Articles
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Employee Benefits •
Business Strategies •
Economic Concepts •
Education Funding •
Estate Planning •
Charitable Giving •
Insurance •
Personal Finance •
Tax Considerations •
Investment Planning •
The Entrepreneur's Dilemma
As larger corporations downsize to meet the competitive challenges of the 21st century, many middle managers are taking the opportunity to strike out on their own as consultants. They often seek the independence and satisfaction of working for themselves. Wouldn't everyone?
COBRA: Continuing Health Care Coverage after Employment Ceases
The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) enacted health care continuation coverage requirements applicable to employers with more than 20 employees (except churches, the federal government, and the District of Columbia). COBRA requires an employer who maintains a group health insurance plan to provide employees with an option to remain covered by the employer's plan for a specified period of time, if the employees or their family members lose coverage upon the occurrence of certain events (such as reduced or terminated employment).
Funding Medical and Dependent Care Costs with Pre-Tax Dollars
Section 125 "cafeteria plans" can help business owners and employees lower their tax bills. Under Section 125 of the Internal Revenue Code, workers are permitted to withhold a portion of their pre-tax salaries to pay for premium contributions to employer-sponsored insurance plans and to cover qualifying unreimbursed medical and dependent care expenses. Because Section 125 benefits are not subject to FICA or income taxes, cafeteria plans can help employees lower their taxable income, while reducing the payroll and workers' compensation tax liabilities of their employers.
Key Person Insurance: Cash, When It's Needed Most
Life insurance may be a "diamond in the rough" for your business if its ongoing success depends on one or more key individuals. The death or disability of such a person - for example, an owner or manager who brings in customers - can mean tough times. The realities of business do not include a grace period following a loss: Cash flow must continue, and customers will need reassurance that your goods or services will continue to be available.
Removing Money from Your 401(k) Before Retirement
From time to time, circumstances may warrant taking money out of your 401(k) account. If you're older than age 59½, become disabled, get divorced (in specific situations), or die, money can be removed from your 401(k) without paying the 10% federal income tax penalty for early withdrawals. (Of course, income taxes will still be due.)
Section 105 Plans Can Help You Manage Health Care Costs
Section 105 of the Internal Revenue Code may very well be one of the "best-kept secrets" for managing your company's health care costs. The medical reimbursement plans allowed under Section 105 provide sole proprietors, partnerships, C corporations, and limited liability companies (LLCs) a full tax deduction for employee medical benefits. This includes premiums paid to fund employee/dependent health insurance and other non-insured medical expenses (e.g., dental and vision care). As a small business owner, finding the right combination of employee benefits and tax savings is important to your company's cost management strategy.
Get "In Sync" with Today's Retirement Plans
Although small business owners wear many hats, too often, the one labeled "Retirement Planner" is not among them. Hats may add panache, but basically, they're for protection. Today, protecting your financial future, as well as that of your employees, by establishing a defined contribution plan is relatively easy.
Involving the Family Can Be Good Business
A family business may grow to the point where the owner is called upon to undergo a radical transformation from the man or woman of action to the manager of many actions.
It will be important to determine which family members will be active in the business, what their roles will be, how they will be compensated, and what compensation inactive family members will receive. Your ability to entertain a variety of viewpoints and articulate your own interests is crucial to the success of these discussions.
An Intriguing Exit Strategy for Today's Business Owner
One of the more difficult challenges facing a business owner is the formulation of a viable and economically beneficial exit strategy at retirement. Typically, the main goals of such an exit strategy are 1) to identify a qualified buyer, and 2) to receive fair compensation for the business, which would, in turn, translate into a desirable retirement income. One obstacle in realizing these goals is the substantial capital gain that is often attributable to the sale of company stock.
With Noncompete Agreements, Enforceability Counts
Competition is the backbone of the American economy. But business owners need to consider the consequences of a consultant or key employee opening a rival company - stealing trade secrets, hiring valued staff, and luring away customers. This could pose a serious threat to your business. You wouldn't have merely another competitor, but one with an inside edge - thanks to your proprietary information and diligent efforts.
Effective Cost Management Builds a Solid Foundation
From the smallest proprietorship to the largest international conglomerate, cutting costs can often be perceived as a "quick fix" toward improving financial results. However, such business decisions may not always be in the best long-term interest of an otherwise healthy company.
Business Succession Planning - 10 Steps to Success
Business owners are often so busy with the day-to-day issues of running and growing their companies that the issue of business succession is often overlooked or left on the "back burner" until it's too late. What would happen to your business if you were to disappear from the scene tomorrow due to disability or death? Would your co-owners, managers, employees, and family members know what to do, and would they have the guidelines and tools they would need to keep your business moving forward?
