412 (i) Defined Benefit Pension Plan - Posted by Fred

Posted by John Merchant on September 22, 2003 at 10:46:17:

Def.Ben plan is a great tool for the corp, but beware that many (most?) annuities have early surrender penalties, so you’d want to acquire one that does not have a horrendous surrender penalty.

Annuities come in lots of varieties, icluding one & two year ones, but these normally pay a really pitiful interest rate, and are really nothing more than short term safe storage of your money…and they may not be IRA-rollable, so you’d want to make the annuity company or agent provide you proof that they would be.

Or get a legal opinion first, so your lawyer could check IRA Regs & annuity pol language before you leap.

412 (i) Defined Benefit Pension Plan - Posted by Fred

Posted by Fred on September 04, 2003 at 16:41:14:

Do the moderators or any other tax folk have any knowledge of using a 412(i) Plan to gain big deductions for your corporations. My understanding is that the monies can only be used to purchase whole life insurance or a fixed annuity but the corporation gets to deduct the full amount. This sounds like a great way to get rid of retained earnings. The funds can later be rolled into a self directed IRA and are tax deferred until withdrawn. Another feature is that all assets are protected under ERISA laws and offer the ultimate asset protection vehicle. Comments?