Resource of the Month: About the Fiduciary Rule

Weingast Fiduciary RuleThe Department of Labor’s announcement has raised many questions for people who will be affected by the new Fiduciary Rule. To help keep you informed and up-to-date, we’re providing a fact sheet from the DOL as our Resource of the Month. We hope you’ll find this helpful and a great place to get answers to any of your questions.

Click here to download the resource, and be sure to contact us with any questions.

A note about the Fiduciary Rule from Robin Weingast

Weingast Fiduciary RuleDear Friends,
You may have have seen the recent news about the Department of Labor’s Fiduciary rule. The Robin S. Weingast & Associates team has been closely involved in understanding this rule and we are keeping a close eye on what these changes mean for our clients. For over 30 years, we have made our clients’ benefits and retirement plans our priority, and we look forward to continuing that tradition. The rule goes into effect in April 2017, with full implementation due by January 2018. This will give us all time to work to make sure you understand the rule and feel comfortable about your retirement savings path.

As a fiduciary, I am already held to the highest standards when it comes to keeping fees to a minimum and ensuring that your retirement plan works for you. You can expect the same level of service and attention to your finances as the DOL’s new rule is implemented.

If you have any questions, concerns, or want to know more about this new rule, I invite you to contact me today.

I look forward to hearing from you and to our continued success.

Robin S. Weingast
President & Owner, Robin S. Weingast & Associates

Need to Know: Whole Life Insurance

Robin Weingast life insurance benefits planningLife insurance has been around for thousands of years. It is believed that the Romans originated the product to fund burials of military personnel who were members of a burial club.

Over time, the reasons for owning life insurance grew more complex, such as to meet estate planning or business planning needs, in addition to personal protection. Product innovations and designs also occurred to meet varying factors, including economic concerns, investment market cycles, medical advances and increases in longevity.

Throughout that time, one proposition has remained constant: None of us know when we’re going to die. Whole life insurance is uniquely positioned to meet that proposition and, thus, has seen a resurgence in popularity because unlike term insurance, it is a permanent life insurance product. And unlike variations of universal life products, it is not subject to interest rate and market fluctuations provided the required premiums are paid.

Once thought of as an expensive form of death protection, whole life insurance lends itself well to various scenarios. Among them:

Scenario 1: Clients who want a higher return with lower risk.

Given current low interests, which are yielding minuscule returns on bank and fixed income financial products, whole life insurance’s cash value growth is now seen as a higher-yielding financial product with similar risk profiles. Yes, it is still life insurance, but the cash value element is often thought of as a bond or CD alternative.

Insurance carriers guarantee an interest rate in cash values. Mutual companies also often provide an annual dividend which is not guaranteed, (although most has paid a dividend every year). The dividend further increases cash values, all of which grows tax-deferred and can potentially be accessed income tax-free through withdrawals to basis and loans thereafter.

Scenario 2: Clients who want a healthy investment portfolio.

Whole life insurance is a non-correlated asset class in a healthy, diversified investment portfolio. For entrepreneurs and more aggressive investors, whole life insurance serves as a counter-balancing force against concentrated positions and aggressive investments.

Scenario 3: Clients who need permanent protection.

The average mortality rate has increased dramatically in recent times due to advances in medical technology, greater access to healthcare, and greater awareness of wellness. As a result, families often realize that there is no standard or finite period to maintain life insurance, such that when the period is over, the “need” or desire somehow goes away.

Other products and designs may not be able to guarantee death benefit coverage through advanced ages without:

• increasing premiums on existing coverage;

• adding to underwriting to get new coverage; and

• reducing coverage on existing policies to maintain the policy and/or premium.

The above shortcomings have led to a renewed awareness of whole life insurance. By design, the death benefit is guaranteed if the premium is paid, thus ensuring the policy will be there when protection is needed. Premiums have been amortized over the expected life of the product so as not to place sticker shock on those who are no longer actively employed but still want and need coverage.

Scenario 4: Clients who have business planning needs.

In business planning situations, advisors and clients have traditionally turned to term insurance to fund buy-sell agreements. Increasingly, however, business owners have discovered that the likelihood of dying while in the business is remote.

