Assessing Your Retirement Resources

How resourceful can you be during your retirement? Determining where your retirement money will come from is an integral part of planning for retirement. Most people draw on three main sources of income: Social Security, employer-sponsored plans, and personal retirement savings. Each offers important resources that can help you fund the lifestyle you seek in retirement.

Social Security

Social Security offers a retirement benefit to workers and their spouses. You can start receiving benefits as early as age 62 (considered early retirement) or wait until you reach the full retirement age of 65 to 67 (depending upon your year of birth). The benefits you receive are based on the income you have earned over the course of your life, subject to a maximum amount. You can calculate how much you can expect to receive by visiting the Social Security Administration (SSA) website at www.ssa.gov.

Social Security benefits will most likely fall short of meeting all of your retirement needs. The maximum benefit for a person who retires in 2016 at full retirement age is $2,639 per month; the benefit for a nonworking spouse is considerably less. For most people, Social Security provides only a base level of income. Therefore, you may require a retirement plan that includes additional sources of income.

Employer-Sponsored Plans

Employer-sponsored plans are a staple of retirement income for many individuals. Many employers offer benefit packages that include retirement savings options, such as defined benefit plans, 401(k) plans, 403(b) plans (for nonprofit organizations), and Savings Incentive Match Plans for Employees (SIMPLEs). Here's how the plans work:

• With a defined benefit plan(also called a traditional pension), retirement benefits are generally based on a variety of factors, including salary, length of service, and a benefit formula that averages the employee's earnings over a prescribed period of years. In some instances, you, as an employee, may make additional contributions. To receive benefits, you generally must be employed for a certain number of years and reach the normal retirement age, typically age 65. When you retire, you may have options as to how and when you collect your benefits, such as in monthly payments or in one lump sum.
• A 401(k) plan, offered by many private employers, provides you with the opportunity to contribute part of your salary, with restrictions, into a retirement account. Your employer may match your contributions, up to a predetermined percentage and subject to a maximum. For example, if your employer matches your contributions by 50%, for every dollar you put into the fund, your employer will add $.50. In 2016, you can contribute up to $18,000, and those age 50 and over can contribute an additional $6,000. Your contributions are pretax, and any potential earnings are tax deferred, so payment of taxes will not commence until you begin taking distributions. If you withdraw money from your 401(k) before age 59½, you will incur a 10% Federal income tax penalty, except under certain qualifying circumstances (such as death or disability).
• A 403(b) plan is a 401(k)-type plan designed for employees of certain educational and nonprofit organizations. Your contributions are pretax, and potential earnings grow tax deferred. The contribution limit in 2016 is $18,000, with catch-up contributions of up to $6,000 allowed for those age 50 and older. At retirement, you pay ordinary income tax on your distributions.
• The Roth 401(k), which is available through sponsoring employers, incorporates elements of both traditional 401(k) plans and Roth IRAs, a type of personal retirement savings plan. Your contributions are made with after-tax dollars, but potential earnings grow tax free and distributions are tax free, provided you are at least age 59½ and have owned the account for five years. You may contribute a maximum of $18,000 per year ($24,000 for those age 50 and older); that limit includes any contributions to a traditional 401(k) account. Matching contributions made by your employer must be invested in the traditional side of the 401(k) account, not the Roth. Under the Small Business Jobs Act of 2010, participants in traditional 401(k) plans are now permitted to roll over funds into Roth accounts within their plans, if available. Any eligible funds transferred to Roth 401(k) accounts are taxed in the year of conversion. Some 403(b) plans may also offer a Roth option.
• SIMPLEs are used by small businesses with 100 or fewer employees. A SIMPLE plan allows you to contribute up to $12,500 to a SIMPLE IRA or SIMPLE 401(k) in 2016. If you are age 50 or older, you may contribute an additional $3,000. Employer contributions, which are mandatory, can be in the form of either a 2% contribution to all eligible participants or a matching contribution that is generally 100% of the first 3% of compensation. Your contributions are pretax, and you defer payment of taxes until you begin taking withdrawals.
  Because retirement savings options often differ from one employer to another, it is important for you to understand the specifics of your company's benefit package. Contact your employer's benefit coordinator for more information.

