If I were a business owner, wouldn’t I want this wonderful pension plan? Under this plan, I’d (a) be able to turn personal expenses into deductible pension contributions; (b) the pension plan would only cover me (and my family), not those pesky employees; (c) I’d be able to change (through alchemy, perhaps) my salary into a pension plan contribution, and then get this back through a phony loan; and (d) even the down-payment on my condominium could be considered a deductible pension plan contribution.
The only thing missing is the snake oil.
Last week, the US Department of Justice sued a Pasadena (California) man who allegedly promoted this scheme. The DOJ sued William Alexander, and his two businesses, Retirement Plan Services Inc. and Lyons Pensions Inc. The government is asking that they be barred from promoting such pension schemes. The government estimates they’ve lost $30 million in tax revenue from Mr. Alexander’s pension plans.
There are many good choices for retirment plans. However, if someone comes to you and tries to sell you on such a wonderful scheme like Mr. Alexander’s, run (don’t walk) in the other direction.