By Chris V. – ERISA Attorney | VP @ Sequoia
CFOs, if a vendor has pitched you a “wellness program” that saves six figures a year in FICA and payroll taxes at no cost to the company, you’ve been pitched a scam that’s been running for about 20 years.
The pitch is always close to the same. Employees make a large pre-tax “wellness contribution,” usually around $1,200 a month. The plan pays most of it back as a “benefit” triggered by something trivial, often just completing a health activity or a call. Take-home pay stays flat. The company “saves” payroll tax. The vendor collects a cut of the savings and waves around a tax attorney opinion letter nobody’s allowed to read in full. Sometimes there’s an NDA.
The IRS has already said no to this structure, in writing, in Chief Counsel Memo 202323006. The “savings” are back taxes and penalties waiting for an audit.
None of this is theoretical. The original version was sold by Total Financial Group as the “Classic 105” and called a $40 million fake welfare plan by the DOJ. The founder pled guilty in 2019. In September 2025, federal prosecutors in the Eastern District of Louisiana indicted a former TTFG consultant and his partner for raising over $4 million from investors to build a successor product called the “New 105 Plan.” The charges include wire fraud conspiracy and obstruction of justice, up to 20 years in prison per wire fraud count.
This keeps happening because the margins are enormous and the pitch works. It sounds like a free lunch, and the pressure to cut benefits costs is real.
If you’ve been pitched something like this, three questions tell you what you’re dealing with. Would a tax attorney you already pay put their name on this, in writing, without an NDA? Can the vendor show you the statute, the regulation, and the IRS guidance, or just their own opinion letter? If this really worked, why aren’t the big four already doing it for every public company in the country?
If the answers are hard to get, walk away. A plan sponsor who signs up here isn’t a victim. You signed the plan documents. You ran the payroll. You’re the named fiduciary. When the IRS or DOL comes looking, the vendor is already gone or already in court, and the employer is the one writing the check and explaining it to the board.
