the argument being made is that while the contributions to the section 79 plan are tax-deductible from a corporate point of view - i will pay personal income tax on a portion of the contributions that were made... it appears that i won't be taxed on the whole amount, though. The amount that i save on taxes, basically ends up being spent in premiums.

the argument being made is that 1) this is great asset protection 2) that it is great estate planning 3) that it provides a source of income in the future since i will be able to draw loans with minimal to no interest tax-free in the future to supplement retirement income...

your thoughts?
your time is MUCH appreciated!

I certainly understand all of the arguments being made. My issue is that I have not found anyone (other than the insurance agents selling this concept) to find it to be a good idea. I have several calls out and will let you know if I find out any additional information.

I am assuming the plan that you are being shown is with Pacific Life. Correct?

Are you currently a "C" corporation? Do you have any employees other than yourself?

Zip Code: 11797

yes - it is pacific life? how did you know? is that the only one marketing this?

i have no other employees --- i have an s-corp and a c-corp and would be using the c-corp for the sect 79...

what is the biggest down-side of doing this?

I most likely know the group that you have been speaking with as they have written several books and are great at marketing to physicians.

Other companies do sell this type of plan as well. However, most of the major carriers avoid these types of plans due to increased IRS scrutiny (and a history of these things not having worked as favorable as described over time).

Like I mentioned, I would not recommend this plan to any of my clients nor would I do it for myself. I have not found anyone, other than agents and brokers (that have a vested interest in selling or administering the plan), that have given it the "thumbs up".

Worst case scenerio, if the IRS does not view the plan as described or the regs change, the deduction would be disallowed and you would owe taxes at the highest personal rate plus state, city, interest and penalties.

If you would like to discuss things in more detail, feel free to call. I would be happy to provide you with more detail and background behind this plan.

Bottom line: It is geared toward the greed of the agent or broker and client that is willing to take a very aggressive position to reduce income taxes.

There are other options that may produce similar results with a lot less risk.

Zip Code: 11797

Curious-

Here is a link to an article called "The Truth Behind Section 79 Plans". It was written by a physician turned financial advisor. You will find it interesting to say the least.

http://healthcarewealthcare.com/wealthcare/2009/10/31/the-truth-behind-section-79-plans/

Zip Code: 11797