|
Don't miss this month's timely story ideas, direct dial phone numbers, and E-mail addresses of these accessible experts! • Does Your Paycheck Reflect the New, Lower Federal Withholding Tax Rates Yet? Check your check using the FREE, online paycheck calculator at at http://www.paycheckcity.com! • High Income Families in Top Tax Brackets Should Check Projected Taxable Income Because of Changes in the “Jobs & Growth Tax Relief Reconciliation Act of 2003.” • 401(k)s - Staying Put or Rolling Over. INVESTMENTS AND WEALTH MANAGEMENT • Keeping Investors in the Right Funds at the Right Time. • The Traditional Road to Rome -- Base + Bonus + Options – Does Not Equal Financial Freedom. • Higher Bar for Medicaid Eligibility Likely As States Get Serious About Saving Money: Action may spell end of Medicaid Planning strategies. • Advisors Need Accurate Resources to Prospect Pension Market. • BenefitStreet’s TPA/RIA Marketing Alliance Supports Competition.
Does
Your Paycheck Reflect the New,
Lower Federal Withholding Tax Rates Yet? Consumers in all 50 states can use a FREE, online paycheck calculator at http://www.paycheckcity.com to see how their paychecks are affected by the recent reduction in Federal withholding taxes. The new, lower Federal withholding tax rates should be used by employers as soon as possible. The PaycheckCity.com calculators allow consumers to check three important facts about their paychecks: 1. To quickly see what impact the tax changes will have on their
paycheck, Symmetry Software, the parent company of http://www.paycheckcity.com, has been providing withholding tax calculation engines for payroll applications for 20 years. Symmetry's accuracy and timeliness in updating withholding tax tables are unequalled in the industry and their senior management are the "experts" you will want to quote for your story on this topic. A recent IRS bulletin said that employers should use these new tables as soon as they can work them into their payroll systems, but not later than July 1, 2003. However, the IRS itself does not expect to mail a printed copy of the tables until the third week in June, although early release of the tables is available online at their website. The news release is at http://www.irs.gov/newsroom/article/0,,id=109817,00.html. and the tax tables are at http://www.irs.gov/pub/irs-pdf/n1036.pdf. Accuracy in payroll withholding taxes is very important to every
employee. If the employee is over-withheld, they could end up
with less take home pay and a large refund. Some employees view a
large refund as a windfall, but financial advisors insist that this
large refund is, in effect, an interest free loan to Uncle Sam. PaycheckCity.com offers unequalled employee self-service tools for paycheck management. The FREE PERSONALk FINANCE CALCULATORS at this site are used by individuals and organizations of every size to quickly and accurately answer paycheck-related questions and to compute paychecks under a variety of circumstances. Over a million page views take place each month on the PaycheckCity.com site and visitors stay an average of 10 minutes each. It is the most visited site for payroll-related support on the Internet. Contact Jon Bohnert, jon@paycheckcity.com, 480-596-1500 x. 103.
High Income Families in the Top Tax Brackets Must Look Closely at Projected Taxable Income Because of Changes in the “Jobs & Growth Tax Relief Reconciliation Act of 2003”. A husband and wife, filing jointly and making over $300,000 a year, should be looking at some tax savings. Because the top tax rate has declined from 38.6% to 35%, coupled with the reduction of capital gains taxation and dividend taxation to 15%, this couple may save enough in taxes to pay for one child’s college tuition for the year. It is definitely a time to do projections with your tax advisor. The recent changes have cut the top marginal rates and can potentially increase cash flow to families, cash flow which otherwise would be used for paying taxes. Consider putting your savings to work in equities, rather than let the IRS hold your assets for a year with no interest. The overall stock market averages (NASDAQ, Dow, S&P and Barra Growth) are advancing and most are up over 10% a year to date. Since the equity markets tend to be a good economic indicator (mostly in advance of actual economic expansion,) it appears as though the bottom of the recession has been reached and we are now into a recovery. Bond rates are at 2% and money markets are yielding 3/4%, while dividend yields in stocks are at 4,5, and 6%. Now that these dividends are 85% tax free, there are significant opportunities in certain stocks with high dividend yields which are also priced below market value who have attractive valuations. Patrick J. Horan, CFP™, ChFC, is the founder and managing partner of Horan & Associates Financial Advisors, Ltd., providing asset management and financial planning for executives and closely-held business owners through management of wealth accumulation and wealth preservation with minimal tax consequences. Worth Magazine recognized Horan & Associates in 2001 as one of the “Top 250 Financial Advisers in America” for the third consecutive year. He can be reached at 800-592-7534 or path@horan-associates.com, www.horan-associates.com.
