Section 1035 Exchange Of A Life Insurance Policy With Loans

IRC Section 1035 allows Tax Free Exchanges of life insurance policies in a gain position (i.e. gross cash value greater than adjusted cost basis) so that cash values can be easily transferred to more financially efficient policies.  Sometimes greater death benefit and/or lower premium can result from the exchange in addition to desirable contract guarantees. […]

Requirements to Change State of Residency

It’s Not As Easy As You Think!   Often, wealthy older clients from high tax states will consider moving to a lower taxed state to save taxes. This typically involve state income taxes on retirement benefits and state estate taxes on their net worth /gross estates. You may have heard people say “If I live […]

Life Insurance Ownership Changes & the “Transfer for Value Rule” of IRC Section 101

Life insurance policies sometimes have a need to be transferred from the original policy owner to a new policy owner. When a transfer of ownership takes place (absolute assignment or change of ownership form), financial professionals should be concerned about the so-called Transfer for Value Rule (TFV) and qualifying for one of the TFV exceptions. […]

IRA Rollover Rules Interpretation

IRS Clarifies IRA to IRA Rollover Rules: Only One is Permitted Each Year for Any Individual   As a result of a Tax Court decision in 2014 (Bobrow v. Commissioner, T.C. Memo 2014-21), the Internal Revenue Service (IRS) has stated in Announcement 2014-15 that it will follow the result of that Tax Court case starting on January […]

“Wait & See” Buy Sell Agreement Strategy

Sometimes it’s difficult to decide which type of buy sell agreement to recommend when dealing with business succession planning for C Corporations. Should it be a stock redemption plan funded with employer owned insurance or a cross purchase plan funded by cross owned insurance?   Using a cross purchase plan, the surviving shareholder gets a […]

EOLI Notice & Consent Rules Require Careful Planning to Assure Tax Free Death Benefit

IRC Section 101(j) was enacted as part of the Pension Protection Act of 2006. For Employer-Owned Life Insurance (EOLI) issued after August 17, 2006, the death proceeds of a life insurance policy above the policy cost basis will be income tax free only if certain Notice and Consent requirements are met.   IRS issued IRS […]

Obama Administration Releases "Green Book" Budget Proposal For FY 2015

The Obama Administration recently released its “green book” budget proposal for 2015.   The proposal is very similar to the Administration’s budget proposals for prior years. However, the chances that any of these proposals actually become law is low given the fact that 2014 is an election year and any chance of compromise between the […]

U.S. Supreme Court Rules Defense of Marriage Act (DOMA) Unconstitutional

July 2013– U.S. Supreme Court Rules Defense of Marriage Act (DOMA) Unconstitutional   On June 26, 2013, in a 5-4 decision, the U.S. Supreme Court ruled most of DOMA to be unconstitutional.  This means that same-sex marriages legalized by the states will now be recognized for federal tax and benefit purposes.   The case (United […]

Pre-59 1/2 Substantially Equal Periodic Payments (SEPP) from an IRA to Increase Income and Fund Insurance

Generally, taxable withdrawals from non-qualified deferred annuities before the participant attains age 59 ½ are subject to an additional early withdrawal penalty tax. Learn more about avoiding this penalty and helping your clients close an income gap.   The Scenario:   Within the past year, Ted Eller was let go by Acme Consulting after working […]