Compliance April 18, 2011

Abusive Retirement Plans Make IRS “Dirty Dozen” List

The Internal Revenue Service (IRS) has compiled its annual list of “dirty dozen” tax scams, including “abusive” retirement plans.
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The IRS says it continues to find abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). Moreover, the IRS says it is looking for transactions that taxpayers use to avoid the limits on contributions to IRAs, as well as transactions that are not properly reported as early distributions. 

“Taxpayers should be wary of advisers who encourage them to shift appreciated assets at less than fair market value into IRAs or companies owned by their IRAs to circumvent annual contribution limits,” the IRS cautions, noting that other variations have included the use of limited liability companies to engage in activity that is considered prohibited.  

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The rest of the Dirty Dozen for 2011 includes:

  • Hiding Income Offshore
  • Identity Theft and Phishing
  • Return Preparer Fraud
  • Filing False or Misleading Forms
  • Frivolous Arguments
  • Nontaxable Social Security Benefits with Exaggerated Withholding Credit
  • Abuse of Charitable Organizations and Deductions
  • Disguised Corporate Ownership
  • Zero Wages
  • Misuse of Trusts
  • Fuel Tax Credit Scams

“The Dirty Dozen represents the worst of the worst tax scams,” IRS Commissioner Doug Shulman said. “Don’t fall prey to these tax scams. They may look tempting, but these fraudulent deals end up hurting people who participate in them.”

More information on the “dirty dozen” is available at http://www.irs.gov/newsroom/article/0,,id=238262,00.html?portlet=6 

Products April 18, 2011

Smart401k Partners with vWise on New Advice Offering

Smart401k announced a partnership with vWise, Inc. to bring an education and advice component to employer-sponsored retirement plans.
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Smart401k, a web-based service delivering investment advice to individuals in employer-sponsored retirement plans, will now provide the investment advice component to the vWise SmartPlan Enterprise plan participation system.

vWise SmartPlan Enterprise is an interactive video-based retirement planning system that is designed to help employees better understand their 401(k) and 403(b) plans “in a way that engages, entertains and ultimately educates participants,” according to the announcement.The firm says that SmartPlan provides “the benefits of a financial professional, without the expenses typically associated with on-site meetings and print materials.”

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“This partnership helps to fulfill the growing demand for investment advice while making use of a medium that takes participant engagement to an entirely new level,” says Scott Holsopple, President and CEO of Smart401k. “vWise subscribers can now pair video-based education with Smart401k’s online investment advice to provide a full suite of services to their client base.”

When the advice component is selected inside SmartPlan Enterprise, the video hosts guide users through an interactive risk profile questionnaire devised by Smart401k. Smart401k’s proprietary investment allocation algorithm analyzes the answers and provides recommendations for specific plan investments and contribution amounts, according to the announcement.  Participants that have the advice component enabled within their plan can revisit their investment profile as many times as they like to make sure that their current path is aligned with their retirement objectives.

“We are excited to partner with Smart401k, to create a convenient, affordable way to deliver personalized investment advice right inside SmartPlan,” observed vWise President and CEO Tony Mingo.

According to the firms, the partnership emerged as a result of requests from current SmartPlan Enterprise subscribers who were hoping to offer tailored investment advice to participants.

Founded in 2003, Smart401k is a web-based service that delivers investment advice to individuals in employer-sponsored retirement plans. Subscribers receive tailored investment allocation recommendations on a quarterly basis for a flat fee. Members also have access to Smart401k’s team of advisers who are available to answer questions via phone, e-mail of live chat.  More information is available at http://www.smart401k.com.

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