There are advantages to leaving money in a 401(k) rather than rolling it into an IRA. If you have over $5,000 in your account, your employer has to allow you to leave the money in the 401(k). If you are happy with the choices and the plan provider you can leave the money. You will not be able to add to the account or borrow from it but you should have the ability to change the asset allocation periodically. Assets in a 401(k) are protected from creditors. Depending on your state, IRA assets may or may not be protected from creditors. The only people who can access your 401(k) assets are the IRS (for taxes owed), and in the case of divorce, your ex-spouse or your children. However, an IRA at a brokerage firm, for example, generally offers many more investment options than a 401(k). Consider an IRA if your employer makes you pay for ongoing administration expenses. Talk to a few IRA providers to really understand all the costs and the investment options of the IRA. Please note, your beneficiary designations do not automatically carry over to your IRA. When you establish your IRA, the trustee will have a line on the application for beneficiary designation. In a 401(k), you are required to name your spouse as your primary beneficiary (unless your spouse waives this right). This is not the case with an IRA. Keep in mind that you should always arrange a trustee to trustee transfer when making a change from a 401(k) to an IRA. This means you do not take title to the assets or accept a check written in your name during the changeover. By law the plan provider will withhold 20% for taxes if the check is in your name alone. Dee Lee, Harvard Financial Educators, Harvard, Mass. 978-456-3778. Educator and speaker, Dee has authored four books: “The Complete Idiot’s Guide to 401(k) Plans”, Let’s Talk Money”, Everywoman’s Money: Financial Freedom”, and “The Complete Idiot’s Guide to Retiring Early”. Keeping Investors in the Right Funds at the Right Time Now even Barron's is questioning the conventional thinking that fund managers should stick to their published "style" of investing, regardless of the results for the shareholders. Funds have touted that they were at the top of their class of funds by only losing 18% of their shareholders assets, while their peers or benchmarks lost 22%. Yet good relative performance in bear markets does not support retirement expenses. A unique and commonly more appealing strategy is to concentrate in funds doing well right now. It does not matter if a fund is ranked number one in its category for the past 10 years or if it has outperformed its benchmark, if it's not getting the job done in June of 2003, it won't make it into the portfolio. This strategy identifies funds using a proprietary ranking system that measures three things: 1. Trend measure -- Is the fund in an uptrend or downtrend? These three measures create an overall ranking that clearly identifies the funds that are doing well at any given time. Energy is not wasted on answering "why" questions such as why is the fund going up. Effort is only expended to recognize that it is going up. There is no such thing as a favorite fund with this strategy. It is an objective and disciplined fund ranking that allows investors to stay in the right funds at the right time. PMFM, Inc. Principals are Tim Chapman and Don Beasley, experienced investment advisors with offices just outside Athens, Georgia. Jud Doherty, CFA, manages the marketing and distribution of 401k Toolbox, a service that provides discretionary management as part of its advice product. PMFM provides money management services for its own clients, for the assets held by plan participants in their 401(k) plans, as well as for the clients of other asset managers. At PMFM, 100% of employees' 401(k) plan investments are managed in the firm's "growth" portfolio in exactly the same manner as clients. The firm has a lengthy history of good risk-adjusted performance, and has preserved the value of client accounts over the difficult last three years. Tim Chapman, timchapman@pmfm.com, www.401ktoolbox.com, 800-222-7636.
The Traditional Road to Rome -- Base + Bonus + Options – Does Not Equal Financial Freedom. Creating financial freedom is a two-step process: First, you must generate the earnings, the raw material, to fuel the capital-making machine and secondly, you must leverage those earnings. The access to capital, without a plan to leverage your earnings, buys you a nice today. Capital together with financial leverage buys you the opportunity to pursue both the dreams you have today and the ones you hold for tomorrow. You need information, knowledge, expertise, and perspective to parlay earnings into capital and capital into financial freedom. Adopt a strategic, diversified, and integrated approach to building financial independence, by asking these three simple questions about your money and your financial futur • What
am I most curious about? Expand your perspective on how to create financial freedom with a renewed focus on your investment program. Paula Chauncey, CFA, Managing Partner of Etre llc, 617-716-0257, headquartered in Boston, MA, works with individuals, and their closely held businesses, to develop and execute wealth-building strategies. pchauncey@etrellc.com.
