- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
"annualcreditreport.com" 12b-1 fees 401k 401k match 403b 457b 1974 1987 2001-2002 2008-2009 active duty advisor search alternative minimum tax area agency on aging asset allocation asset protection atm automobiles bad debt bank fees banking banking on-line banking relationships banks beneficiaries benefit term black monday bond duration bond investing 101 bond ratings brazil bric bureau of consumer financial protection bypass trust capital gains career transition caregiver 101 care manager car loans cash management catch-up contributions charity china college planning commodities compound interest core series cost basis coverdell ira cpa credit credit card credit reports credit score credit union cross purchase buy-sell agreeement custodial fees daily benefit amount debit card debt decision making deflation derivatives desires directive to physicians disability insurance divorce djia dollar cost averaging downsizing ea ebri economic education elder care elimination period emergency fund employment energy credits energy tax estate planning estate tax euro european union eurozone exemption equivalent expense ratio fafsa fair isaac family care giver federal deficit federal reserve fee-only fico fiduciary fiduciary standard financial financial aid financial coach financial planning financial reform bill financial stability oversight council find an advisor flexible spending account foreign markets foreign stocks form 1099 formula clauses front-end load generation skipping tax gifting gift taxes goals and objectives good debt government grants grat greece guardianship happiness harvesting losses healthcare health care directives health care reform health insurance premiums health savings accounts hedging high deductible insurance plans homeowner tax credit housing hsa i-bonds identity theft income tax income tax preparation india inflation insurance interest rates internet tax investing investment income investments ira ira distributions irs italy itemized deductions japan laddering layoff life insurance life insurance trust linkedin long-term care lost decade marginal tax rate marginal tax rates marriage medicaid medicaid tax medical insurance medicare medicare supplement medigap money monte carlo simulation mortgage nais.org napfa nasdaq ncua needs net-operating loss carryforward net worth new year's resolutions nine minutes no-load non-cancellation non-mortgage debt obamacare occupational outlook handbook office of credit ratings ofice of credit rating own occupation partnership personality portugal post-divorce action power of attorney prescription drug benefit private school education profit sharing plan prospectus quarterly update real estate refinance regulation residual benefit retirement plan contributions retirement planning retirement plans retirement relocation ria risk tolerance roth 401k roth 403b roth ira roth ira conversion russia s&p 500 schedule c schedule d scholarships sep shop exchanges simple ira small business social security sole proprietor spain spending spending plan standard deduction step-up basis stimulus check stock market stock market recovery stock markets surrender charges tarp tax-free bond taxable bond tax credits tax loss harvesting tips total return strategies transaction fees unemployment unemployment benefits upsizing us news & world report vat volcker rule wealth building wealth management webinar wills women yield curve
Making Cents
Subscribe
Viewing entries tagged with 'insurance'
Health Savings Account Advantages
Health Savings Account Advantages
Health Savings Accounts offer more than tax breaks.
Why do people open up Health Savings Accounts in tandem with high-deductible insurance plans? Well, here are some of the compelling reasons why younger, healthier employees decide to have HSAs.
#1: Tax-deductible contributions. These accounts are funded with pre-tax income. Your annual contribution limit to an HSA depends on your age and the type of insurance plan you have in conjunction with the account. For 2010, the limit is set at $3,050 (individual plan) and $6,150 (family plan). If you are older than 55, those limits are nudged $1,000 higher.(source)
How Will Health Care Reform Affect Your Small Business?
HOW WILL HEALTH CARE REFORM AFFECT YOUR SMALL BUSINESS?
Will OBAMACARE mean headaches … or hidden dividends?
Increased costs or savings in years to come? What do the federal health care reforms mean for your company? Will they lead to thousands of dollars in extra costs and more paperwork? Or will federal subsidies make this a “game changer” for small companies that have struggled to provide insurance plans?
