Interesting Facts About 412i

gold eggA 412(i) plan is a type of defined benefit plan funded with life  insurance. At some point, the participant buys the insurance from the plan and rolls the sales price over to an IRA. You need an ERISA attorney because, in addition to all of the other problems that you have uncovered, it is not uncommon for there to be too much insurance in the plan and/or for the purchase price to be too low.

It also may be possible that there are potential “listed transaction” problems here. If so then form 8886 needs to be filed or there might be 6707A Penalties. If they were supposed to file form 8886 and didn’t I believe there is no statute of limitations.

Some 412i plans used life insurance which of course could not go into the IRA,

Funding for these type of 412i plans is restricted EXCLUSIVELY to life insurance policies and or fixed annuities ONLY.

412i plans offer no flexibility regarding funding and there are no other funding choices available for funding these plans.

412i plans are funded by the employer with specific level dollar amounts annually.bullseye

Annual payments are adjusted by interest accrued from insurance policies and or from interest earned from the fixed annuities.

Any business, whether a C Corporation, S Corporation, partnership, sole proprietorship, self-employed can establish a 412i plan.

412i Defined Benefit Plans are generally best suited for high income individuals and companies or organization with anticipated stable future earnings and with few employees.

412i plans can be established for larger employee organizations and can be structured on an age eighted, salary weighted basis.

A 412i plan is established so that the amount of the employee’s retirement income is fixed, defining the benefit in advance by the plan’s benefit formula.

Future payout for 412i plan beneficiaries is a monthly dollar payment for life and or with the option to roll the cash value at some future date into other retirement plan options.

The employer’s desired fixed benefit and fixed contribution is determined by formula based on how the 412i plan is designed and set up.

2015-ira-contribution-limits412i plans can be established for relatively brief contributory periods.

Key Features of these plans, include: very large tax deductible contributions, which can produce a substantial retirement fund in a few years and plan provides large fixed known monthly benefits.

Relative to a high contributions permissible in traditional defined benefit plans, these plans can be structured, dependent of funding structure allocation between life insurance and fixed annuities, to provide tax deductible contribution typically far in exceed of what’s available in defined benefit plans or any other retirement plan choices.

A 412i plan has set-up expense, annual administration and annual IRS 5500’s series of filings.




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