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FSL was paying commissions to agents up to 95% of the first year’s contributions followed by excessive percentages thereafter, and the plans’ claims for favorable tax treatment were dubious and would jeopardize the unusually large deductions CJA and Thorndike had touted to lure small businesses into the investment. Law firm Moukawhser & Walsh, LLC, which filed the suit, said the so-called Section 412 (e)(3) plans are under attack from the IRS as illegitimate attempts to avoid federal taxes. According to the complaint, the plans’ participants had little or no accrued benefits at various points because nearly all the plan assets were converted into commissions and fees, subjecting the plans to retroactive disqualification by the Internal Revenue Service (IRS). The lawsuit seeks to recover the plans’ losses, attorneys’ fees, costs and other equitable relief for fiduciary breaches under the Employee Retirement Income Security Act (ERISA). The complaint is at http://mwlegalgroup.com/Complaint.pdf.
FSL was paying commissions to agents up to 95% of the first year’s contributions followed by excessive percentages thereafter, and the plans’ claims for favorable tax treatment were dubious and would jeopardize the unusually large deductions CJA and Thorndike had touted to lure small businesses into the investment.
Law firm Moukawhser & Walsh, LLC, which filed the suit, said the so-called Section 412 (e)(3) plans are under attack from the IRS as illegitimate attempts to avoid federal taxes.
According to the complaint, the plans’ participants had little or no accrued benefits at various points because nearly all the plan assets were converted into commissions and fees, subjecting the plans to retroactive disqualification by the Internal Revenue Service (IRS).
The lawsuit seeks to recover the plans’ losses, attorneys’ fees, costs and other equitable relief for fiduciary breaches under the Employee Retirement Income Security Act (ERISA).
Rebecca Mooreeditors@plansponsor.com