Higher Bar
for Medicaid Eligibility Likely
As States Get Serious About Saving Money: How to pay for long term care with private funds will soon be the only debate, not whether to engage in Medicaid planning. The National Governor's Association Medicaid Task Force is developing a proposal expected to call for radical changes that would cap Medicaid spending on long-term care and allow each state to change eligibility requirements as needed to meet their fiscal reality without having to apply for federal approval (called a "waiver"). The likely outcome is the elimination of "Medicaid Planning" which encourages middle-class and wealthy families to transfer property titles and give away assets to "appear" poor in order to qualify for Medicaid care. This push by the states will eliminate the false security middle class families have traditionally felt by knowing that they could always count on Medicaid to pay. If states tighten Medicaid eligibility, these families will be required to use funds to pay for long-term care services that previously could be hidden. Although most Medicaid recipients are children, the lion's share of Medicaid funding is spent on long-term care services for seniors. This issue is as important for children as it is for parents in
that it is driven by the inability of the states to continue to outlay
a huge percentage of state revenue for elder care to the detriment
of many other services needed by constituents, such as education,
bridges and roads, conservation, water quality, etc. The task force is made up of five Republican governors and five Democratic governors, and their proposal is in response to the governor's criticism of President Bush's Jan,. 31 proposal. Approximately one half of Medicaid spending is funded by the states. A final proposal is expected at any moment. Marilee Driscoll is author of the only long term care planning book to cover all the ways to pay for long-term care, "The Complete Idiot's Guide to Long Term Care Planning" available in bookstores and on Amazon.com now. The book has received enthusiastic and numerous "must reads" from its reviewers. Driscoll is President of the Long Term Care Learning Institute, Plymouth, Mass., speaks to national audiences (both consumer and financial services) on retirement planning and long term care. She also provides technical long term care training to financial advisors & accountants. 508-830-9975 or toll free at 866-MARILEE (866-627-4533), or md@LongTermCareLearning.com
Advisors Need Accurate Resources to Prospect Pension Market. Advisors wishing to improve their marketing approach to the pension market must be discerning in their choice of resources to support that process. To be successful, advisors need several key pieces of information about the specific plan existing at a company they wish to prospect. This information includes: * Access to a collection of Form 5500s, filed with the Federal
Government by every pension plan. " Advisors and brokers should not waste time cold calling into retirement plans. It is time consuming and comes off as unprofessional. Success comes when the preparation for a sales call that is extensive and thorough," says Judy Diamond, Judy Diamond Associates, Inc., Washington, D.C. publishers of tools that support pension plan sales for advisors and brokers. Now available -- the new, updated version of "King of Pension Funds" published by Judy Diamond Associates, Inc.. a compilation of every qualified pension fund (over 800,000) filed with the federal government. These resources comes on a single CD-rom with a powerhouse search engine that makes it possible to find detailed information about any pension or 401(k) plan in an advisor's prospecting area. Go to www.judydiamond.com for further information.
BenefitStreet’s TPA/RIA Marketing Alliance Supports Competition. BenefitStreet's Marketing Alliance Program matches Third Party Administrators (TPAS) and Registered Investment Advisors (RIAs) who can then jointly offer investment management and administrative services to Plan Sponsors. Under this program TPAs and RIAs interested in forming strong relationships join forces, allowing each firm to compete successfully against the bundled solution providers who now control 75% of the market. BenefitStreet's TPA/RIA Marketing Alliance Supports Competition. "The increase in revenue and client acquisition rates realized from partnerships brokered by BenefitStreet between TPAs and RIAs has been so large that BenefitStreet has formalized this opportunity into a unique Marketing Alliance program," says Luis Doffo, Vice President for Alliances. TPAs perform the administration functions for hundreds of retirement plans with millions in retirement assets, some of which are being under-serviced because of the lack of professional investment advice. The result: Lack of Service = High Client Turnover. TPAs are in search of a partner who can flip the equation: Higher/Complete Service = Lower Client Turnover and Higher Client Acquisition.. Independent registered investment advisors represent that partner. Only by working together can the RIAs and TPAs implement this equation within their business models and create a revenue stream that will produce exponential growth. BenefitStreet first created programs and partnerships between RIAs and TPAS in 2001. "To build a sustainable practice, new liaisons must be forged. RIAs and TPAs utilize BenefitStreet's Advanced Daily Valuation and Mutual Fund Trading Platforms as the foundation to a business model that provides a continuing referral source and revenue streams for both parties," says Doffo. The current BenefitStreet Marketing Alliance Program is based on the demand for the Advanced Daily Valuation Platforms that are taking market share from legacy providers, whose cost and service is not competitive. BenefitStreet is strategically positioned to capture this opportunity with ten years of expertise in RIA and TPA software solutions, web experience, a proven business plan for the partnership, and perhaps the key advantage, a model that provides a continuing referral source and revenue stream. BenefitStreet's technologty is fundamentally different offering a streamlined retirement plan administration process, including prospecting, high volume conversion, and enrollment, as well as performance and tax reporting. The BenefitStreet technology makes communication seamless and easy between all essential partners for all types and sizes of plans. Luis Doffo, 925-328-4549, V.P. for Alliances at BenefitStreet, luis_doffo@benefitstreet.com.
|