What Robin’s Reading: May 2016

Robin Weingast Reading RecsWelcome to another installment of What Robin’s Reading — our regular feature that gives you an inside look at what the Robin S. Weingast & Associates team is focusing on to stay up-to-date with benefits and retirement planning news.

This month, we continue to monitor the impact of the Department of Labor’s Fiduciary Rule, but with graduation season upon us, we’re also reading up on the investment and benefit trends among the new crop of job seekers. A recent video by Tony Robbins caught our eye — it contains his opinion on a “must invest” for young professionals. Click here to hear what he has to say.

We also read “Millennials & Financial Literacy—The Struggle with Personal Finance,” a fascinating report on the personal finances of millennials. Based on research conducted by The Global Financial Literacy Excellence Center (GFLEC) at the George Washington University, the report uncovered eight key trends. When it comes to personal finance, millennials:

1. Have inadequate financial knowledge
When tested on financial concepts, only 24% demonstrated basic financial knowledge.

2. Aren’t happy with their current financial situation
When ranking satisfaction on a scale of 1-10, 34% were very unsatisfied.

3. Worry about student loans
When asked about their ability to repay their student loan debt, more than 54% of Millennials expressed concern.

4. Have debt across economic and educational lines
Among college-educated Millennials, a staggering 81% have at least one longterm debt.

5. Are financially fragile
Nearly 30% of Millennials are overdrawing on their checking accounts.

6. Are heavy users of Alternative Financial Services (AFS)
In the past five years, 42% of Millennials used an AFS product, such as payday loans, pawnshops, auto title loans, tax refund advances, and rent-to-own products.

7. Sacrifice retirement accounts
More than 20% of Millennials with retirement accounts took loans or hardship withdrawals in the past year.

8. Don’t seek professional financial help
Even with inadequate knowledge, only 27% of Millennials are seeking professional financial advice on saving and investment.

But the picture isn’t totally bleak for millennials. Another piece from CNBC outlines distinct advantages that the generation has when saving for retirement.

Whether you know a young professional who would benefit from advisement, or you want to make sure your own personal finances are in order, the Robin S. Weingast team is here for you. Contact us today for an appointment. Our team of experts is ready to make sure you and your loved ones are on track to meet your financial goals.

Resource of the Month: Do You Have Retirement Peace of Mind?

Robin Weingast retirement planning peace of mindPlanning for retirement isn’t just about having money, it’s about having peace of mind. Just a few years ago, a landmark study was conducted with more than 6,000 Americans over the age of 45. The study aimed to get a large-scale understanding of our retirement concerns and questions and to find out what factors made it more likely for people to have “retirement peace of mind.” Our latest Resource of the Month compiles the results and explores what they mean for YOUR retirement. From asking pointed questions about your goals to giving you tangible tips to increase your peace of mind, this is a resource that will truly help everyone.

Download our April 2015 Resource of the Month.

One interesting note from the study is that people who worked with advisers were significantly more likely to have retirement peace of mind. The Robin S. Weingast & Associates team provides more than just valuable retirement planning advice and administration – we provide all of our clients with the peace of mind they need to both prepare for and enjoy their retirement. Contact us today to find out how we can help you.

Need to Know: Making up for Lost Time With Retirement Planning

Robin Weingast retirement planning Congratulations on making it through April and the ever-busy tax season! It’s hard to believe that 2015 is almost half over, but in a few months we’ll be talking year-end wrap ups and 2016 planning. Before the year gets away from us, the Robin Weingast & Associates team wants to focus on an important, time-sensitive topic that impacts everyone: timely retirement planning.

The general rule of thumb is that earlier is better when it comes to retirement planning. But that’s not always an easy rule to follow. Just last month, expert testimony to the US Senate’s Special Committee on Aging revealed that “nearly half (45%) of Americans have no retirement savings…[and] the median retirement-account balance is only $3,000 for working-age households and only $12,000 for households approaching retirement. In two-thirds of working households with earners between ages 55 and 64 years, at least one earner has saved less than one year’s income for retirement.”

If you suspect that you – or your employees – are unprepared for retirement, there are things you can take to get on track. Before you can properly plan, you need to understand where you actually stand. This is the most important step you can take, because it will determine what comes next for your retirement planning. Use this tool from the AARP; it compiles information about you, your spouse, and your current savings and projects what you will need for retirement and if you’re prepared.

