Over the years, you’ve often heard how important it is to invest in the 401(k) plan at your workplace, but what is the big deal with a 401(k) anyway?

There are significant benefits of taking advantage of your 401(k). The first is the ability to contribute to your retirement before income taxes are withheld. Known as pre-tax contributions, these contributions come from your “gross” pay instead of your “net”, so they go into your retirement account before Uncle Sam gets his cut. This immediate tax deduction could bring the taxable income of someone making $40,000 per year down to $36,000 if they contribute 10% of their pay to their 401(k) plan. (more…)

By Peter C. Golotko, CPA/PFS, MBA 

What is your strategy to begin receiving Social Security benefits?  Are you married or single?  How is your health?  Your spouse’s health?  Your parents’ health history?  Before receiving Social Security benefits, each individual has to make the decision whether to start collecting benefits in the first year of eligibility at age 62, wait until age 70 when you could qualify for the maximum payment based on your salary history, or start collecting somewhere in between. Every situation will be different, and each individual should take into consideration their unique factors when making their decision. While it may be favorable for some individuals to delay their Social Security, below we will explain how not delaying benefits may actually be in your favor. (more…)

The government has a knack for catching on to the most popular loopholes.
There are plenty of tips and tricks to maximizing your retirement benefits, and more than a few are considered “loopholes” that taxpayers have been able to use to circumvent the letter of the law in order to pay less to the government. But as often happens when too many people make use of such shortcuts, the government may move to close three retirement loopholes that have become
increasingly popular as financial advisers have learned how to exploit kinks in the law. (more…)

If your financial assets are insufficient to take care of your family and liquidity needs, life insurance is an inexpensive way to fill that gap.  Life insurance comes in many varieties.  The two basic types are whole life and term life insurance.  The premiums for whole (also called permanent) life insurance is more expensive because it generally includes a savings factor or cash surrender value.  Term insurance is much less expensive and creates a death benefit without any savings value.  For young couples, inexpensive level term life insurance is a method to create a substantial amount of death benefit if the insured dies early in his or her career.   Term also has an expiration date when the policy ends.  Assume David Jones, age 32 and in good health, has two children ages 6 and 3.  His financial assets are less than $100,000.  A 20 year level term life policy for $1 million would cost less than $600 in annual premiums from a top rated insurer.    If the Jones’ wish was to fund a college education for his two children it would be prudent for Jones to purchase term insurance for the amount necessary to support his wife and cover schooling for his children for the next 20 years.  Assuming Mr. Jones lives to see his children attend college, the 20 year policy would expire.  Jones, of course, would supplement the life insurance with a college savings plan through a pre-paid college fund, 529’s and  a Uniform Gift to Minor’s Trust (UTMA).  (more…)

Risk management for businesses or families involves two main concepts: risk retention and risk transfer.  Today, we will discuss these two key risk issues for businesses.    The success of every closely held business is generally based on the leadership at the top.  So what if something tragic happens to the leader or key persons of your business such as an unexpected death or disability?  Many businesses may choose to ignore these issues and merely “retain” the risk.  Others may choose to “transfer” the risk generally by the purchase of insurance on the key persons.    Business succession planning and funding buy-sell agreements through insurance and key person coverage are just a few methods used to “transfer” the risk.    These types of policies are different than  traditional life insurance policies because business insurance can either be owned by the business or the owners of the company.  (more…)

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