National Offices of Lance Wallach

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Monday, March 12, 2018

Captive Insurance Plans, Want to Get Audited? - HGExperts.com

Captive Insurance Plans, Want to Get Audited? - HGExperts.com: The insurance industry have been conjuring ways to make life insurance premiums tax deductible. Over the years we have seen many schemes that have failed IRS scrutiny. Welfare benefit plans set up und

Tuesday, February 27, 2018

JOHN J. KORESKO GOES TO JAIL Get Veba Help


CIVIL ACTION NO. 09-988 (E.D. Pa. Aug. 31, 2016)

SOLIS V. JOHN J. KORESKO, V, JEANNE BONNEY, PENN-MONT BENEFIT SERVS., INC.
WENDY BEETLESTONE, J.

OPINION
This case arises out of an action by Plaintiff, the Secretary of Labor of the United States Department of
Labor ("DOL"), brought against two multiple-employer trusts and others, alleging breach of their fiduciary
duties under the Employee Retirement Income Security Act for failure to maintain employee welfare
benefit plan assets in trust and transferring plan assets into non-trust accounts they controlled. Before the
Court is Defendant John J. Koresko's ("Koresko") Motion for Reconsideration of the Court's Order of
Contempt issued April 26, 2016 (ECF No. 1307).
In entering the Contempt Order, the Court concluded that the DOL had proved by clear and convincing
evidence that: (1) a valid order of the court existed; (2) the defendant had knowledge of the order; and (3)
the defendant disobeyed the order. See FTC v. Lane Labs-USA, Inc., 624 F.3d 575, 591 (3d Cir. 2010). The
Court's rationale was set forth in its oral opinion from the bench at the conclusion of the hearing on the
Motion for Contempt. See ECF No. 1321.
Beyond the frivolous and meritless objections discussed supra, Koresko has not offered any
newly-discovered evidence or asserted any manifest errors of law or fact that would warrant
reconsideration. A motion for reconsideration should generally be denied "unless the moving party can
point to controlling decisions or data that the court overlooked." Shrader v. CSX Transp., Inc., 70 F.3d 255,
257 (2d Cir. 1995). Koresko having failed to do so, the motion
is denied.

Friday, June 2, 2017

Pacific Life Insurance Co.


Gordon Lee

Re: Life Policy # VF51683620

Dear Sir/Madam,

I bought a One Million Dollard Life policy from your company in 2007 for Gordon H. Lee, Welfare Benefit Trust under 419 Plan. I particularly relied on the fact that your company had reviewed the plan and allowed your companies insurance into the plan. I have read a lot about other people being audited in this plan, and also about lawsuits against the plan and your company. I have also read some documents about your executives comments about this plan, and what they should have know with respect to the plan. I have discussed this with a lawyer who has been suing insurance companies in this respect. I do not especially want to sue, I just want to be made whole. If you are interested in discussing this I would like to do so. 

I have also discussed my situation with two people who have been writing extensively about these plans in publications. I told them that I would hope that your excellent company would make good to me, on a plan that they approved putting their insurance into. I told them that they do not have my permission to use my name at this time. If you want to settle with me they will never have my permission.

I got audited in April of 2009 by IRS.  Not only do I have to pay the tax on the income I excluded according to the 419 Plan for the Insurance Premium I paid to Pacific Life, I have to pay interest and penalty.  Most devastatingly is the Sec. 6707A Penalty which was $200,000 for the Trust, and $100,000 for each individual each year. I now understand that the law is changed and the fine for not reporting will be a little less You and your agent never told me that I had to file the forms. I can prove that your company knew that there was a problem with the plan and the IRS.

I did as Kevin Lee, your Broker/Agent to research with Pacific Life about the legality and applicability about this 419 Plan.  And according to Kevin Lee, Pacific LIfe gave a green light on every aspect of this application. I did not want life insurance, just a legitimate tax deduction. I now have life insurance that I did not want, and have lost my tax deduction. I also owe money to the IRS.

