Exit Insight: sale proceeds from your business

The following is an excerpt from “Exit Insight: Getting to Sold!” (pp. 157-158) available on Amazon.com and Merrell Publishing: The third element contributing substantially to your retirement lifestyle is the money you receive from the sale of your business. Most business owners do not know the true value of their business, heavily overestimating its worth as we have mentioned repeatedly. This is a huge detriment because if you do not know its value, you are unable to calculate whether or not you are due for a dear or a dire retirement. The after-tax proceeds from the sale of your business are critical to your retirement comfort. Most business owners assume a happy ending, foolishly confident that a buyer will be ready and waiting to purchase the business at the asking price when the day comes. Yet the chances of that happening are remote without preparation and planning. Just as you would dress up your home for curb appeal, fix the leaks, mow the backyard and put flowers on the dining room table, your business may require several years of carefully considered adjustments to prepare it for sale, so it stands out from the flood of other businesses begging to be bought. Consulting with a master financial planner trained in understanding a variety of ways to strategically synthesize the fiscal tools available to you for reducing taxes, improving your business’s appeal, increasing your portfolio’s value, and providing the most funds for your retirement lifestyle is the most lucrative and sensible investment you can make. Whether your financial accordion’s bellows need some steady pushing, the tone chamber requires an adjustment, or...

Long-term care insurance explained: part 2

In our most recent blog post, we introduced you to long-term care insurance and explained risk management and how to evaluate a policy, including factors to consider. We continue our discussion below, beginning with benefit flexibility. Benefit flexibility A comprehensive policy may be purchased that covers the individual in a nursing home, adult day care center, assisted living facility, his or her own home, or just about any other setting. Or a nursing home only or home care only policy may be purchased. Most policies will pay 100% of the daily benefit for skilled care, but many policies will reduce the percentage they pay if care is received for custodial care. Some policies will also reduce the benefits depending on where the care is received. For example, it will pay 100 percent for care received in a nursing home but only 80 percent for assisted living. Further, many polices allow the client to choose a lower coverage rate in order to keep the cost of the policy down. In this situation the policy may pay 100% of the daily benefit for nursing home coverage and the client could choose a 50% or 80% rate for home health care. As long as the coverage is affordable, it is wise to have a policy that pays 100% at any level of care and 100% regardless of the care facility. This way the client can choose where he/she will receive care at the time of claim as opposed to at time of application. Benefits are paid usually in one of two ways. A policy can be designed to pay for expenses actually...

Long-term care insurance explained: part 1

As a person ages, insurance for long-term care will be a welcome lower cost solution as current costs for care in a nursing home is about $70,000 annually. Our elder population is growing as the Baby Boomers enter their retirement years; before long there will be a significant impact on end-of-life health issues, and mortality rates will increase as this generation becomes ill and dies. Elderly people typically require assistance with daily activities such as eating, bathing, dressing, etc. This type of care is called long-term care, and may be administered by family members, or in a variety of assisted living facilities. Because the costs for long-term care can be exorbitant and can quickly deplete assets, and because standard health insurance policies exclude long-term care benefits, long-term care insurance can mitigate the effect of excessive expenses. Risk management Long term care insurance is available to manage the risk of enormous expenses, typically in the later years of a person’s life when they are living on a fixed income. The risk is great, because most people will not be able to afford the exorbitant cost of the care they may need, and their entire estate can be consumed. Some careful thinking about and planning for this very likely situation is mandatory. An analysis of the risks associated with long-term care reveals that the only choices available to an individual considering the financial impact of elderly needs are purchasing an insurance policy, or self-funding the costs. A third choice, dispersing your estate to rely on the resources and mercies of Medicaid, is an unappealing alternative. There are three categories of people...

2014 Retirement Plan Limits

Though the New Year is just around the corner, there is still plenty of time to make contributions to your retirement plan. Here are the applicable limits for 2014:   2014 401(k) Limits   401(k) elective deferrals $17,500 Annual defined contribution limit $52,000 Annual compensation limit $260,000 Catch-up contribution limit $5,500 Highly compensated employees $115,000   2014 Non-401(k) Limits   403(b)/457 elective deferrals $17,500 SIMPLE employee deferrals $12,000 SIMPLE catch-up deferrals $2,500 SEP minimum compensation $550 SEP annual compensation limit $260,000 Social security wage base $117,000     Have a question about your 2014 retirement plan contributions or limits? Need help setting up a plan before year end? Synergetic Finance can help. Contact us today to set up a complimentary...

401(k) Plan Alternatives for Large Companies

In our last post, we talked about 401(k) plan alternatives for small companies. Here we’ll discuss retirement plan options for larger companies. Except for the Keogh plan, larger companies can adopt all of the plans available to smaller companies, but there are nine additional options: Profit Sharing Plan: Employees receive a percentage of the company’s profits based on quarterly or annual earnings. Money Purchase Pension Plan: The company makes annual contributions to the employees’ pension accounts that are not related to the company’s profits. Age-weighted Profit-sharing Plan: This plan allows employers to make retirement contributions based on an employee’s age as well as their salary. New Comparability Plan: A new comparability plan creates classes of employees in a company, and permits the employer to maximize contributions for selected employees. Thrift/Savings Plan: A TSP is a retirement savings plan for employees and retirees of the federal government, in addition to members of uniformed service organizations such as the military, police, firefighters, EMTs and paramedics. Defined Benefit Plan: Employers can also establish a pension plan in which the employer deposits a specified monthly amount. Target Benefit Plan: With a plan of this type, contributions are based on retirement benefit projections; results are tied to the performance of the investments and are not guaranteed. Cash Balance Plan: The employer makes annual contributions to each individual’s account, and on retirement, the originally defined dollar amount is available to the retiree. The monetary value in the account may increase or diminish over the years, with the risk being borne by the employer. Employee’s Stock Ownership Plan (ESOP): This plan is for companies owned by...

401(k) Plan Alternatives for Small Companies

For many companies, 401(k) plans are a good choice, providing the right amount of options and opportunities for a company and its employees. There are alternatives, however. In this post, we’ll share the options available to small companies. Payroll Deduction IRA Plan: Employees establish either a traditional or Roth IRA with the financial institution of their choice, and then authorize a specific payroll deduction to fund their account. Simplified Employee Pension (SEP) Plan: Employers contribute a set monthly amount to their employees’ traditional IRA accounts. SIMPLE IRA Plan: SIMPLE is an acronym for Savings Incentive Match Plan for Employees. This plan allows both employees and employers to contribute funds to their employees’ traditional IRA accounts. SIMPLE 401(k) Plan: Similar to the SIMPLE IRA plan, the SIMPLE 401(k) plan allows an employee to defer some compensation, however the employer must also make a matching and legally prescribed contribution. Keogh Plan: A Keogh plan is a qualified tax-deferred pension plan specifically for a self-employed person or a partnership. Because of the complexities and ramifications involved in selecting and implementing a retirement plan, we recommend that you work with an experienced financial planner or wealth manager like Synergetic Finance. Please contact us with your questions or to set up a complimentary consultation to discuss your company’s retirement planning needs and goals. Coming soon: Author Joseph M. Maas of Synergetic Finance will be releasing his next book in the Insight series: 401(k) Insight: Getting to...