Personal Retirement Savings

Personal retirement savings may be the key to achieving your financial goals. Common complements to Social Security and employer-sponsored plans include the following:

• Traditional IRAs allow you to set money aside in a tax-deferred account. Depending on your income and whether or not you participate in an employer-sponsored retirement plan, you may be eligible to take an income tax deduction. In 2016, the maximum contribution for all IRAs (traditional, Roth, or both) is $5,500, and those age 50 and older can contribute an additional $1,000. Even if you don't qualify for a deduction, your contributions have the potential to grow tax deferred; you pay taxes on withdrawals and avoid tax penalties if you are at least age 59½.
• Roth IRAs permit earnings to grow tax free and distributions to be taken tax free, provided you have owned the account for five years and are at least age 59½. However, your initial contributions are not tax deductible. The contribution limits are the same as with traditional IRAs, including the guidelines for "catch-up" contributions, in the aggregate. In 2016, only taxpayers whose adjusted gross income (AGI) falls below certain levels ($117,000 a year for single filers, and $184,000 for joint filers) are eligible to contribute after-tax dollars to a Roth IRA.

With a sound assessment of your income resources, you can begin to plan for the retirement you want. The choices you make today can influence your future financial independence. Starting now puts time on your side. 

Family Business – Laying the Groundwork for Success

Is your growing business still a one-person operation? As your company continues to grow and the workload increases, it is easy to find yourself wearing too many hats and not having enough hours in the day to accomplish everything that needs to be done. At such a turning point, many small business owners turn to their families for help.

Explore the Possibilities

Involving family members in your business isn't a course of action to take lightly. If you are considering this option, it is best to approach it as seriously and professionally as you would any other business venture. Begin by exploring the following questions with your family and key advisors:

• Do family members want to be involved in the business?
• What are their individual interests, talents, and areas of expertise?
• What positions would they hold within the company?
• How would they be compensated?
• How well do they interact with one another?
• Who would be best qualified to succeed you if you were to step down or something unexpected were to happen to you?
• What ownership shares would both participating and non-participating family members receive?

Elements of a Succession Plan

Once you've determined that family members are interested in becoming involved in the business and have the skills and talents to contribute, consider developing a succession plan that details strategies for transferring business assets or selling the business. With the help of your advisors, consider such factors as your age and health; the ages of your spouse and children, as well as their interests, talents, and expertise; and the expected growth rate of your business.
Next, formalize your succession plan with a funded buy-sell agreement. This legal contract will obligate family members or other parties to buy out your share of the business for a predetermined price should you die or become disabled. Buy-sell agreements are typically funded with life insurance. If left unfunded, family members or the company (depending on the type of your agreement) may not have the cash or the borrowing ability to buy out your interest. This could put an end to your company.
Ownership can also be shared with family members through a gifting strategy. You may be able to reduce gift and estate taxes by using your annual gift tax exclusion ($14,000 for single filers and $28,000 for joint filers in 2015 and 2016) and your lifetime applicable exclusion amount of $5,430,000 in 2015 and $5,450,000 in 2016. Careful planning is essential to help ensure that these gifts aren't drawn back into your estate.
Ideally, a succession plan should also include a business plan with short-, medium-, and long-term goals. The business plan must be based on realistic budgets and financial forecasts that are compared to actual results on a consistent basis and adjusted for changing conditions.
Remember, business advisors and other non-family members can also play a key role in the success of your company. Inviting non-family members to serve on your board of directors can open the door to fresh ideas and new perspectives. Non-family members may also be more objective, allowing them to help mediate family disputes involving the business.

