Case Study: Meet John, the Game-Changer

John, a solo business owner, was contributing the max to his 401k but felt he could do more. That’s when he discovered the power of 409A Deferred Compensation Plans and Defined Benefit Cash Balance Plans. With the right strategy, John is now able to contribute an astonishing $200,000 per year towards his retirement.

Why It’s a Game Changer

Maximize Savings: Go beyond the limits of traditional retirement plans.

Tax Benefits: Utilize favorable tax laws to enhance your savings.

Customized Planning: Tailor a plan that fits your unique business needs.

Did You Know?

The IRS actually encourages this! They recognize the need for substantial retirement savings for entrepreneurs like you. These plans aren’t just for the corporate giants – they’re for go-getters like us who dream big.

Take Control of Your Future

Don’t let traditional limits hold back your retirement dreams. Dive into the world of alternative retirement plans and see your savings skyrocket. Remember, the earlier you start, the more you benefit. Let’s break the barriers together!

Learn More

Interested in exploring how this could work for you? Reach out for a personalized consultation. Together, we’ll chart a course to a secure and prosperous retirement.

Important Disclosures

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

LPL Tracking #531630

The post Unlock Your Retirement Potential: Think Beyond 401k! appeared first on Tribox Private Wealth.

If the word “retirement” makes you cringe, you may be one of the many family business owners who can’t imagine ever fully stepping down from your company. Even as you establish a business continuation plan, mentor the next generation, and relinquish some responsibilities, you may picture yourself still involved in some capacity with your business for many years to come.

What do you think of when you hear the words long term care (LTC)? The first image that may come to mind is an older adult who requires constant care, along with various medical treatments and procedures. But, this is not necessarily the reality of LTC for many of us. Far more frequently, it involves services that help an individual cope with a reduced level of functioning for a temporary or indeterminate period of time. This includes a wide range of care options delivered in various settings, including at-home care, an assisted living facility, or a nursing home.

Have you thought about what would happen to your family and your business if you were to need LTC at some point in the future? While it’s true that the majority of people needing LTC are over age 65, what you may not know is that approximately 40% of current LTC recipients are ages 18 to 64.[1]The need for extended care can come about suddenly, as a result of sustaining an accident or illness, or gradually.

As a business owner, planning can be important to help prevent a LTC event from interfering with future plans for your business. For example, a family member or members may need to scale back their responsibilities or even step down from a role in the business in order to provide caregiving. Or, the business and its assets may need to be liquidated to pay the costs of a nursing home or other extended care costs. If you own a family business, you may want to consider taking steps nowto help this valuable asset remain intact for your children, grandchildren, and beyond.

LTC Insurance

LTC insurance can play an important role in the future of a family business. In general, the cost of a policy varies with the daily benefit amount chosen, the maximum benefit amount, and the elimination period (the number of days for which the insured is responsible for his or her own care before benefits begin). LTC insurance policies can be customized to include inflation protection, which helps the policy benefits keep up with the rising cost of health care by increasing the benefit in line with inflation. It’s important to note, however, that adding any riders may involve an additional premium.

What’s covered?

LTC insurance helps cover the following care options:

• Skilled nursing care—around-the-clock medical care under a doctor’s supervision, typically provided by registered nurses and/or certified nursing aides in a nursing home;

• Assisted living facility—residential facilities that offer social support with several tiers of independent living, including varying levels of assistance with daily activities under the supervision of licensed professionals and qualified staff;

• Adult day health services—community social day programsthat provide light physical activityand cognitive stimulation among peers in a supervised group setting.

• Custodial or at-home care—in-home assistance from a certified home health aide with daily activities, such as meal preparation, bathing, doctor’s visits, housekeeping, etc., to help maintain independence longer.

As a family business owner, you may mitigate the financial risk of extended care, have more care options, and manage the potential burden of caregiving on family members with this type of insurance. A dual strategy of open and honest communication with family members and the guidance of a LTC insurance professional can help prepare your business ownership and assets for future generations.

LTCFAMBS-X

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.

This article was prepared by Liberty Publishing, Inc.

LPL Tracking #1-05184916

[1] U.S. Department of Health and Human Services National Clearinghouse for Long Term Care Information, 10/22/08.

The post Long Term Care Planning appeared first on Tribox Private Wealth.

