Did You Know…?

by Roxie Munoz, CLU, FLMI, Assistant Vice President / Manager, Insurance Services

Unique Benefits of Fixed Index Annuities
A sound retirement plan can resemble a relay race. Each phase, or leg, has its own needs that demand their own strategy or product strengths to best build, sustain and deliver financial solutions. Fixed index annuities offer unique benefits that work in concert to help you reach your retirement goals.

Protection: A central benefit of fixed index annuities is a level of protection that underpins the product’s guarantees.  When you purchase a fixed index annuity, not only is your principal protected, so is any interest credited to your contract. No matter what the index does, your return will never be less than zero due to index volatility.

Tax Deferral: Throughout the accumulation phase, money can grow tax-deferred. This means, while your principal and any interest credited are protected from volatility, the tax-deferral benefit provides the opportunity for compounded growth over time—further bolstering your resources for when you choose to take an income.

Liquidity Options: As a component of a strategic income plan, a fixed index annuity provides added income flexibility through a variety of liquidity options.  They offer liquidity features that give access to the contract value. Typically, 10 percent of the annuity’s value annually is available for free withdrawal during the surrender charge period. Many products also have increased or full access to the contract value for qualified care needs.

Guaranteed Income: A study found 78% of workers are looking for lifetime income in retirement. This goal is followed closely behind by 76% who are looking for stability of income.1  Once the accumulation period ends, you can begin receiving distributions from the guaranteed income sources you generated. You can choose to receive a lump-sum payment, fixed amount payments over time, or annuitized payments for life.  With an income rider option, you have additional flexibility for guaranteed lifelong income payments. These fail-safe measures can be added to a fixed index annuity contract, securing payments that cannot be outlived, with joint payout options for a spouse.

Take Care of Loved Ones: In addition to helping generate and sustain a stable income throughout your life, with fixed index annuities you can also establish a clear transition of assets to a named beneficiary.  Whether death occurs during the accumulation or distribution phase of the annuity, the annuity guarantees direct payment to the named beneficiary. Depending on the contract, these payments may be in the form of a lump-sum, series of payments or lifetime payments. The contract may also help bypass probate, saving time and expense in the process.

Benefits You Can Rely On.
Any of these benefits on their own are important in retirement. But, it is their interdependent strengths that can help fund retirement from start to finish. Contact our office today to determine if an annuity should be part of your financial plan.

Sources: Indexed Annuity Leadership Council, The State of America’s Workforce: The Reality of Retirement Readiness. White Paper, 2018

Did You Know…?

by Jessica Goedtel, Senior Associate
If you are on a high deductible health plan, you may have access to a Health Savings Account (HSA). Recently these have become very popular due to their “triple tax exempt” nature. First, if you contribute to your account via payroll, contributions will come out pre-tax. Alternatively, you can make after-tax contributions but receive a deduction on your tax return.

Second, you are not taxed on any investment growth in the account. Some plans offer a variety of investment options, others may work as a simple savings account. Check with your plan administrator to see what options are available to you.

Third, any distribution for qualified medical expenses is not taxable. And, unlike a Flex Savings Account (FSA), the balance can be carried over each year. If you are nearing retirement this could be an excellent strategy to save for medical expenses.

The contribution limits for HSAs for 2018 are $3,450 for a single person plan, and $6,900 for a family plan. If you are over the age of 55, you can increase your contribution by $1,000. One important item to consider is that once you become eligible for Medicare at age 65, you can no longer make contributions.

If used correctly, an HSA can be a very powerful tool in your financial plan.

Did You Know…?

Source: Associated Press, June 25, 2018

Pennsylvania OKs new college saving grants for newborns
HARRISBURG, Pa. (AP) — Pennsylvania is starting a program proposed by state Treasurer Joe Torsella to provide college savings accounts for newborns, beginning with a $100 grant.

Torsella said Monday the program will be open to any child starting next year who is a Pennsylvania resident at birth or adopted by a Pennsylvania family. Parents will be notified about the account set up for them.

Gov. Tom Wolf signed the program into law Friday.

