Tax Guru – Ker$tetter Letter

For clients and others wondering where we are, we have been out of power since last Tuesday morning as the result of what everyone is calling the worst ice storm ever to hit this area. Just one more fact proving AlGore’s global warming theories to be a pile of donkey crap. We all wish we had warming after digging out of the ice and cutting down hundreds of fallen trees to barely clear the roads.

Needless to say, we have had no internet access up on the mountain and we received our first snail mail delivery since last Monday yesterday by meeting our mailman half-way.

Parts of the Ozarks do finally have power and we were able to make it off the mountain this afternoon to set up a satellite office in a Super 8 motel room in Harrison with two laptop computers and a laser printer from my main office.

Our electric company is vague about when we will have power restored, but they do have some pictures on their website of what things are looking like around here. Tax returns will be delayed a bit; but I will do my best to answer emails as soon as possible.

I was reading my paper copy of Practical Accountant magazine the other day and noticed this small item in the Tax Briefing section.

ROBS Retirement Plans Targeted

An IRS memorandum has been issued containing audit guidelines for a version of a qualified plan being marketed as a means for prospective business owners to access accumulated tax-deferred retirement funds without paying applicable distribution taxes in order to cover new business start-up costs. The memorandum refers to these arrangements as ROBS (rollovers as business startups).

IRS indicates that they “may serve solely to enable one individual’s exchange of tax-deferred assets for currently available funds, by using a qualified plan and its investment in employer stock as a medium. This may avoid distribution taxes otherwise assessable on this exchange. Although a variety of business activity has been examined, an attribute common to this design is the assignment of newly created enterprise stock into a qualified plan as consideration for these transferred funds, the valuation of which may be questionable.”

This obviously has to do with the kind of plans that that I have discussed on numerous occasions, such as those offered by companies like BeneTrends. I haven’t seen any response to this yet from BeneTrends or any of the similar companies; but I’m hoping their plans will withstand any IRS scrutiny that may come their way because they are a huge help to small business owners, as well as a more productive investment vehicle for the retirement funds than the big stock market or other conventional vehicles.