It is more likely that the business owner will become sick, injured or leave the business due to retirement or some other life event. As a result, the cash value buildup in a whole life policy is an attractive vehicle to create a sinking fund that will act as a down payment on an installment sale or to supplement a lifetime buyout, while the death benefit ensures funding in the unlikely event of death.

If death does not occur, then the policy can be re-purposed for personal planning use of the departing owner. A well-drafted business continuation plan can address this situation.

Scenario 5: Clients looking for a favorable cost structure.

Overall, costs of a whole life policy are too often misunderstood. As measured by premium outlay, there is no argument that whole life presents the highest premium. However, over a lifetime, whole life insurance generally provides both the highest IRR of premium to death benefit (measured at life expectancy) and also the best cost structure as measured by net present value of premiums relative to cash values.

Scenario 6: Clients who need a “forced” savings vehicle.

As increases in college tuition continue to outpace inflation, and as more individuals and families are realizing they won’t be saving enough in traditional retirement accounts to meet retirement expenses, whole life insurance and its cash value buildup are excellent supplemental sources to accumulate wealth while also protecting the family. The premium payments are often seen as a “forced” savings vehicle.

Thus, there are many reasons why whole life products have enjoyed a resurgence in popularity. For those advisors who don’t typically work with whole life, perhaps a fresh look is warranted. To take a fresh look, contact the Robin S. Weingast & Associates team today. We’re here to help!

What Robin’s Reading: August 2015

Robin Weingast Reading RecsWelcome to a new installment of “What Robin’s Reading,” our bimonthly feature that highlights what the Robin Weingast team is reading to stay current and up-to-date on the issues that will most impact our clients and their benefits planning.

The entire Robin Weingast team believes that a key part of our responsibility is to understand what our clients value, what’s on their minds, and what they need to have peace of mind about their benefits and retirement planning. That’s why this month, some recently released studies have captured our attention.

The first is a study from the American Psychological Association that found that money is the leading cause of stress for Americans. This is probably not a surprise to most of us, since as the study indicates, most of us are stressed out about finances! What was surprising to us is that money anxiety crosses all socioeconomic lines. In fact, a recent survey of individuals “with a net worth of $1 million or more by UBS found that while millionaires derive significant satisfaction from the wealth they amassed, they also feel “ever-present fear of losing it all.” This fear and money anxiety take a toll on personal happiness and relationships, and sometimes trick us into making the wrong decisions about planning for our future.

Another recently released study indicates that Americans are saving more,  “but the percentage of household savings that went into employer-sponsored retirements plans like 401(k)s fell 7 percentage points to 22 percent in 2014, and households participating in employer-sponsored plans declined to 56 percent last year from 60 percent in 2013.” What’s the reason for the decline? A focus on short-term, unexpected cash needs rather than long-term planning. In fact, there was an 8% increase in households reporting that their savings were being put aside specifically to deal with immediate emergencies that may arise.

We’ve spent time on our Need to Know blog discussing the dangers of not being prepared for retirement (Link 4), and our 30+ years of experience have shown us that a well-structured, attractive retirement plan is a win for everyone — you’ll attract the best staff and they’ll be more prepared for retirement. We also know that knowledge and support are the keys to alleviating anxiety, preparing properly, and achieving peace of mind.

This month’s readings have shown us that now, more than ever, the Robin S. Weingast team’s ability to provide Retirement Peace of Mind is vital. Don’t let anxiety about your future affect your present. Our team is here to help you take a deep breath, plan, and free you up to enjoy the results of your hard work. Whether you want to ensure that you’re on track to meet your future goals, or you want to make sure your retirement plan is structured to ensure that you and your staff are properly prepared for retirement, we can help. Contact us today to learn more.

Need to Know: Obergefell v. Hodges Decision on Same Sex Marriage Will Impact Planning

Robin Weingast Obergefell v. Hodges    This month, the Supreme Court issued its ruling on Obergefell v. Hodges, a case that was poised to determine the future of marriage equality in the United States. With their 5-4 ruling, the Court struck down state-level bans on same-sex marriages and mandated that all states must recognize a same-sex marriage, regardless of where it occurred. This means that all married same-sex couples are now entitled to full benefits under the law – in all 50 states (and US territories).