It’s projected at a $14 million annual cost for an average of 140,000 births per year and Torsella says it can be financed by donations and surpluses in Pennsylvania’s existing college savings program.

The Treasury Department will invest the money and income it earns can be spent on a range of post-high-school education needs until the child reaches age 29.

Did You Know…?

by Mae Gerhart, Tax / Financial Planning Professional
Miscellaneous Itemized Deductions were one item that was nixed in the Tax Cut and Jobs Act of 2017. While the deductions may still be allowable on your state and local returns, you are no longer able to write off unreimbursed employee business expenses on your federal return.

Unreimbursed business expenses are defined as an expense that is common and accepted in your trade or business and helpful or appropriate for your business. These expenses may include…

Transportation costs associated with using your personal vehicle for work-related reasons such as a business meeting away from your regular workplace, visiting clients or customers, or traveling between your regular place of business and a second office. The rate for unreimbursed business mileage is 54.5 cents per mile for 2018. You may also deduct the costs associated with parking or tolls. Regular commuting expenses are not deductible.

Travel expenses such as the cost of airline tickets, checked bags, a rental car or cab rides, meals while traveling, or a hotel stay for a work-related conference or out of state client or vendor meeting.

Other business expenses such as business cards, subscriptions to trade and business publications, professional dues (not for recreation, entertainment or pleasure) home office expenses, necessary tools and equipment, hospital scrubs, steel toed boots, union dues, business gifts (up to $25 per client), and work-related education that does not make you eligible for a new position.

If your employer has an accountable reimbursement plan, you may be able to provide receipts or mileage logs documenting these expenses to your employer for reimbursement. Whether your employer participates in an accountable reimbursement plan or you would be deducting it on your state and local returns, you will need to keep adequate records to substantiate the expense. Your records should include the date, amount paid, description of the expense, the business purpose, and other persons in attendance, if any.

Talk to your tax professional about planning strategies around changes in the tax law and how they may affect your individual situation.

Did You Know…? PRO TIP

by Joseph F. Goldfeder, CFP®, Assistant Vice President
Looking to buy a home? How do you know if you’re getting the best rate?

If you’re planning on buying a home soon, one of the most important steps is obtaining a mortgage. It is probably one of the first things you should check off your list. Too often, eager home buyers neglect to search for the best rate possible. Many avoid comparing lenders and go with the first option they can find, which could end up costing borrowers more in the long run. There are many factors that go into your rate that you can’t control, but there are also some ways for you to ensure that you’re getting the best rate possible. Let’s review.

Credit Score
One major piece that you can control when it comes to getting the best rate, is ensuring that your credit score is in good shape. Lenders use your credit score to predict how reliable you will be in paying off your loan. The general rule of thumb is the higher your credit score, the lower the interest rate. If you’re looking into purchasing a home, be sure to look into your credit score ASAP and take action if needed. There are many providers such as Credit Karma, which will offer your credit scores for free.

Loan Type and Term
When you begin exploring mortgage options, you should keep in mind that the type of loan you choose may have an effect on your rate. Typically, adjustable-rate mortgages have a lower interest rate than fixed-rate mortgages. Adjustable-rate mortgage loans have an interest rate that will “adjust” periodically. They are traditionally structured to change every year after an initial period of remaining fixed. Fixed-rate loans are just that, fixed for term of the loan. Loan term is another big factor. Typically, shorter-term loans have lower rates and lower costs, but higher monthly payments. It is important to weigh all aspects of your loan; type, term, and rate before making a decision.

Down Payment
Another factor in your rate is your down payment. Under normal circumstances, the higher your down payment is, the lower your rate will be. This is why people typically like to build a strong savings before they look into buying a home. Usually, 20 percent or more for a down payment can keep you at a lower rate. If your down payment is lower than 20 percent, you face the possibility of a higher interest rate.

Did You Know…?

by Jaclyn M. Cornelius, CFP®, EA, Vice President

If you are not currently maxing out your 401k/403b, consider increasing your contribution.  One of the easiest ways to do this is when you get a raise.  Consider increasing your retirement plan contribution by half the amount of your raise;  you keep half and save the remainder.