Based on what you find out, it’s time to make some potentially tough decisions. Think about where you can trim expenses and how you can cut down on more significant costs – are you at the stage in life where you can downsize your home or apartment? If you need to make significant decreases to your monthly expenses, try using a tool like this, which walks through standard monthly expenses and gives you tips on how to cut costs. Also consider if you’re maximizing your earning potential. Are there part-time or freelance opportunities that can help you close the gap?

A key part of catching up is making sure you understand your current retirement plan and making sure you’re taking full advantage of what’s available to you. Whether you’re an employee who isn’t fully aware of what retirement benefits your company offers, or a manager who wants to make sure your team understands the full details of a retirement plan, it’s wise to keep the lines of communication open. Schedule regular meetings with HR to make sure that you’re making the most beneficial choices.

Having a team always helps. You can count on the Robin S. Weingast & Associates team for the most effective retirement planning strategies at any stage. Contact us today to see how we can help achieve your goals.

What you Need to Know in 2015

2014 is coming to an end and the Robin S. Weingast & Associates team has been busy preparing for 2015. We value working with our clients and want to give you the most current information on what you have to look forward to in the new year.

As we told you in October, the IRS issued information geared towards helping to increase the use of income annuities in 401(k) plans. Plan sponsors can now voluntarily include deferred income annuities in a target date fund used as a default investment, making it easier for employees to consider using lifetime income. We posted the full announcement and would be happy to speak with you about how to take advantage of these new important guidelines.

Beginning in 2015, the IRS increased retirement fund contribution limits. This change reflects cost-of-living increases and could have major implications for you and your employees. Click to expand this graphic and se what the new limits are.

Robin_Weingast_new_IRS_limits

New York-based businesses should know that on December 31, the statewide hourly minimum wage for non-exempt (i.e., hourly) employees will rise from $8.00 to $8.75 (and then to $9.00 on December 31, 2015). Just as significantly, the minimum weekly salary for certain exempt employees – executives and administrators – will also increase on December 31: from $600.00 to $656.25 (and then to $675.00 on December 31, 2015). The wage increase also affects those in the food service and hospitality industries. You can read more about it here (the post also contains information about minimum wage changes in other states).

There are some small changes to the Affordable Care Act that may impact your business. This site summarizes everything that will change in 2015, and we are happy to talk through what these changes mean for your benefits plans and for your business.

Earlier this year, we let you know that the IRS announced an 2016 deadline for pre-approved document restatements. Here’s a refresher on what that means for you. Remember that our team is here to help you with this process.

We hope you found our Need to Know Blog, monthly resources, and updated newsletters a valuable source of must-have information. If you have any suggestions for topics we should cover, please contact us and we’d be happy to cover them on our website.

The Robin Weingast team is ready to offer guidance and help you develop solutions and innovative approaches to respond to any new regulatory changes. We look forward to making 2015 a happy and successful year for you.

Need to Know: Startup Companies and Benefits

Weingast_startupEmployees of startup companies probably consider themselves pretty lucky. According to an article in Forbes startup employees benefit from the “startup culture,” which breeds collaboration as well as from a sense of ownership and visibility that comes from being with a company since its inception. For many startup employees, these factors alone are enough to keep them engaged and on board with the company for years to come.

But if you are at the head of a startup company, you may want to consider the impact of offering a formal benefits program to your employees.  A recent article in Entrepreneur reports that  “MetLife’s annual study of employee benefits trends found that benefits can be even more important than advancement opportunities and company culture in fostering employee loyalty.” This is a key factor to keep in mind, particularly when considering the time, money, and energy it takes to recruit and retain talented staff. In addition to keeping your staff happy, offering formal benefits may also be a way to distinguish you from competitors when you’re recruiting new staff, since “only 28 percent of businesses with fewer than 10 employees offer health insurance.”

Here are some important tips to keep in mind if you are thinking of establishing a formal benefits program for your startup company:

1)    Start with the basics, such as health insurance and disability insurance. Save the fancier perks for later, when you have established your company on solid financial ground.

2)    Manage expectations, for yourself and for your team. Offering any kind of formal benefits at all puts you in a better position than most small companies; asking for employee contributions is not only reasonable but will likely be necessary. And, avoid cutting back benefits at all costs.

3)    Take advantage of health-insurance subsidies, which are now available under the Affordable Care Act.