Economic Trends and Your Dollar
If you are like most people, you probably think of the U.S. dollar in terms of what it purchases in your local community. A gallon of gas costs. . .a loaf of bread costs. . .a ticket to a ballgame costs. . .etc. And, you probably understand that when economists talk of inflation eroding the purchasing power of the dollar, they mean simply that over time a dollar will buy less than it does today. However, the dollar is subject to not only domestic economic forces but international economic forces as well. What may be less understood is how those forces affect the dollar and what it may mean for you.
Subtract Inflation and It All Adds Up!
Some people remember the "good old days" when gasoline prices were as low as 25¢ per gallon. Some even recall when a can of soda cost 15¢. The fact is that prices tend to rise over time - sometimes steadily, and sometimes not so steadily. If you were asked to define "rising prices," you might answer with one word: inflation. However, if asked to give an explanation of inflation and how it affects our economy as a whole, it might be difficult to present an accurate description.
Finding Financial Aid for Private Schools
Schools award financial aid on the basis of either need or merit. The need for financial aid is defined as the gap between the annual cost of attending a particular school and the amount a family can be expected to contribute. Many schools use the School and Student Service for Financial Aid (SSS) to determine eligibility for need-based scholarships.
The Taxing Question of Scholarship Income
Students who receive scholarships or grants need to be aware that some monies they are awarded may be taxable.
Budget Basics for College Students
One "extracurricular" activity that every student should master while in college is personal money management. Typically, a student's day-to-day spending is done on an improvised basis, meaning that overspending is often the norm rather than the exception.
A New Name in College Savings Plans
The average price tag for four years at a private college exceeds $120,000, according to the College Board's Trends in College Pricing 2006. That's 35% higher than just five years ago. In fact, rising tuition costs are outpacing inflation, while federal grant aid is lagging behind inflation.
529 Plans: A College Savings Alternative
igher education costs continue to soar, many parents find themselves faced with a nagging question: "Will I have enough money to pay for my child's college education?" Although most people today are likely to agree that an investment in higher education usually reaps its rewards in higher long-term earnings - and, hopefully, greater job satisfaction - one key concern is how to choose a smart savings alternative. 529 plans are flexible investment options with tax benefits.
Laying the Cornerstone of a College Savings Fund
College tuition costs keep increasing on a yearly basis with no apparent end in sight. Including tuition, fees, room and board, the average cost at private colleges averaging $30,000 per year (Source: Trends in College Pricing - 2006, The College Board). With this in mind, the projected cost of educating today's newborn is staggering.
Education: One of the Best Investments You'll Ever Make
It wasn't long ago that an individual went to school, got an education, and embarked on one career that usually lasted a lifetime. Many companies provided on-the-job training, and little thought was given to "going back to school." It was common to be asked in a job interview where you saw yourself in five or ten years. Many people fresh out of school could see a fairly predictable career track ahead
Reconcile Your Domicile
Increased mobility in today's society has changed the ways in which we live, work, and play. Compared to previous generations, it is now quite common for work and recreation arrangements to cross state lines, resulting in ownership of property and formal social relationships in more than one state. However, the expanded opportunities created by mobility may come at a price: the increased likelihood that several states may be able to tax your estate when you die. If you were to die today, do you know if more than one state would try to levy death taxes on your estate?
Intellectual Property: A Planning Issue for the New Millennium
If you are an inventor, author, artist, or owner of a closely held business, you may have already taken steps to ensure the protection of your intellectual property rights. Business ideas, visual art, published or unpublished literary and musical works, inventions, computer programs, and designs of clothing and architecture can be protected by law through copyrights, patents, and trademarks. These valuable assets also need to be carefully considered when planning your estate, so that they are transferred to your heirs according to your wishes upon your death.
Protecting Your Future with a Living Will
How do you feel about life-support systems for the terminally ill? How much thought have you given to the decisions your family may face when contemplating the choice of maintaining or terminating life-sustaining medical treatment for you? Certainly, it is an easy subject to avoid considering. However, it is important to recognize there are measures you can take now that can help solidify your thoughts and wishes on the subject, thus providing your loved ones with guidance in the event such decisions become necessary.
Estate Planning for Lifetime Partners
There have been some distinct changes in the American cultural and sociological landscape in recent years. Among them is the increasing number of unmarried couples living together. This trend has spawned some difficult and complex estate planning challenges for the individuals involved. This article provides a brief look at some of the more common estate planning issues affecting these individuals.