Because I partially relied on Pacific Life, therefore, it is would be fair for your company to cover my losses. If I sue I am sure that I will probably win. I have done extensive research into what is happening with respect to your company and these plans. I have also gotten a lot of information from the IRS.

Captive Insurance and Other Tax Reduction Strategies


The Good, Bad, and Ugly


By Lance Wallach                                                                  May 14th


Every accountant knows that increased cash flow and cost savings are critical for businesses.  What is uncertain is the best path to recommend to garner these benefits.

Over the past decade business owners have been overwhelmed by a plethora of choices designed to reduce the cost of providing employee benefits while increasing their own retirement savings. The solutions ranged from traditional pension and profit sharing plans to more advanced strategies.

Some strategies, such as IRS section 419 and 412(i) plans, used life insurance as vehicles to bring about benefits. Unfortunately, the high life insurance commissions (often 90% of the contribution, or more) fostered an environment that led to aggressive and noncompliant plans.

The result has been thousands of audits and an IRS task force seeking out tax shelter promotion. For unknowing clients, the tax consequences are enormous. For their accountant advisors, the liability may be equally extreme.

Recently, there has been an explosion in the marketing of a financial product called Captive Insurance. These so called “Captives” are typically small insurance companies designed to insure the risks of an individual business under IRS code section 831(b). When properly designed, a business can make tax-deductible premium payments to a related-party insurance company. Depending on circumstances, underwriting profits, if any, can be paid out to the owners as dividends, and profits from liquidation of the company may be taxed as capital gains.

While captives can be a great cost saving tool, they also are expensive to build and manage. Also, captives are allowed to garner tax benefits because they operate as real insurance companies. Advisors and business owners who misuse captives or market them as estate planning tools, asset protection vehicles, tax deferral or other benefits not related to the true business purpose of an insurance company face grave regulatory and tax consequences.

A recent concern is the integration of small captives with life insurance policies. Small captives under section 831(b) have no statutory authority to deduct life premiums. Also, if a small captive uses life insurance as an investment, the cash value of the life policy can be taxable at corporate rates, and then will be taxable again when distributed.  The consequence of this double taxation is to devastate the efficacy of the life insurance, and it extends serious liability to any accountant who recommends the plan or even signs the tax return of the business that pays premiums to the captive.

The IRS is aware that several large insurance companies are promoting their life insurance policies as investments with small captives. The outcome looks eerily like that of the 419 and 412(i) plans mentioned above.

Remember, if something looks too good to be true, it usually is. There are safe and conservative ways to use captive insurance structures to lower costs and obtain benefits for businesses. And, some types of captive insurance products do have statutory protection for deducting life insurance premiums (although not 831(b) captives). Learning what works and is safe is the first step an accountant should take in helping his or her clients use these powerful, but highly technical insurance tools. 


Lance Wallach speaks and writes extensively about VEBAs, retirement plans, and tax reduction strategies.  He speaks at more than 70 conventions annually, writes for 50 publications, and was the National Society of Accountants Speaker of the Year.  Contact him at 516.938.5007 or visit www.vebaplan.com.
    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.

Help! My Captive Insurance Company is Under IRS Audit. We have learned from…

Help! My Captive Insurance Company is Under IRS Audit. We have learned from…

Captive insurance and abusive tax shelter, 419 plans

Captive insurance and abusive tax shelter, 419 plans

412i,419, section 79 and captive insurance lawsuits and IRS audits | LinkedIn

412i,419, section 79 and captive insurance lawsuits and IRS audits | LinkedIn

VEBAs and Pre-Funding Retiree Health Benefits

Practical Guidance for Employers, Plan Administrators, Investors and their Advisors
September 9, 2008 10:30 a.m. ET
Length: 75 minutes

Presented by Lance Wallach

Whether you are a benefits manager or administrator tasked with finding a solution to manage retiree medical liabilities or an investor analyzing a company with post-retirement benefits on the books, this webinar is a must attend event.