As marriage equality advocates rejoice nationwide, the Robin S. Weingast & Associates team is here to help you understand what this ruling means for planning:

Healthcare: Someone in a same-sex marriage can no longer be excluded from their spouse’s healthcare, long-term care, or guardianship decisions.

– TaxesSame-sex couples will now enjoy federal and state-level tax benefits. They can file jointly on the state level – which was not possible previously in states where same-sex marriage was either banned or not recognized – and are eligible to take full advantage of all tax breaks.

– Survivorship: This issue was at the core of Obergefell v. Hodges. Although federal-level benefits have been available to same-sex surviving spouses since 2013, with this ruling, a surviving same-sex spouse will be legally recognized and entitled to all benefits, including those on the state level. This is particularly important when considering governmental benefits, custody of children, and any other financial benefits.

Intestacy: If a spouse dies without a legally recognized will (known as “intestacy”), the surviving same-sex spouse will have automatic spousal inheritance rights.

Understanding the new benefits available to same-sex couples is just the first step. As always, the Robin S. Weingast & Associates team recommends that all couples plan proactively and prepare themselves for all situations that may arise. Our team is here to work with you and make sure your wishes are followed out at all stages of your life. Contact us today to find out how we can help.

Cash Balance Plans: What Else You Need To Know

Robin-WeingastWe’re wrapping up our four-part series on Cash Balance Plans. (Miss a part? Click for Part One, Part Two, and Part Three).

In our final post, let’s look at some other key factors to consider when thinking about adopting a Cash Balance Plan:

1) Profit Sharing Plans on their own allow flexibility for contributions to vary from year to year depending on profitability. Cash Balance Plans require amendment in order to accommodate the need for different levels of contributions. There is a restriction on the frequency of amendments unless a valid economic reason exists.

2) If profits are not expected to support its Cash Balance Plan contribution, then the plan can be amended to accommodate either a lower level of contribution or no contribution at all.

3) Any amendment reducing or freezing contributions must be adopted 30 days before employees complete 1,000 hours. Amendments for increases to contributions must be adopted within two-and-a-half months following the end of a plan year.

4) Qualified plans’ assets are protected from creditors in the event of bankruptcy. The anti-alienation provision of ERISA states that “each pension plan shall provide that benefits provided under the plan may not be assigned or alienated,” which means that the assets in a qualified plan are not available to creditors. Since professionals and business owners often consider asset protection a premium, it is very advantageous to accrue retirement savings in an asset-protected vehicle, like a qualified plan. These plans provide a means for business owners and partners to move assets from their businesses to a pension plan. Once in the qualified plan, these assets are then protected from creditors as a “nest egg” for retirement or to pass on to heirs.

As you can see from our series, Cash Balance Defined Benefit Plans can enhance the effectiveness of your retirement program, but only if they are designed thoughtfully and using state-of-the-art technology and processes. They must also include effective communication and education for your employees.

If you are considering a Cash Balance Defined Benefit Plan, The Robin Weingast & Associates team of enrolled actuaries and certified pension and employee benefit consultants are essential partners who can help you develop and get the most out of a Cash Balance Defined Benefit Plan as part of your retirement program. Contact us today for more information.

Cash Balance Plans: Advantages

Weingast-Cash-Balance-PlanWelcome to Part Two of our special series on Cash Balance Plans. (Click here to catch up on Part One).

Now that you have an understanding of Cash Balance Plans and their tremendous growth, it’s important to understand why and how cash balance plans can be advantageous to your business goals.

Advantages of Cash Balance Defined Benefit Plans

1) The opportunity for larger tax deductible contributions for partners than permitted by 401 (k) Profit Sharing Plans.

2) As an enhancement to an existing pension program, it attracts competent employees and serves to increase retention.

3) Contributions required for Cash Balance Defined Benefit Plans are generally less volatile from year to year and allow lower costs for employees than Traditional Defined Benefit Plans

4) Tiered levels of benefits are attractive to partnerships who desire different levels of contributions fro partners and employees.

5) Many employees seem to understand the account balance concept and appreciate the value of an account balance more than the value of the promise of an annuity payable in the future.

