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Guardian Adds 412(i) Funding Products

By Staff Writer

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NU Online News Service, Feb. 18, 2004, 4:32 p.m. EST – Guardian Life Insurance Company of America, New York, is stepping up its push for 412(i) plan business.[@@]

The insurer has added a family of pension trust whole life policies and annuity contracts designed to fund 412(i) plans.

Section 412(i) of the Internal Revenue Code lets business owners who use guaranteed life insurance policies and guaranteed annuities to fund defined benefit pension plans escape from some of the regulatory burdens imposed on sponsors of other types of defined benefit pension plans.

Guardian has been selling products designed to fund 412(i) plans since 1960, but 412(i) plans have been getting more attention since the stock market slumped in 2001. Business owners who set up the plans can guarantee that they will receive large, steady retirement benefit payments. Because the guaranteed rates of return on plan assets are so low, sponsors can deduct huge contributions from taxable income.

The new Guardian 412(i) plan products include 3 annuities and several life insurance policies.

Guardian has cut the guaranteed rate of return to 3%, from 4%. The reduction in the rate guarantee will help customers take bigger tax deductions for plan contributions, Guardian says.