A business owner can open several retirement savings plan types if they’re the only employee or have anywhere from two to 100 employees. As you work with your financial and tax professionals to determine which is appropriate for your small business, we outline what to know about each:

Solo 401(k)- A solo 401(k) is a retirement savings plan for self-employed business owners who want to maximize their retirement contributions. It’s also called an individual 401(k) or i401(k). Here are other things specific to this plan:

• Only the business owner and their spouse can participate in this plan.
• Contributions are made in two ways: employee elective-deferral contributions and profit-sharing contributions.
• The plan may offer loans, depending on the plan documents.
• There is no nondiscrimination testing, which would determine who may or may not participate.
• Contributions may be up to 25% of eligible compensation.
• Contributions are made pretax; the business contribution is tax-deductible to the business.
• Participant withdrawals are taxed as regular income and if withdrawn before age 59 1/2 may be subject to ordinary income taxes in addition to a 10% penalty.

Traditional 401(k)- This retirement savings plan allows employees to contribute a higher dollar amount and take loans if the plan document allows. Traditional 401(k)s may include pretax and Roth 401(k) contributions. Traditional 401(k) plans also have IRS limits on what the employee can contribute:

The 2023 contribution limits are $22,500 or $30,000 for employees aged 50 and older. Employers can contribute up to 25% of the employee’s compensation, but the employee and employer contribution totals must not exceed $66,000 or $73,500 for employees aged 50 and older. Here are other things to know about traditional 401(k) plans:

• Employee contributions are made to the 401(k) with pretax dollars and into the 401(k) Roth with after-tax dollars.
• The business’s 401(k) and 401(k) Roth contributions are tax deductible.
• The plan requires nondiscrimination testing.
• 401(k) plans are for businesses with two or more employees that are not owner-employees.
• Participant distributions taken before age 59 1/2 may be subject to ordinary income taxes in addition to a 10% penalty.

Simplified Employee Pension (SEP) IRA- A SEP IRA is an individual retirement account (IRA) that a business or a self-employed person can establish. Contributions are discretionary, meaning there is a choice to contribute. Here are other things about SEP IRAs:

• The business or the self-employed person contributes.
• IRA contributions are made pretax and are a deduction to the business, which may help lower taxes.
• SEP IRA annual contribution limits may be higher than standard IRAs and 401(k)s.
• Participant withdrawals are taxed in the year received and if withdrawn prior to age 59 1/2 a 10% additional tax generally applies.

SIMPLE (Savings Incentive Match Plan for Employees of Small Employer) IRA– A SIMPLE IRA plan is for businesses with less than 100 employees who earned $5,000 or more during the previous calendar year. The business cannot have another retirement plan to have a SIMPLE plan. Here are other things specific to a SIMPLE plan:

• Employees make contributions with pretax dollars.
• Employees are subject to the IRS annual contribution limits.
• The business may or may not choose to make contributions.
• The business may receive a tax credit for establishing a SIMPLE plan.
• Distributions by a participant are generally subject to income tax upon withdrawal and if withdrawn prior to age 59 1/2 a 10% additional tax applies. (The additional tax increases to 25% if withdrawal occurs within 2 years of beginning participation in the plan.)

Small business owners should consider establishing a retirement plan because it may help them be more financially confident in retirement. A retirement plan may also help attract and retain qualified employees and offer business tax savings.

Small business owners must meet with their financial and tax professionals to determine which plan suits their situation and how it may help reduce their overall tax burden.

Important Disclosures:

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

LPL Tracking #1-05375334

Sources:

https://www.irs.gov/pub/irs-pdf/p3998.pdf  (found on this IRS site- https://www.irs.gov/retirement-plans/retirement-plans-for-small-entities-and-self-employed)

The post 401(k) Options for Small Business Owners appeared first on Tribox Private Wealth.

$1 million or more may seem like a daunting, even impossible mountain to climb. What if you’re contributing as much as you can to your retirement savings plan, and investing as aggressively as possible within your risk comfort zone, but still feel that you’ll never reach the summit?

As with many of life’s toughest challenges, it may help to focus a little less on the end result and more on the details that help refine your plan.1

Retirement goals are based on assumptions

Whether you use a simple online calculator or run a detailed analysis, remember that your retirement savings goal is based on certain assumptions that will, in all likelihood, change over time. Assumptions may include:

Inflation: Many goal-setting calculators and worksheets use an assumed inflation rate to account for the rising cost of living both during your saving years and after you retire. Although inflation has averaged about 2.1% over the last 20 years, there have been years (e.g., 1979 and 1980) when inflation has spiked into double digits.2 No one can say for sure where prices are headed in the future.

Rates of return: Perhaps even more unpredictable is the rate of return you will earn on your investments over time. Although most calculators use estimated rates of return for pre- and post-retirement years, returns will fluctuate, and there can be no guarantee that you will consistently earn the rate that is used to calculate your savings goal.