The Cross Purchase Buy-Sell Agreement
THE CROSS PURCHASE BUY-SELL AGREEMENT
Taking Care of Your Business After You’re Gone
Business owners are builders. They spend their lives building a business that provides goods and services to their clients and provides themselves a living. But nothing can tear down that lifetime work faster than their own death, or the death of a business partner. Often, much of the value of a business dies with the owner.
Each business encounters different problems. The questions facing a sole proprietor are two-fold. First, if he or she dies, how can the heirs continue the business or keep from selling the business at fire sale prices? The executor of the estate can continue the business, but must find someone willing to run it. They can sell the business, if the heirs wish, but must find a buyer. This is made harder by the fact that any potential buyers will be in a better negotiating position, knowing the business is becoming less valuable with each passing day following the owner's death. Also, the heirs may be in disagreement over what to do with the business. Some may want to keep the business, while others want to cash out. If the business is kept running by some heirs, those wanting out would need to be compensated. If the cash to do this can't be found, this could potentially force a liquidation of the business.
The second question facing a sole proprietor is this - how does the business owner keep key employees confident that the business, and their jobs, will survive after his or her death?
If a partner dies, the surviving partner can be left with uncertainty. First, they may find themselves in business with the deceased partner's heirs - who may have different goals for the company. If the heirs wish to sell to the surviving partner, can they be paid? And will the cash needed to buy the business be on hand?
These questions can throw the value and continuation of a business into doubt. This could make creditors more likely to call loans, and key employees less likely to stay with the firm.
Buy-sell agreements are designed to answer these questions and work toward eliminating these problems.(source)
Breaking the Surface
BREAKING THE SURFACE
Four tips for recovering from unemployment.
Any period of unemployment is fraught with stress – both personal and financial. While landing that formerly-elusive new job can be a relief, it is only the first step on the road to recovery from unemployment. This transition time is akin to breaking the surface after being underwater for several minutes. It’s a relief to be breathing again and feel the sun on your face, but it’s no time to relax. You must start swimming right away to get back to a healthy financial shore.
Here are four steps you can take to help make sure your recent unemployment doesn’t cast a long shadow across your future financial health.
Continue to live lean. More likely than not, you weren’t buying $4 coffees while unemployed. Five star restaurants were out too. Hamburger may have replaced steak. You may want to continue to follow that pattern. We tend to grow into our incomes, our budgets bloating along with our salaries. Fighting that urge will help with the rest of the steps to unemployment recovery.
Protect yourself ASAP. The longer your unemployment lasts the more important basic survival becomes. Someone who is unemployed may let life insurance, disability insurance or health insurance policies lapse as they try to keep current on the mortgage, pay utilities and put groceries in the pantry. Sometime during the first few days of your employment you should enroll in whatever benefits you need your company offers. If the new firm does not offer the coverage you need, make an appointment with an insurance professional and use part of your first paycheck to protect you and your family. Remember, the income from your new job won’t benefit anyone if a catastrophic illness, disability or death suddenly takes it away.
Develop a plan to pay down your debts. When you have a job, debts are a nuisance. When you don’t have a job, they may become a threat to your future financial well-being. While it’s normal to hope you never have to go through unemployment again, you must start preparing for the possibility.
If you are behind on your mortgage, call your lender to let them know of your new job and to work with them on a plan to catch up on your payments. If they are unwilling to work with you, consider using a Federal resource such as those offered by the U.S. Housing and Urban Development Administration.
While there are fewer similar programs for car loans, calling your lender and trying to develop a plan for a loan you’re behind on should be your first step.
All too often during unemployment, credit cards may be used to get by when cash is low. While your interest rates may have been low when you initially signed up for the card, new legislation has caused a spike in credit card rates.(source) Rates of 20% - 30% are not uncommon as banks react to new rules. Paying down these balances should also be a primary goal.
Remember to start paying yourself. Whether you call it a rainy day fund, a nest egg or emergency cash, slowly, paycheck by paycheck, begin paying yourself a fraction of your salary. Some experts will argue a family should keep six months to one year’s worth of expenses in the bank for unexpected events such as a blown car engine, the roof caving in, or another round of unemployment.(source) For many families, that may feel like an insurmountable sum. But as the old joke goes “How do you eat an elephant?” The answer: “One bite at a time”. Paying yourself has to be done paycheck-to-paycheck, little by little.