4)    Get a broker. You’re busy trying to make your business a success. Once you know the basics of what benefits you want to offer your employees, leave the details and logistics to a broker who knows the in’s and out’s of benefits planning. The best part? There’s no extra charge for using a broker.

Read the full article here.

Whether you’re an entrepreneur who wants to attract and retain the best staff as you build and grow a successful business or a leader at an established company that wants to gain a recruiting edge, the Robin Weingast team can help you establish and analyze your employee benefits. Contact us today for a free consultation or a free analysis of your current plan. Our business is to make sure your benefits are working….for you.

Resource of the Month: Life Insurance in Qualified Plans

Welcome to our new Resource of the Month series!

At Robin S. Weingast and Associates, we strongly believe that our clients benefit both from having relevant knowledge readily available and from working closely with us to leverage this knowledge and achieve their goals. We make it our business to make sure that you are always in-the-know and on top of the latest trends and regulations. That’s why we’re so happy to introduce the Robin Weingast Resource of the Month.

Every month we will feature a resource guide about an important aspect of your business—including retirement plans, life insurance policies, and much, much more. Each resource guide that we feature will always be available on our Resource of the Month page for you to download so that you can access all of our resources, whenever you need them. It’s the knowledge you need, right at your fingertips.

The Robin Weingast & Associates team is always available to discuss these resources in depth. We would be happy to walk you through what they mean for your business and how they can help you reach your business goals. We also welcome your feedback on Resource of the Month topics that would benefit you. Just email rsw@rswtpa.com with any feedback, and we’ll get right to work finding you the resources you need to stay on top of your game and ahead of the curve!

Our first Robin Weingast Resource of the Month is about the legal limitations of life insurance in qualified plans. It provides a detailed overview of

1) The legal limitations of personal and business plans, including IRAs, tax sheltered annuities, defined contribution plans, profit sharing plans, and defined benefit plans.

2) Advantages and disadvantages to employees.

3) Advantages to employers.

Download our April 2014 guide today.  Be sure to contact the Robin Weingast & Associates team if you have any questions about this resource guide and how it applies to your business. We look forward to hearing from you and hope you enjoy our Resource of the Month!

Robin Weingast featured in the March 2014 Suffolk Lawyer

Robin Weingast featured in March 2014 Suffolk Lawyer sharing her benefit planning expertise.Employee benefit expert Robin Weingast recently shared her 30+ years of knowledge with the Suffolk Lawyer, the official publication of the Suffolk County Bar Association. In “Cash Balance Defined Benefit Retirement Plans—How to Increase Your Tax Deductible Plan Contributions,” Weingast explores if adding a Cash Balance Defined Benefit Plan is a good fit for your company.

As you know, we are currently exploring Cash Balance Plans in our special series (catch up on part 1 and part 2), and in her article for the Suffolk Lawyer, Robin goes into detail on the many advantages of a Cash Balance Defined Benefit Plan, including:

1) The potential for larger tax deductible contributions than permitted under Defined Contribution (401(k) Profit Sharing Plans) for owners and key employees—which shelters your business profits from taxes

2) Tiered benefit levels, allowing partners and employees to have different levels of contributions

3) A greater appreciation of the plan and its benefits by your employees

4) Less volatility and cost

5) Greater funding flexibility

 

The article also explores if a Cash Balance Defined Benefit Plan is a good fit for your company, and breaks down the many factors to consider, including company demographics (including the age of your staff and your age relative to them), taxes, and if your company has the resources to offer this type of plan.

These are just a few of the many insights offered in the piece. You can download the full article here..

Above all, any benefit plan needs to be thoughtfully constructed and carefully managed by a qualified team of experts. As always, Robin Weingast and her firm of enrolled actuaries, certified pension and employee benefit consultants, and financial and insurance advisors are available to discuss your options for a customized, tax-favorable, and innovative retirement program that is current with ever-changing tax laws. Contact the Robin Weingast team today for more information.

Robin Weingast & Associates Cash Balance Series: Putting Cash Balance Plans in Context

Robin Weingast Putting Cash Balance Plans in ContextDefined Contribution Plans

Before we can really discuss what a Cash Balance Plan is, it’s important to have some general background information to put the discussion in context. A defined contribution (DC) plan, such as a 401(k) profit sharing plan, dictates the contributions that go into the plan each year. Contributions, which are usually discretionary, include employee salary deferrals, employer matching contributions and employer profit sharing contributions. The maximum amount a participant can receive in a DC plan each year is $49,000 for those under age 50 and $54,500 for those age 50 or older. These contributions and the investment returns they generate determine a participant’s ultimate retirement benefit.