Survivorship Life Insurance - Preserving Your Business Legacy
Are you hoping the business you've worked so hard to build will live on for the benefit of your family once you're gone? So was Mike Simon (a hypothetical case), the founder of a thriving, $3-million electronics firm. His dream was to pass the company on to his son, Tim. But Mike, a widower, had never found the time to plan his estate. After Mike's death, his estate faced a hefty estate tax liability.
Protecting Life Insurance from Estate Taxes
Life insurance can help provide for your heirs, and it should be considered an important estate planning tool. It can offer protection to loved ones when they need it most and help ensure financial obligations will be fulfilled. One thing that many people do not realize, however, is that life insurance can add a significant amount of wealth to their overall estates, possibly causing assets to surpass the applicable exclusion amount of $2,000,000 (in 2008), the amount that can be sheltered from estate taxes. Fortunately, with proper guidance, it is possible to keep your life insurance policy proceeds out of your estate, as well as provide immediate funding for short-term financial needs. .
Protect Your Estate with an Irrevocable Life Insurance Trust
Many estate planning practitioners view the irrevocable life insurance trust (ILIT) as one of the most flexible and useful tools they can put to work on behalf of their clients. While the issue of where the ILIT fits into the overall estate planning process can be somewhat confusing, a closer look reveals its potential advantages.
Fire Sales, Loans, or Discounted Dollars - The Choice is Yours
Paying the estate tax can be quite a challenge for individuals with large estates. Given the fact that the value of an estate in excess of $2 million is taxed at 45% (for 2008), estate taxes can be quite substantial.
Creative Insurance Solutions for Today's Mature Family
One of the more flexible and creative products to enter the insurance arena within recent years is survivorship life insurance. Often referred to as last-to-die or second-to-die, this life insurance policy insures two individuals, yet provides only one death benefit payable at the death of the second insured. In many instances, survivorship life insurance may be less expensive than a single life insurance policy on one of the insureds. This is possible because the insurance risk is spread over the life expectancy of two lives rather than one. In fact, two individuals can be insured even if one is medically "uninsurable," thus providing added security and planning potential for otherwise difficult situations.
"UGMA" and "UTMA" in Action
Parents who would like to give property to their minor children may be unaware of their options regarding the ways in which property can be held for the benefit of their children. Essentially, there are only four ways in which a parent can give property to a child: 1) give it outright; 2) give it in a trust; 3) give it by means of a guardianship; or 4) give it through the use of a custodial account.
Estate Planning in Action
Once the estate planning process is initiated, there are a number of strategies that may play an integral role in your family's future. Even if you are just starting to build your estate and do not need complex estate planning, here's a quick look at some common planning measures and tools that can help you protect your family and reduce potential expenses in the event of your death:
How Trusts Can Benefit You and Your Family
Many people perceive trusts as a complex subject better left to their attorney. When stripped of all its "bells and whistles," however, a trust can be viewed simply as a contract wherein a grantor agrees to transfer assets to a beneficiary, who then receives the assets as stipulated in the contract. A trustee, who may or may not be the grantor, manages the trust assets and ensures the stipulated terms of the trust are faithfully carried out.
Can a Living Trust Replace Your Will?
Many people are hearing more and more about using a revocable living trust in place of a will. While it is true that a properly managed revocable living trust provides many unique benefits, it does not completely replace a will. In determining whether this type of trust is right for you, it helps to understand the major purpose, benefits, and tradeoffs of this estate planning tool.
Family Foundations - Benefits Stretch Beyond Charitable Giving
Many affluent individuals view the family foundation as a means for meeting specific philanthropic goals. For some, it also creates visible evidence of a donor's charitable intent. In addition, a family foundation may serve two unique purposes within the confines of familial walls. A foundation can assist a donor in maintaining the integrity of his or her charitable intent for many years into the future, as well as help to inspire the character, sense of community, and love of knowledge of future generations.
You Insure Your Car... You Insure Your Home... But, What About Your Income?
What if you suddenly became sick or hurt and lost your ability to earn a living? How would you pay your bills and daily expenses? According to the Insurance Information Institute (III, 2007), 43% of all people age 40 will have a long-term (lasting 90 days or more) disability event by age 65.
Managing Personal and Financial Affairs after the Loss of a Loved One
The grief one feels when a spouse, parent, or other loved one dies is almost always overwhelming. In addition to the emotional heartbreak, there is often a great deal of confusion concerning the deceased's financial affairs and how the survivors will carry on.
Across the Miles: Reach Out and Help
Today, life in America commonly finds families scattered across the country. With family members often separated by hundreds or thousands of miles, it may be extremely difficult to manage the care of an older parent or relative living far away. To help facilitate the best care possible for your loved one, and to help alleviate the stress long-distance caretaking could cause, you may want to take steps now to be prepared, should the need arise.