Prepare Now for Estate Tax Law Changes
Prepare Now for Estate Tax Law Changes
The nonstop discussion of health care reform and the economy this year crowded out discussion surrounding estate tax law sunset, due to expire December 31, 2009. However, it appears likely the estate tax will be continued at 2009 levels through 2010. What does this mean? More than likely, as of this writing, the 2010 estate tax top rate will be 45 percent and the exemption will be $3.5 million per person.For now, conservative Congressional lawmakers dream of killing the estate tax seems to be dead, at least through 2012. The ever expanding federal spending continues, fueling the need for every tax Congress can dream of and maintain. That means it’s a good time to talk to tax and financial experts about the best ways to pass your holdings to the next generation no matter what happens with the future of the “death tax.”
If you suspect your estate or the estate of relatives you might inherit from may fall prey to the estate tax, it makes sense right now to enlist the help of experts. Assets may be expected to grow over time, and your estate may turn out to be larger than you may think. You should be talking to board-certified estate planning attorneys, as well as fiduciary, fee-only CFP® professionals for solutions to estate tax issues. This is one area where solutions are readily available, procrastination being the largest tax due to your inaction.
Here are some things to keep in mind as you prepare for those conversations:
Give during your lifetime: You can now give $13,000 per calendar year per recipient without paying gift tax or affecting your 1 million dollar lifetime exemption. You can also pay someone's tuition or medical bills directly, or give to a charity, without paying gift tax on the amount, thereby reducing the size of your estate and your eventual estate tax bill after you die.
Check whether your state charges an estate tax: Roughly half of all states charge estate tax, and that’s a recent thing. States previously received a slice of the federal estate tax, which no longer happens, so it’s important to consider the state’s impact when making an estate plan.
Think about a life insurance trust: Whether you need it for estate liquidity or for other purposes, an irrevocable life insurance trust can be created to keep the proceeds of the insurance out of your taxable estate. An added benefit is that such trusts may permit spousal access to the cash value of the policy. Yet note the word “irrevocable” – it means a decision that cannot be changed.
Know if your assets are expected to increase: A grantor-retained annuity trust, or GRAT, is an irrevocable trust popular among families with assets expected to appreciate in value. Such appreciation can be passed on to heirs with minimal tax consequences with proper estate planning.
The bottom line remains it is always better to have an estate plan, than not to have one! Today, make an appointment to have your wills, power of attorney, directive to physicians, guardianship, and power of attorney for health care drafted by a competent estate attorney in your state. It also pays dividends to consult with your fiduciary fee-only advisor in advance, as this individual can aid in sorting through the many decisions to be made in your estate planning. Begin 2010 on a good note by taking care of this for your family!
Are you Prepared to Pay for Long Term Care?
ARE YOU PREPARED TO PAY FOR LONG TERM CARE?
In the coming years, many Americans will face the challenge.
70% of people currently over age 65 will require some long term care someday. That is the estimate of the U.S. Administration on Aging, a division of the U.S. Department of Health & Human Services.(source) Will Medicare or private health insurance pay for it? The short answer is “no”.
In the decades ahead, baby boomers will reach their seventies, eighties and nineties. With aging parents of their own, some are learning how much long term care really costs. Some are still unaware.
How many of us are financially prepared for the possibility? Here are a couple of “averages” to consider from MetLife’s 2009 survey of LTC costs. The average annual cost of nursing home care is now $79,935 or $219 per day. That’s up 3.3% from 2008. The average nursing home stay is about 2.5 years, which means you would need roughly $200,000 to pay those bills.(source)
Can you imagine paying it out of pocket? Taking out a reverse mortgage to do it? Using Medicaid because you have nothing left? No one wants these financial circumstances. The clear answer is long term care insurance coverage.