6) Cash Balance Plan assets are portable on termination of employment in that vested balances can be paid as lump-sum distributions, which can be rolled over to an IRA or another qualified retirement plan. When a participant terminates employment, they are eligible to receive the vested portion of their account balance. The vesting schedule required for Cash Balance Plans is also called a 3-year “cliff” vesting schedule, whereby accounts are not vested for the first two years of service, but are fully vested after 3 years of completed service.

As you can see, there are distinct advantages to this kind of benefits plan. In our next part, we’ll explore how to tell if you are a good candidate to adopt a Cash Balance Plan.

If you think a Cash Balance Plan may be right for you, it’s vital that you have the right guidance. The Robin Weingast & Associates team of enrolled actuaries and certified pension and employee benefit consultants are essential partners who can help you develop and get the most out of a Cash Balance Defined Benefit Plan as part of your retirement program. Contact us today for more information.

Cash Balance Plans: What are They?

Welcome to a special series from Robin Weingast & Associates on Cash Balance Plans! If you keep up with our Resource of the Month series, you’ll recall that we recently provided two resources on Defined Benefit Plans: One on Traditional Defined Benefit Plans and one on Fully Insured Defined Benefit Plans.

This month we want to give you an in-depth look at the fastest-growing type of Defined Benefit PlanCash Balance Plans. Since 2001, Cash Balance Plans have soared, with double-digit annual growth each year of the decade and an increase of more than 600% in 12 years:


This growth is why we’re presenting a special four-part series on Cash Balance Plans that explains what they are, their advantages, good candidates for adopting a cash balance plan, and other considerations.

Cash Balance Defined Benefit Plans: What Are They?

Professionals of highly profitable businesses are generally looking for larger tax deductions and accelerated retirement savings with minimal costs for employees, so a Cash Balance Plan working in coordination with an already established 401 (k) Profit Sharing Plan may be the perfect solution for your practice. Current tax legislation is encouraging many professionals to adopt this type of plan arrangement as part of their pension programs.

A Cash Balance Plan is a “tax qualified” retirement plan, similar to a 401 (k) Profit Sharing Plan in that it allows for tax deductible contributions and deferral of taxes, as well as creditor protection under the Employee Retirement Income Security Act (ERISA).

While assets of a Cash Balance are invested in a single pooled investment account, each participant has has an account, similar to a 401 (k) Profit Sharing Plan, that is record kept by the plan actuary, who generates annual participant statements, so that employees know what they have accumulated in the plan.

Participants’ account balances in a Cash Balance Plan grow annually in two ways:

1) The employer’s contribution, which is a percentage of compensation or a flat dollar amount based on a formula specified in the plan document, and;

2) An annual interest credit, which is a guaranteed rate of return, independent of the plan’s investment performance. The guaranteed rate varies each year but it is generally equal to the yield on 30-year Treasury bonds, which has hovered close to 5% in recent years.

In our next part, we’ll explore the advantages of these plans.

If you think a Cash Balance Plan may be right for you, it’s vital that you have the right guidance. The Robin Weingast & Associates team of enrolled actuaries and certified pension and employee benefit consultants are essential partners who can help you develop and get the most out of a Cash Balance Defined Benefit Plan as part of your retirement program. Contact us today for more information.

Resource of the Month: IRA Rollover as a Qualified Plan Conduit

Weingast_IRAIn the spirit of new year’s resolutions, the start of the year often means that employees are putting plans in place to start new jobs. That’s why our January Resource of the Month is about Conduit IRA’s – which are special IRAs where funds are held until they are either transferred to a new plan or dispersed to the employee.

The resource provides an in-depth look at how these plans work, explains what your options are as either the plan provider or the employee, and goes over other considerations based on the latest legislation – including some new parameters that went into effect on January 1, 2015.

This is a can’t-miss resource – download it here today!

Need To Know: 2015 Pension Plan Limits

It’s a new year and that means something important for your retirement plan – new contribution limits. In 2015, the IRS has raised pension plan limits to reflect cost-of-living increases. There are new limits for 401(k)-related plans as well as others. We’ve summarized the new limits (and given you a six-year overview of plan limits) in this helpful chart:Robin_Weingast_Plan_Limits

Based on these new limits, it’s more important than ever for you and your employees to review your retirement plans. The Robin Weingast & Associates team is here to help you understand the new limits and make sure you maximize their potential and opportunities. Contact us today to make sure your benefits are working for you.