees' Beneficiary Associations, I've received hundreds of phone calls with basic questions which I will attempt to answer in this article.

First and perhaps most important, a VEBA only becomes a tax-exempt organization under Internal Revenue Code Section 501(c)(9) when it has received a Letter of Determination from the Internal Revenue Service granting it tax exempt status.

If a business or professional wants to participate, it joins an existing multiple employer VEBA which has received this determination letter from the IRS. (It is important to note that while several VEBAs have received IRS determination letters, not all programs purporting to be VEBAs have received them.)

VEBAs allow large amounts of tax-deductible contributions for the funding of life insurance, accident insurance, sickness and other benefits for the members of the VEBA, their employees, dependents and beneficiaries. Contribution amounts can be made flexible and benefits are highly favorable to the business owner.

Under the proper conditions, a small business can sometimes put in hundreds of thousands of tax-deductible dollars per year to fund its VEBA.

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Establishing a Buy-Sell Agreement | LifeHealthPro

Working with an attorney, you can help a company establish a buy-sell agreement that sets down in writing what happens to the company's ownership structure in the event a member of the ownership group or a major shareholder dies or becomes disabled.

Without such an agreement in place, a company can be thrown into disarray if one of its owners or key shareholders dies, since the deceased's stake will likely revert to their estate. In that case, the surviving owners' attempts to redeem stock from the estate of the deceased can be a complicated, prolonged, and sometimes contentious process, particularly when it comes to valuing that stock.

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Amazon.com: IRS Secrets You Should Know eBook: Lance Wallach: Books

Lance Wallach

National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, Wallach is a frequent speaker on retirement plans, financial and estate planning, and abusive tax shelters.

He is also a featured writer and has been interviewed on television and financial talk shows including NBC, National Pubic Radio's All Things Considered and others,Lance authored Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk education's CPA's Guide to Life Insurance and Federal Estate and Gift Taxation,

as well as AICPA best-selling books including

Avoiding Circular 230 Malpractice Trap.

Testimonials...

"Mr. Wallach, thanks so much for taking the

time to talk to me ..today about VEBAs.

Any information you can send me would be

helpful. Hopefully, we can work together in

the future as interest in VEBAs increase."

Corman G. Franklin

Office of the Assistant Secretary for Policy

U.S. Department of Labor

Protect your clients – and yourself – from all kinds of financial chicanery and stupidity with this vital new book

It doesn't matter if a financial error was made because of malice or ignorance – the end result is that you lose money. Luckily, you don't have to sit idly and take it. If you have Protecting Clients from Fraud, Incompetence and Scams, you can identify and avoid the dysfunctional sectors of the financial industry, steer clear of the fallout from the Madoff Era, and guide your clients to real, healthy, sustainable returns. This powerful book

• Pinpoints dysfunctional sectors within the financial industry and offers advice against frauds and scammers
• Shows how a team approach to asset management can ward off financial predators
• Offers practical strategies and tools to combat client risk for Risk and Asset Management

Offering insightful information to protect your clients from all sorts of frauds and incompetence, this essential guide equips you with tips and techniques to spot the red flags of fraud and prevent it before it starts.

IRS Secrets You Should Know



Including



Tax, Insurance, and Cost Reduction Strategies for Small Business



Just one of these ideas from the book will save you thousands:



IRS red flags and how to audit proof your tax return

Why your retirement plan is an audit target: how to upgrade it

The only way to deduct estate and business succession plan costs

Turn your life insurance into a tax deduction

Reduce health insurance, workers’ comp and other insurance costs

Discover the only deductible benefit plan where money comes out tax free, even before retirement

Protect assets from creditors while obtaining a tax deduction

Why the IRS has turned your accountant into a tax collector, and what to do about this

Seven best new tax reduction ideas

Use a captive insurance company to reduce taxes and costs



And much more!!!



Books can be purchased here

Amazon.com: Lance Wallach: Books, Biography, Blog, Audiobooks, Kindle

Before you buy you should know section 79 Plan history

Section 79 Scams and Captive Insurance HistoryWhen trying to understand how a product becomes a target of government scrutiny it helps to know its history. 
In the case of plans that fall under Internal Revenue Code Section 79, that history is complex.

Insurance companies, agents, financial planners, and others have pushed abusive 419 and 412i plans for 
years. They claimed business owners could obtain large tax deductions. Insurance companies, agents and 
others earned very large life insurance commissions in the process. Eventually, the IRS cracked down on the 
unsuspecting business owners. Not only did they lose the tax deductions, but they were also fined, in addition 
to being charged penalties and interest. A skilled CPA with extensive IRS experience could usually eliminate 
the penalties and reduce the fines. Most accountants, tax attorneys and others have been unsuccessful in 
accomplishing this.

After the business owner was assessed the fines and lost his tax deduction, he had another huge, unforeseen 
problem. The IRS then came back and fined him a huge amount of money for not telling on himself under IRC 
6707A. If you participate in a listed or reportable transaction, you must alert the IRS or face a large fine.  In 
essence, you must  alert the IRS if you were in a transaction that has the possibility of tax avoidance or 
evasion. Not only must you file Form 8886 telling on yourself, but the form needs to be filed properly, and 
done every year that you are in the plan in any way at all, even if you are no longer making contributions. 
According to IRC 6707A Expert Lance Wallach, "I have received hundreds of phone calls from business 
owners who filed Form 8886, usually with the help of their accountants or the plan promoter. They got the fine 
for either improperly filing, or for making mistakes on the form."

"The IRS directions about preparing the form are vague, especially if the form is filed late. They presume a 
timely filing. In addition, many states also require forms to be filed. For example, if you work in New York State 
and manage to properly fill out the Federal form, but do not file the State form, you may still get fined," says 
Wallach, adding that he only knows of two people that know how to properly prepare and file the forms, 
especially forms being filed late. As an expert witness in such cases, Lance Wallach’s side has never lost.

The result of the all of the above was many lawsuits against insurance companies, including Hartford, Pacific 
Life, Indianapolis Life, AIG, and Penn Mutual, to name just a few. Agents, accountants, and attorneys were 
also successfully sued.



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Insurance Agents: Help for those who sold 419 and 412i plans.

Insurance Agents: Help for those who sold 419 and 412i plans.



Our team of experienced consulting "tax attorneys", CPAs, and "insurance experts" specializing in 412i" and "419 "IRS 
audits" that resulted from plans you sold to your clients, mainly "419 plans", "412i plans", "captive insurance" plans 
and "Section 79" plans as well as other similar "employee benefit plans" or "welfare benefit plans" that the IRS is 
targeting as "abusive tax shelters".

Our firm has been successful in "defending life insurance agents" and "material advisors" who have participated in 
the sale of these "benefit plans".

Section 79 Services

Services