How expensive is LTC coverage? Annually, it typically costs about as much as a cheap used car. MarketWatch cited an example from the MetLife survey: in 2009, a 52-year-old federal employee could pay $1,524 annually for an LTC policy with a $200-per-day benefit for three years and a maximum lifetime benefit of about $200,000.(source)
Coping with a Layoff
Basically, you have three quick to-dos: leaving work with as much money as possible, securing health insurance for the interim, and arranging unemployment benefits. Beyond these items, stay calm and stay in the hunt – or alternatively, work for yourself.
Negotiate your exit. While no law requires your employer to give you a severance package, some employers do provide them.1 Severance package or not, you may very well receive two weeks pay and perhaps compensation for unused vacation or sick days.
Don’t be meek here. If you’ve been a key employee or simply a good employee, make the case for your company to extend your health coverage a little longer or give you a true severance package. They may see the merit if you have proven yours.
In tax terms, it may be better to receive your severance pay in the form of recurring checks rather than a lump sum. If you get a lump sum, it’s quite possible you could have too much withheld.
If you know you are getting laid off in the next few months, you can request to reduce the amount of withholding taxes on your last few paychecks to give yourself more take-home pay. And if it looks like you are going to receive a lump sum severance before December 31, think about deferring that payment until 2010 so you don’t have to include it on your 2009 tax return.
Keep yourself insured. If you can sign up as a spouse for the plan offered by your spouse’s employer, it makes sense to do it as soon as you can. If that doesn’t describe your situation, then the options are extending coverage through COBRA or keeping up the payments on private life or disability insurance that your company provided.
If you sign up for COBRA at the moment, the federal government will subsidize 65% of the cost for nine months as a result of the federal stimulus. In COBRA, you will have to pay the entire premium on your health insurance plus a 2% administrative fee.1
Sign up for unemployment benefits. It is prudent (not demeaning) to sign up for these benefits. You will want to do so ASAP, because it may take a few weeks for that first check to arrive. In some states, you can receive unemployment checks even if you have been given a severance package – although you may have to wait until the entirety of the severance is issued to you before jobless benefits can follow.1
Remember that the federal government is pulling out all the stops right now. Take advantage of the federal economic stimulus effort, which is directing $500 million toward helping the jobless find jobs. New search assistance, education, and retraining programs are available. The government is also boosting unemployment payments a bit and elongating parameters of eligibility. Currently, the average weekly unemployment check in America is about $300. Jobseekers can receive unemployment benefits for up to 46 weeks – up to 59 weeks in states where the unemployment rate tops 6% for more than three months in a row, which would be just about everywhere right now. Under the stimulus, weekly unemployment checks will increase by $20 – and the first $2,400 of unemployment payments will be tax-exempt.1
Press flesh, not just keys. Despite the buzz surrounding job boards like Monster.com, Dice.com and CareerBuilder.com, an article this winter in the San Francisco Chronicle noted that only about 2-3% of new hires find their jobs through such resources. About 15% of new hires find work directly by applying at a company’s web site, and about 65% find new jobs through that old standby – networking.2
Older employees may actually cope with layoffs better. That’s what a collaborative study coming from the Federal Reserve Bank of Chicago and Columbia University has just concluded. It found that laid-off workers younger than 55 experience a much greater increase in “mortality hazards” than their older counterparts – stress and health risks, addictions, and negative personal behaviors. Perhaps this is because workers over 55 are somewhat less likely to deal with making ends meet and the pressures of raising a family; they may have already thought about (and planned for) a retirement transition and they have the options of Medicare and Social Security now or in the near future.3
Have you been given a gift? That’s one way to look at it: one door closes, another opens. If you have an entrepreneurial ambition, or just suspect that like many Americans you will one day have to be your own boss, then maybe now is the time to talk over your options with a potential mentor – a friend who owns a business or makes a living as an independent professional in your industry. If you are mature and want or need to keep working, you might even think about a life or career coach – someone who can help you see the full range of possibilities, including those that you may not have considered five or ten years ago.
