Benjamin Franklin playing chess - Tax Saving Benefits

Tax Saving Benefits too Good to be True

This 402(b) begins with a Foreign Company business expense deduction of contributions to this specific 402(b) Foreign Government regulated, registered and recognized retirement plan.

Which means the contribution is not on the company’s books as an asset and the company can never get the money returned. (remember this is a foreign company not a US company) And the contribution is to a Foreign government regulated , registered and recognized retirement plan. It is not a contribution to a U.S. person!

This 402(b) meets the Section 83 rules and the IRS comes sweeping in to a foreign company to tell that foreign company what?

That they can’t take a business expense as a deduction from tax in that foreign jurisdiction ?

Do you expect that the IRS has control over the tax rules of this foreign jurisdiction?

The contribution is not to the U.S. person it is a contribution to a Foreign retirement plan that is a designated employee benefit service agreement that follows Section 83 rules of Internal Revenue Code. In fact the contribution is recognized as being insignificant because it is specifically listed as exempt from reporting on IRS Form 3520.

Base on your idea that the IRS cancels the 402(b) law then what does the IRS tell the individual? That that money is not his and he can never ever get it? The money is not his so what does the IRS have to do with it?

The money is taxable at the time the employee would receive it. When he receives it is the IRS going to say he can’t have it?

Meaning that to say that the IRS is going to cancel the law and that this would in some way have an effect on the individual means that you don’t understand that the money is not the individuals in the first place. Therefore, if it is not the individuals then the IRS changing the law has no effect. Get it?


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