412i lawsuits. . . can’t sue the insurance company

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A few years back the financial community, in particular insurance agents, really pushed the concept of a 412i plan as a way to save money. Basically a 412i was a defined benefit plan that put all its money into insurance products. Thus the love affair insurance agents had with them.

Fast forward a few years and the IRS decided a lot of the plans were shams and proceeded to hit 412i participants with hefty fines.

This being America, guess what the participants do? Sue everyone involved.

Unfortunately for the participants lawsuits against the insurance companies haven’t been too successful. Today another case was released, this one out of Texas, that basically says the participant can’t go after the insurance company based upon fraud.

Before you do any advanced planning you really need to consult with a professional advisor who doesn’t stand to make 5 or 6 figure commissions on the idea.