How can your business benefit from a 401(k)?

A 401(k) can help build the retirement nest egg you need to be comfortable in those “after working” years. Here are some advantages that a 401(k) can offer:

• Tax-differed growth of investments
• Automatic contributions through payroll deductions
• Higher contribution limits and greater flexibility over other salary deferral or personal retirement plans.
• Pretax contributions reduce your taxable income.
• Improved employee retention and recruiting.

 

401(k)’s can be a crucial part of your retirement plan. Along with other strategies it is a great vehicle for saving toward that nest egg. Most business owners do not know that a 401(k) can be set up for as little as one employee, usually a sole proprietor owner.

 

Free Life and Disability Insurance

Return of Premium Life and Disability Insurance

Return of premium means simply that. If you keep your policy for the length or the term or in the case of a disability income policy, a certain duration, you will receive 100% of all of your premiums back thus making it a free benefit. No one really likes paying insurance premiums to begin with but a Return of Premium policy gives the insured the best of both worlds. It provides affordable and necessary protection and pays you back 100% of the base premiums ate the end of the select term or duration. It’s almost a great “forced” savings if you will.

This is also a great option for those that like the idea of whole life but can’t afford it or business owners entering a buy-sell contract knowing that would like to see the premiums paid back after the term is up. More people are also looking at this as a savings strategy as they will know that they will end up with a nice cash sum down the road.

What happens if you get rid of the policy early? Depending on how long you have owned it, you simply get a percentage (not the full 100%) or your premiums back. So it is not an all or nothing contract but one that is a win-win all around

Coordinating Medicare with other Insurance

Most of us know by now that age 65 we need to transition from a major medical health insurance plan to Medicare. At this point we have a few options we can look at.

We can accept Medicare, we can look at a Medicare advantage plan which takes place of the government Medicare or we can add Medicare supplements to our Medicare plan to cover certain areas we feel may need enhanced coverage based on our own situation.

Along with Medicare insurance, there are some other insurance options that the senior market should be looking at and owning.

Life insurance is a key component in our retirement years as the death benefit can be used to back up our nest egg, provide a charitable donation, off set the cost of estate taxes and final expenses, leave behind gifts and college money for grandchildren etc. For some that didn’t get to build a large nest egg, spending could be less restrictive in the early years of retirement knowing that an insurance policy will replenish the surviving spouse’s nest egg.

For those that don’t have a life policy and may not qualify due to health reasons, final expense policies are available that can provide up to $50,000 of coverage.

Long Term Care insurance reimburses the cost of home health care, assisted living expenses or nursing home facilities should the insured’s health suddenly require such attention. This again helps protect the nest egg so that health care expenses do not take a toll on it. As Long Term Care can be costly, there are now Whole Life Insurance and Annuity options out there that offer riders which provide similar benefits as Long Term Care but without the cost.

Critical Illness and Cancer policies are just that; if one is to face serious illness, usually vascular/heart, cancer or other illness. These plans pay cash settlements to the insured which in turn can be used to help pay medical bills, medical deductibles, time off work, and travel for family members, child care and more. The cash is in addition to the insured’s major medical or Medicare benefits, long term care benefits or disability benefits. In other words, these type of polices don’t coordinate with your other insurance and don’t care about other insurance plans you own, they simply pay out.

The senior market can be well protected if a simple review is done of their insurance needs.  Not all products are necessary for everyone, nor can everyone afford to own all products. Your personal agent should be able to help you understand and coordinate benefits so that they fit with your retirement goals or needs.

We are available for questions as well. www.insuranceslc.com

Health Care Reform and HSA

If you own a Qualified High Deductible Health Plan (QHDHP) also known commonly as a HSA Health Plan, then you should be aware of some new changes taking place. The changes affect how and what you can use your HSA or Health Savings Account money for. You will no longer be allowed to purchase over the counter medications with a few exceptions being you have a prescription for that medication. One example is cold sore medication. If you have a doctor’s prescription then you may go use your HSA money, if not use your regular checking account or you could get dinged by uncle same. Your HSA money will still cover most of the qualified expenses it did in the past but it’s best to check out the IRS website for up to date info: http://bit.ly/yWlDx

One thing to keep in mind is that early with draw penalties for non qualified expenses are up from 10% to 20%, but you shouldn’t concern your self with that as long as you’re not buying flat panel tv’s or getting your nails done courtesy of your Health Savings Account.

All in all, HSA qualified/QHDHP are gaining more popularity as people realize that they have the potential to keep more of their money in their pockets when it comes to health care costs. In a nut shell if used properly, you will give less to the insurance company but still have major medical coverage for those unexpected and financially devastating medical emergencies.

One more thing, if you never use your HSA money by age 65, just think of it as an additional retirement savings.

Retirement Savings Contributions

Here’s an update from the IRS on how much you can sock away into a retirement account:

 

“Qualified Plans

The Internal Revenue Service has announced the 2011 cost of living adjustments for pension plans, which remain unchanged from 2010 levels.

• The maximum elective deferral for defined contribution plans such as 401(k) plans remains at $16,500.  The catch-up contribution limit for participants aged 50 and over remains at $5,500.
• The maximum contribution for defined contribution plans remains at $49,000.
• The maximum annual benefit that may be provided under defined benefit pension plans remains at $195,000.
• The maximum compensation that may be taken into consideration for a qualified plan remains at $245,000.”

This is courtesy of the IRS so go here for more detailed info: http://bit.ly/dcRjlg