Life expectancy: Retirement savings estimates also usually use an assumed life expectancy, or other time frame that you designate, to determine how long you will need your money to last. Without a crystal ball or time travel machine, however, no one can make exact predictions in this arena.

Salary adjustments: Calculators and worksheets may also include assumptions for pay increases you might receive through the years, which could impact both the lifestyle you desire in retirement and the amount you save in your employer-sponsored plan. As in other areas, salary adjustments are just estimates.

Retirement expenses: Can you say for certain how much you will need each month to live comfortably in retirement? If you’re five years away, the answer to this question may be much easier than if you’re 10, 20, or 30 years away. In order to give you a targeted savings goal, retirement calculators must make assumptions for how much you will need in income during retirement.

Social Security, pension, and other benefits: To be as accurate as possible, a retirement savings goal should also account for additional benefits you may receive. However, these types of benefits typically depend on your earning history, which cannot be accurately assessed until you approach retirement.

All of these assumptions point to why it’s so important to review your retirement savings goal regularly — at least once per year and when major life events (e.g., marriage, divorce, having children) occur. This will help ensure that your goal continues to reflect your life circumstances as well as changing market and economic conditions.

Break it down

Instead of viewing your goal as ONE BIG NUMBER, try to break it down into a monthly amount — i.e., try to figure out how much income you may need on a monthly basis in retirement. That way, you can view this monthly need alongside your estimated monthly Social Security benefit, anticipated income from your current level of retirement savings, and any pension or other income you expect. This can help the planning process seem less daunting, more realistic, and most important, more manageable. It can be far less overwhelming to brainstorm ways to close a gap of, say, a few hundred dollars a month than a few hundred thousand dollars over the duration of your retirement.

Make your future self a priority, whenever possible

While every stage of life brings financial challenges, each stage also brings opportunities. Whenever possible, put a little extra toward your retirement.

For example, when you pay off a credit card or school loan, receive a tax refund, get a raise or promotion, celebrate your child’s college graduation (and the end of tuition payments), or receive an unexpected windfall, consider putting some of that extra money toward retirement. Even small amounts can potentially add up over time through the power of compounding.

Another habit to try to get into is increasing your retirement savings plan contribution by 1% a year until you hit the maximum allowable contribution. Increasing your contribution by this small amount may barely be noticeable in the short run — particularly if you do it when you receive a raise — but it can go a long way toward helping you achieve your goal in the long run.

Retirement may be different than you imagine

When people dream about retirement, they often picture images of exotic travel, endless rounds of golf, and fancy restaurants. Yet the older people get, the more they may derive happiness from ordinary, everyday experiences such as socializing with friends, reading a good book, taking a scenic drive, or playing board games with grandchildren. While your dream may include days filled with extravagant leisure activities, your retirement reality may turn out much different — and that actually may be a matter of choice.

In addition, some retirees are deciding that they don’t want to give up work entirely, choosing instead to cut back their hours or pursue other work-related interests.

You may want to turn a hobby into an income-producing endeavor, or perhaps try out a new occupation — something you’ve always dreamed of doing but never had the time. Such part-time work or additional income can help you meet your retirement income needs for as long as you remain healthy enough and interested.

Plan ahead and think creatively

Chances are, there have been times in your life when you’ve had to find ways to cut costs and adjust your budget. Those skills may come in handy during retirement. But you don’t have to wait to begin thinking about ideas. Consider ways you might trim your expenses or enhance your retirement income now, before the need arises.

Might you downsize to a smaller home or relocate to an area with lower taxes or a lower overall cost of living? Will you and your spouse actually need two vehicles, or might you simply own one and rent another on the occasional days when you need two? Could you put that extra bedroom to use by taking in a boarder, who might also help out with household chores, such as mowing the lawn or shoveling the sidewalks? Or maybe you can cancel that expensive gym membership and turn the spare bedroom into a home workout room.

Jot down any ideas that come to mind and file them away with your retirement financial information. Then when the time comes, you can refer to your list to help refine your retirement budgeting strategy.

The bottom line

As EBRI finds in its research every year, setting a goal is indeed a very important first step in putting together your strategy for retirement. However, you shouldn’t let that number scare you.

As long as you have an estimate in mind, understand all the various assumptions that go into it, break down that goal into a monthly income need, review your goal once a year and as major life events occur, increase your retirement savings whenever possible, and remember to think creatively both now and in retirement — you can take heart knowing that you’re doing your best to prepare for whatever the future may bring.

1 All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

2 Consumer Price Index, Department of Labor, January 2021

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

This article was prepared by Broadridge.

LPL Tracking #1-05139531

The post Don’t Let Your Retirement Savings Goal Get You Down appeared first on Tribox Private Wealth.