Hear from benefits expert, Lance Wallach, as he provides valuable guidance on the implications of VEBAs and the potential benefits they can offer. Topics of discussion will include:

-An overview of the GM and Ford agreements
- How they work: The proper formation and operation of a VEBA
- Key considerations for plan design, administration and investments
- Alternatives to VEBAs
- Pros and cons for employers and special considerations for public-sector employers
- Investor perspective: The potential impact of a VEBA on large, publicly traded companies

This is your opportunity to hear from and ask specific questions of the leading expert on VEBAs! Plus, Mr. Wallach has offered 10 minutes of free consultation to webinar participants within one week after the event!

Who Should Attend?
From Private, Public Sector and Multi-Employer Entities including
- Plan administrators
- Plan Benefit Managers
- HR Personnel As well as:
- Health Care Benefit Consultants
- Compliance Officers
- Attorneys

As well as analysts from Hedge Funds, Private Equity and Venture Capital companies investing in companies with or considering a VEBA.

Presented by:

Lance Wallach, CLU, CHFC, CIMC

A member of the AICPA faculty of teaching professionals and an AICPA course developer, is a frequent and popular speaker on VEBAs, retirement plans, reducing health insurance costs, and captive insurance at accounting and benefits conventions. He has authored numerous books including "Tax Planning and Asset Protection Using VEBAs". Mr. Wallach writes for over fifty publications including AICPA Planner, Accounting Today, CPA Journal, Enrolled Agents Journal, Financial Planning, Registered Representative, Tax Practitioners Journal, CPA/Law Forum, Employee Benefit News, Health Underwriter, Advisor and the American Medical Association News. Mr. Wallach is listed in Who’s Who in Finance and Industry and is frequently quoted in the press for his expertise on VEBAs—including Bloomberg.com, Washington Post and USA Today. He has also been featured on television and radio financial talk shows including NPR.

Click here to for a link to Mr. Wallach’s NPR 9-25-07 interview.

VEBAS AND PRE-FUNDING RETIREE HEALTH BENEFITS And a lot more.

Webinar Event
9-25-07
Presented by: Lance Wallach, CLU, CHFC

Whether you are a benefits manager, administrator charged with finding a solution to manage retiree medical liabilities or an investor analyzing a company with post-retirement benefits on the books, this webinar is a must attend event.

Hear from benefits expert, Lance Wallach, as he provides valuable guidance on the implications of VEBAs and the potential benefits they can offer. Topics of discussion will include:

• An overview of the GM and Ford agreements • How they work: The proper formation and operation of a VEBA • Key considerations for plan design, administration and investments • Alternatives to VEBAs • Pros and cons for employers and special considerations for public-sector employers •

Investor perspective: The potential impact of a VEBA on large, publicly traded companies

This is your opportunity to hear from and ask specific questions of the leading expert on VEBAs! Plus, Mr. Wallach has offered 10 minutes of free consultation to webinar participants within one week after the event!

Who Should Attend?From Private, Public Sector and Multi-Employer Entities including• Plan administrators • Plan Benefit Managers • HR personnel as well as: • Health Care Benefit Consultants • Compliance Officers • Attorneys

As well as analysts from Hedge Funds, Private Equity and Venture Capital companies investing in companies with or considering a VEBA.

Presented by:Lance Wallach, CLU, CHFC

A member of the AICPA faculty of teaching professionals and an AICPA course developer, is a frequent and popular speaker on VEBAs, retirement plans, reducing health insurance costs, and captive insurance at accounting and benefits conventions. He has authored numerous books including Tax Planning and Asset Protection Using VEBAs Mr. Wallach writes for over fifty publications including AICPA Planner, Accounting Today, CPA Journal, Enrolled Agents Journal, Financial Planning, Registered Representative, Tax Practitioners Journal, CPA/Law Forum, Employee Benefit News, Health Underwriter, Advisor and the American Medical Association News. Mr. Wallach is listed in Who's Who in Finance and Industry and is frequently quoted in the press for his expertise on VEBAs—including Bloomberg.com, Washington Post and USA Today.

He has also been featured on television and radio financial talk shows including NPR.
Click here to for a link to Mr. Wallach's NPR 9-25-07 interview.