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Old 09-05-2019, 01:52 PM
JoJo JoJo is offline
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Default Maintaining 7702 and 7702A compliance

I'm just curious if any companies out there have built some sort of parallel system for monitoring 7702 tax compliance. The calculations are so complicated and admin systems a bit of a black box, so wondering if someone has built or bought something to do this. If more comfortable, please send a PM. I'm trying to see what's out there.
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Old 09-05-2019, 05:47 PM
Chuck Chuck is offline
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We've built custom work-arounds that take a monthly (or whatever interval) extracts from admin systems that give transaction histories and policy changes, maintain an external database, do calcs, create reports, and then feed results back to admin system (to return premiums, do acctg/tax reporting, customer correspondence, etc). Although we could do some of the latter too. I have associates who are 7702/7702A experts. Have also worked with such experts to do remediation with the IRS.

We've done this kind of work-around thing for more than just 7702.

Nothing really off the shelf though.
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Old 09-05-2019, 06:34 PM
JoJo JoJo is offline
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Originally Posted by Chuck View Post
We've built custom work-arounds that take a monthly (or whatever interval) extracts from admin systems that give transaction histories and policy changes, maintain an external database, do calcs, create reports, and then feed results back to admin system (to return premiums, do acctg/tax reporting, customer correspondence, etc). Although we could do some of the latter too. I have associates who are 7702/7702A experts. Have also worked with such experts to do remediation with the IRS.

We've done this kind of work-around thing for more than just 7702.

Nothing really off the shelf though.
Thanks!
Do you know what kind of program - spreadsheets or custom program, what language?
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Old 09-05-2019, 08:42 PM
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So the admin system does have some sort of 7702 and 7702A processing? Is this an in-house system or from a software provider? It's tax code, so yeah, it's a PitA! If it's from a 3rd party firm, see if they have some documentation on the calcs. I had to deal with 7702 calcs a loooooong time ago, so the IRC has probably mutated considerably!!!

I think there's even a study note in the ILA syllabus about 7702/7702A.
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Old 09-05-2019, 09:10 PM
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Are there any consequences to companies letting UL funding exceed 7702/A limits?
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Old 09-05-2019, 11:17 PM
JoJo JoJo is offline
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Yes, admin system has these calculations and is correct most of the time, but want a parallel system to independently double check, test, etc. I am aware of the books, how 7702 works etc, just want to see if other companies are doing something like this and what sort of program they've built. There are a couple things the admin system doesn't do and given the ancient programming language, it seems spending that money on modernizing the programming is easier to program, check, etc is a wiser decision.

JMO Fan - you don't want policies to exceed 7702 or it's not life insurance, OK to exceed 7702A limits, but then you have a MEC which has some tax penalties for the customer.
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Old 09-06-2019, 01:33 AM
Chuck Chuck is offline
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Thanks!
Do you know what kind of program - spreadsheets or custom program, what language?
We have VB programs, Excel/VBA, and VB.NET that could be used as a starting basis.
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Old 09-06-2019, 01:34 AM
Chuck Chuck is offline
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Are there any consequences to companies letting UL funding exceed 7702/A limits?
Potentially substantial penalties from the IRS for not properly reporting violations.
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Old 09-06-2019, 01:31 PM
JoJo JoJo is offline
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Thanks Chuck!
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