Section 79 Plans
Your Best Resource for Section 79 Questions, Problems, Information

You WILL Be Audited For Your Section 79 Plan

Section 79 plans, listed transactions, reportable transactions, 419e, 412i, and captive insurance plans
are all targets of IRS Auditors.

Do you know the ins and outs of these plans enough to protect yourself or clients? We do, and we can help you

You WILL be audited. It's just a matter of when. You need help and you need it now.

Educate yourself here, then call for assistance. Your finances are at risk if you put off dealing with this problem.

Call 516-935-7346 to speak with an expert today.



Copyright (C) 2019 Lance Wallach
All rights reserved
Most people have never heard of a Section 79 Plan, because it is a wealth building tool pitched by
insurance agents who really do not understand the math behind the plan.



July         The Newspaper of the NYSSCPA
Vol. 10, No.13

By Lance Wallach, CLU, ChFC, CIMC, and Ron Snyder, JD, EA

Following the U.S. Congress’ lead, on April 10 the IRS issued final regulations under Section 409A of the Internal
Revenue Code. If the rules seemed unclear before, they are crystal clear now: Most of the so-called “419(e)” plans as
well as the remaining 419A(f)(6) plans are in violation of the law and subject to hefty penalties.
A 419(e) plan is a benefit plan that generally seeks to make the purchase of life insurance tax-deductible to employers.
While the concept is appealing, most of the existing arrangements have permitted the plans to transfer the insurance
policies to the participants upon retirement.

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Abusive Insurance and Retirement Plans

Single–employer section 419 welfare benefit plans are the latest incarnation in insurance deductions the
IRS deems abusive


Some of the listed transactions CPA tax practitioners are most likely to encounter are employee benefit
insurance plans that the IRS has deemed abusive. Many of these plans have been sold by promoters in
conjunction with life insurance companies.

As long ago as 1984, with the addition of IRC §§ 419 and 419A, Congress and the IRS took aim at unduly
accelerated deductions and other perceived abuses. More recently, with guidance and a ruling issued in
fall 2007, the Service declared as abusive certain trust arrangements involving cash-value life insurance
and providing post-retirement medical and life insurance benefits.

The new "more likely than not" penalty standard for tax preparers under IRC § 6694 raises the stakes for
CPAs whose clients may have maintained or participated in such a plan. Failure to disclose a listed
transaction carries particularly severe potential penalties.

Lance Wallach, CLU, ChFC, CIMC, is the author of the AICPA’s The Team Approach to Tax, Financial and
Estate Planning. He can be reached at or on the Web at, or 516-
938-5007. The information in this article is not intended as accounting, legal, financial or any other type of
advice for any specific individual or other entity. You should consult an appropriate professional for such
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