A defined benefit (DB) plan promises a benefit using a formula that is usually based on compensation and years of service. For example, a DB plan might provide an annual benefit equal to 1% of average compensation for each year of service. If a participant has average compensation of $65,000 over 10 years with the company, the annual benefit is equal to $6,500 ($65,000 x 1% x 10 years of service) for the rest of the participant’s life.

Rather than limiting contributions, the IRS limits the maximum annual benefit a DB plan can provide to a participant to $195,000 per year. The contribution is a function of how much is needed to fund the promised benefits. While there are a number of variables, the following table summarizes the tax-deductible contributions to fund maximum benefits for DB participants of different ages:

Robin Weingast and her team can provide you with all the information you need about Cash Balance Plans

The employer is said to bear the investment risk because the higher the return on investment, the lower the portion of the funding that must come from the company and vice versa. To the extent a DB plan is not fully funded, contributions are generally required each year.

The next part of our series will focus on clarifying what a Cash Balance Plan is, and explaining various important elements. If you missed Part 1 of our series, you can catch up here.

If you have questions about Cash Balance Plans and if they are right for your business, the Robin Weingast Team is here to help. Please contact us and we would be happy to answer all of your questions.

A Special Series from Robin Weingast & Associates, TPA: Cash Balance Plans

Robin Weingast has all the information you need about Cash Balance PlansCash balance plans have enjoyed a recent resurgence in popularity. However, these plans, which can provide tax-deductible benefits as much as five times greater than 401(k) profit sharing plans, have actually existed for more than 30 years. When the Pension Protection Act of 2006 (PPA) resolved much of the legal uncertainty of these plans, small and large companies alike showed a renewed interest. According to a recent research report, the number of cash balance plans increased by more than 23% from 2006 to 2007 and more than 75% of existing cash balance plans are sponsored by companies with fewer than 50 employees.

In our special “Need to Know” Series on Cash Balance Plans, the Robin Weingast & Associates team will walk you through everything you need to know about these popular plans.

As always, the Robin Weingast & Associates team is here to help. If you have any questions about cash balance plans, please contact us and we’ll be happy to help. 

Questions about Required Minimum Distributions?

Robin Weingast money imageRequired minimum distributions (RMDs) are the amounts that a retirement plan owner is required—by law—to withdraw each year. Here’s what you need to know about RMDs:

When are RMDs required to begin?
Typically, you will need to begin making annual distributions starting the year that you will turn 70 ½ years old, or the year in which you retire. What this means is that if you are 70 ½ and still work for the company with which you have your 401(k), you will not be mandated to take an RMD from that account.

Important exception: If you own at least 5% of the business that sponsors the retirement plan, you will need to begin making the RMD once you are 70 ½, whether or not you are working.

Do RMD rules apply to all kinds of retirement accounts?
RMD rules apply to:

1) Traditional individual retirement accounts (IRAs)
2) IRA-based plans including SEPs, SARSEPs, and Simple IRAs
3) All employer-sponsored retirement plans including 403(b), 457(b), 401(k), and profit-sharing plans

Important exception: RMD rules do not apply to Roth IRAs (while the plan owner is alive), but DO apply to Roth 401(k) plans.

When do RMDs need to be made?
If you have any IRA account, RMDs must be made by April 1 of the year following the year you turn 70 ½, even if you are still employed. After that, RMDs must be made by December 31 of each year.

How do I calculate my RMDs?
The IRS offers several worksheets and resources to help you understand the amount of your RMD.

Please note: IRA owners have to calculate separate RMDs for each account, although the entire amount can be taken from one or more of the IRAs. However, RMDs from plans such as 401(k)’s must be taken individually from each account.

What else do I need to know about RMDs?
There are some other important elements to RMD requirements:

1) If the plan or IRA owner dies, there are different distribution rules for beneficiaries.
2) If you are still employed and need to make RMDs, your employer still has to contribute to your plan, and you must be given the opportunity to make salary deferrals, plan permitting.
3) If your distributions fall below the RMD requirements, then you will be subject to a tax equal to 50% of the undistributed RMD.

Have more questions?
The Robin S. Weingast & Associates team is here to help. We have over 30 years of experience helping our clients with their benefits, retirement, and investment needs. Contact us for a free consultation today.

Content for this post came from this article.