If you are currently making $60,000 and contributing 3%, you would be contributing $1,800 annually to your 401k.

If you get a 2% raise, you now would make $61,200. If you do not make any change to your 401k contribution, that automatic amount would only increase by $36 annually out of the additional $1,200 you are making.

If you were to increase your 401k contribution percentage to 4% after your salary increase, your annual 401k contribution would be $2,448 (a $612 increase in your 401k savings over a year versus that $36).

The current IRS 401k contribution amount is $18,500 (plus the IRS allows you to add an additional $6,000 if you are age 50 and over).

Make sure you consult with a financial advisor before making decisions that could impact your long-term financial plans.

Did You Know…?

by Michael A. Ippoliti, MBA, CFP®, Vice President

Strategies to Maximize Tax Deferral for Married Couples With one or Both Spouses Working
Required Minimum Distributions (RMDs) from retirement accounts begin when the owner reaches age 70-1/2. Naturally the younger spouse’s RMDs will begin later and therefore have the opportunity to remain tax-deferred longer.

Strategy 1 — Employer Retirement Plans: During working years, after taking advantage of employer matching funds, maximize subsequent contributions to the younger spouse’s retirement account first and then save any remainder to the older spouse’s account.

Strategy 2 — Contributions to Roth IRAs: Roth IRAs are not subject to RMDs for the original owner. If a couple desires to contribute a portion to Roth IRAs, the initial savings should go to the older spouse’s Roth IRA, then the younger spouse’s Roth IRA or Traditional IRA.

Strategy 3 — Roth Conversions: Logic is similar to Strategy 2. Converting a Traditional IRA to a Roth IRA results in the assets becoming tax deferred for life — no RMDs. For couples with an age gap, converting the older spouse’s IRA will reduce the older spouse’s future RMDs and retains the younger spouse’s RMDs.

Did You Know…?

by Roxie Muñoz, CLU®, FLMI, Assistant Vice President, Insurance Services

What are Long Term Care Hybrid policies, and are they right for you?
Clients today have many more options to assist with covering a portion of a chronic illness. In the past, the only option was to purchase a traditional long term care policy and pay annual premiums for insurance coverage you may never use. And, the premiums are not guaranteed so could increase several times.

Newer generation policies are available that blend several types of insurance coverage into a single contract.  These Combination or “Hybrid LTC” policies combine the benefits of an annuity or life insurance with long term care protection. If you never need LTC services, these contracts can provide either an annuity cash value or a life insurance death benefit.

You may have mentally “set aside” some investment dollars which you plan to utilize should a long term care illness occur. By repositioning these monies into one of these policies, the amount will automatically increase for long term care needs.

In addition, the cost of the LTC benefits will not be includible in gross income; it will simply reduce your investment in the contract. You may even be able to exchange an existing annuity, life insurance policy or long term care contract tax-free to one of these policies.

Our office can provide more information, and design a personalized plan based on your financial situation.

Did You Know…?

by Jessica Goedtel, Senior Associate
If you are a Pennsylvania resident and are considering leasing a car, you should know that Pennsylvania imposes an additional 3% tax on the lease of motor vehicles, in addition to the state 6% sales tax. This special tax is collected and put into the Public Transportation Assistance (PTA) Fund, and is dedicated to funding mass transportation.

This tax is 3% of the total lease price, and applies to motor vehicles leased for 30 days or more. When deciding on whether to purchase or lease a new vehicle, make sure to factor in this additional cost.

Click here to read more about the PTA Fund and applicable fees and taxes on the PA Dept of Revenue website.

Did You Know…?

As an independent firm we focus on putting the best interests of our clients above all else. It is important that our industry maintain standards for transparency and ethics. The latest example of this is the SEC Action Looking for Individuals (SALI). The searchable database will help identify registered and unregistered individuals who have been parties to past SEC enforcement actions and against whom federal courts have entered judgments or the SEC has issued orders. Click here to read the SEC announcement.