Striking It Rich: It's Not All Fun and Games
Winning the lottery or coming into a large, unexpected inheritance is a fantasy most of us have probably entertained at one time or another.
Financial Perspectives on "The Car Buying Experience"
Many factors make up the search for the perfect new vehicle, including make, model, color, and price. In addition, the car shopping experience often begins with the question, " Should I buy or should I lease?" Depending on your answer, there may be a substantial difference in what you will get for what you can afford. In addition, if you decide to buy, rather than lease, you have the added consideration of how to arrange financing.
Plastic Money Means Expanding Money
Imagine you are at an auction, and an antique lamp you love is about to come on the block. When you viewed the auction items earlier, you placed a value of $100 on the lamp. It is late in the auction, you have planned your bidding carefully, and you have exactly $100 in cash left in your wallet.
Keeping a Reality Check on Personal Debt
Most everyone has, at some point in their lives, accumulated personal debt - some more than others. Whether debt is a cause for concern depends upon a number of factors, including how the economy is faring, your particular earning and economic prospects for the near and long term, and the type of debt you incur. By being conscious of your spending habits, including credit card use and large purchase habits, you can better understand ways to control debt - before it starts to control you.
The "Pay Yourself First" Budget
When it comes to personal finances, in the long run, the only way to increase your savings is if your income exceeds your expenses. Unfortunately, for many individuals, spending less than they earn is easier said than done. Regardless of how high or low your income, it may seem there's never enough to pay the bills and still provide all the things you want or need.
Living Together - Are There Any Strings Attached?
Unlike marriage, which entails numerous legal obligations and rights, "living together" outside of marriage is particularly nebulous with regard to these matters. For some individuals, this may be the primary reason for avoiding marriage. However, what happens when property is purchased together (e.g., a home) or when one partner financially supports the other and the couple subsequently goes their separate ways? What about assets accumulated while the couple lives together? Does a former partner have a right to such property? Suddenly, cohabitation becomes more than a mere living arrangement and is transformed into an issue of asset protection or lifestyle preservation.
Matching Your Needs to a Day-Care Program
One of the biggest concerns working parents face today revolves around who will care for the kids while they are at work. If you're fortunate enough to have the "built-in day care" of a grandparent or another family member, you're in a better position than most. But, that option may prove to be temporary. Without extended family to rely on, you and many millions of other parents will need to choose a day care option that works. The cost of day care is one concern, but there are more. Here are some considerations when trying to find the right day care for your family.
Losing Your Other Half
Most of us cannot imagine the sudden loss of our spouses. Should this happen to you, you might be thrust into economic self-survival at a time when you may feel particularly vulnerable and least able to cope. Nevertheless, serious decisions would have to be made, often having a lasting impact on your future financial well-being.
Credit Card Blues: Tips You Can Use
In this age of "plastic power," more and more consumers may be using credit cards as their primary means of buying goods and services.
Unless you develop a plan for paying your credit debts, stress and, ultimately, bad credit may result. To prevent this from happening to you, maintain a worksheet to help you keep track of what you've charged. Your worksheet should include the names of your creditors, the last date you made each payment, the annual interest rates you're being charged, the minimum monthly payments, and the total amounts due.
Creating Your Own (Credit) History
When credit cards first came into existence, they were something of a novelty.
When a House is More Than a Home
When the Tax Reform Act of 1986 phased out income tax deductions for interest paid on auto loans, personal loans, and credit card debt, many consumers turned to home equity loans to help finance a variety of personal purchases. You can still deduct interest on up to $100,000 of home equity indebtedness (incurred after October 13, 1987) used for purposes other than improving your home.
Evaluating the Costs of Home Ownership
The question of whether to own or rent a home - depending on your personal situation - is usually answered by asking yourself two important questions: How much will it cost you? And, what is your possible return on the property as an investment?
Year-End Housekeeping
The end of the year provides an ideal opportunity to reflect on the status of your personal finances and review your evolving goals and objectives for the year ahead.
Making the Most of a Fixed Annuity
A fixed annuity can be an especially attractive retirement savings vehicle if you'd like to be able to depend on receiving a stable income at regular intervals (based on the claims-paying ability of the insurer) for the rest of your life or for a term of years. You may also appreciate the relative low risk and tax-deferred growth a fixed annuity provides.
Invest Wisely -- Know Yourself
One of America's foremost thinkers, Benjamin Franklin, stated that "an investment in knowledge pays the best interest." For individuals beginning to develop an investment strategy, no truer words may have been spoken. Whether your goals for investing include financing a child's college education, funding early retirement, or simply maintaining a particular standard of living, it is important to research all savings and investment alternatives thoroughly and examine all available options.
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