Discussion:Benetrends?
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Discussion Forum Index --> Tax Questions --> Benetrends?
| 24 August 2006 | |
| Has anyone heard of or have any experience with a company called Benetrends, Inc? What they offer seems a little too good to be allowed.
1. They set up a C corporation 2. This C corporation creates a new retirement plan 3. The funds from an existing retirement plan are rolled over into the new corporation's retirement plan 4. The new retirement plan purchases stock in the newly created C corporation. It seems to be used to take an individuals retirement savings and purchase a franchise. The company claims to have IRS approval. A new client has done this and I said seems odd but I would research if this is really ok. What have you recommended if you have encountered this? | |
| 24 August 2006 | |
| I just checked out their web site, ... sure sounds like on of those get rich quick ripoffs to me. I really don't see how they can take money from an IRA or 401(k) plan and not incurr the 10% penalty or tax on the proceeds.. | |
| 24 August 2006 | |
| Sounds like an ESOP to me. The admin costs on an ESOP are fairly high. | |
| 24 August 2006 | |
| The retirement plans have always frustrated me; they should be made a whole lot simpler. Aren't there a whole host of prohibited transaction rules, one or several of which make it difficult to invest the retirement assets into one's own business? | |
| 24 August 2006 | |
| Investing in employer securities is a prohibted transaction unless the retirement plan is an ESOP. | |
| 8 March 2007 | |
| I noticed your conversation and have some experience in this area. Benetrends is one of the companies that offers this kind of service but the better choice would be Guidant Financial Group (www.guidantfinancial.com.) They appear to be much larger and seem to have a more streamlined process that offers a higher level of support. The structure offered by both companies is similar but Guidant’s offering is a package deal that is less expensive than the other companies and includes more. For instance, Guidant includes 2 hours of consultation with an independent LL.M tax attorney. The structure created by Guidant follows ERISA and IRC code specifically so there are no end-runs or loopholes. The really cool thing is that Guidant helps you invest money you already have (in your retirement account) without a taxable distribution or a loan into a business you purchase and work for. If you have enough in your retirement account to underwrite the cost to purchase or start your business, there is no debt service. And as you grow your business, you grow the value of your retirement account based on it’s stock ownership plus you will have a 401(k) that will allow you to shelter and defer up to $45k per year, pre-tax. I have seen people buy several types of franchises and existing businesses using this structure. | |
| 8 March 2007 | |
| I'd ask to see the IRS ruling they got to bless this arrangement, and if they don't have one, I'd head for the hills. Remember the general rule: if it sounds too good to be true, it probably is. | |
| 8 March 2007 | |
| I wondered about the same thing. Every Guidant client receives copies of 2 Letters of Determination from the IRS and they get to take advantage of Guidant’s on-going relationship with the DOL (Department of Labor). The DOL sets policy and oversees retirement fund investing and the IRS is the enforcement arm. Guidant is known as the most conservative company offering this type of product and if a client want to pursue something a bit outside the box, Guidant will call the DOL to get a verbal opinion before moving forward. | |
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