Ensure Your Legacy

A well-designed succession plan can help lay the groundwork for the successful development of your family business. It can support your company's growth and help ensure its continuity. Consult your qualified life insurance professional to help ensure that your plan meets your overall objectives.                                                                                               

Online Recruitment Strategies for Business Owners

Many growing businesses face the ongoing challenge of recruiting qualified employees for open positions. When it comes to identifying and screening potential workers, business owners typically rely on strategies ranging from tapping informal networks or outsourcing their company's hiring needs to a staffing agency. The Internet has also become an integral part of recruitment.
The Internet offers efficiency because it reaches a wide audience and is popular with many job seekers who sign up for daily e-mail job alerts from recruitment websites. Electronic job postings generally allow employers to post detailed job descriptions for long periods of time. In an online ad, you may also be permitted to include a link to your company website, where you can post more in-depth information about the position and your organization.
While posting jobs online is only one of several recruitment channels available, you may find that posting on job boards and emailing targeted candidates is faster, more efficient, and less expensive than placing print ads or paying a new hire fee to a staffing agency. Depending on the size and scope of your recruitment needs, you may want to explore recruiting software with tools for posting online ads, scheduling interviews, evaluating applicants, getting job referrals, and communicating with candidates.

Getting Started

Before you begin the recruitment process, regardless of your strategies, it's important to clearly identify the needs of your business and how new employees can best contribute to your company's success. For example, you may be inundated with paperwork and phone calls, and decide to hire an administrative assistant. You would make a detailed outline of all the responsibilities required of an assistant and how the tasks should be completed. You would also need to consider the skills and experience a qualified candidate should have to do the job well. Simply wanting help isn't enough—create a list of the performance expectations that you can use as a starting point in your search for the right candidate. You may find that recruiting software can help you analyze your needs and write an appropriate job description for an ad.
To start, make the most of your own website. If hiring new employees is a priority for the growth of your business, prominently feature employment information on your home page. At the very least, be sure that visitors can easily locate your career opportunities page. Be sure to use descriptive language that will attract potential applicants. Include information about whom to contact for further details and how to submit resumes. Recruiting software can also help you design and manage the recruitment function of your website.

Internet Job Boards

Determining which third-party Internet recruitment sites would be the most appropriate can be challenging. There are countless job posting sites, and more are added every day. While posting ads on well-known national job sites may allow you to reach large numbers of applicants, you may end up being overwhelmed with more resumes than you can read—let alone respond to—particularly if the job is entry level.
To reach a more targeted group of job seekers, look for employment sites based in your geographic area or sites dedicated to your type of business. If the position you are seeking to fill requires specialized skills, advertise on sites that are frequented by workers in that field. If you belong to any professional or industry associations, check out their websites to see if they have a section for job posting. You may also be able to post positions at little or no cost on the job boards of educational institutions or state and local employment agencies.
To get the best results from your electronic posting, take advantage of the keyword and location filters supplied by the website. These filters help ensure that your ad is seen by the type of job seekers you are targeting.
Be aware, however, that not all Internet employment sites offer the same level of service. Spend some time browsing potential sites, making sure that the posted information is up to date, the site is easy to navigate, and the search engine operates smoothly. To find out if the job seekers who use a particular site are likely to meet the required qualifications, you can purchase access to the site's resume database. The site may also be able to provide information about the number of visitors it receives and how much time they spend on the site. If you are still uncertain about whether to post an ad on a particular job board, ask yourself if you would use the site if you were job hunting.

Using Social Media

Besides using job boards, take advantage of the speed and convenience of posting job openings on social media sites, such as LinkedIn and Facebook. Qualified candidates who may not necessarily visit online job boards may be more inclined to check out social networking sites for job openings.
In addition, you may want to email your job description directly to your network of professional contacts, and ask them for referrals. This can be a very effective way to find good candidates. Some recruiting software packages also scour the web for potential candidates, and can automatically email people whose posted résumés match the job description.
Whatever recruitment strategies you choose, it will be well worth the time, effort, and resources to find and hire the right person. Taking on a new employee is an investment in your business—choose carefully and that investment will deliver impressive returns. As Internet job boards become a mainstay for job seekers, you may find that online recruitment strategies can be a faster, more efficient, and less expensive way to recruit top candidates.

9 Drivers of High Healthcare Costs in the U.S

The Commission's report outlined many findings, including the main drivers of high healthcare costs in the U.S. Here are the nine primary drivers, according to the report.
1. Physician, facility and drug costs. Data from the Organization for Economic Cooperation and Development have consistently showed the average unit costs for U.S. physicians, hospitals, facilities and drugs are the highest in the world.
2. Expensive technologies and procedures. When Americans do receive treatment, they often choose the most expensive technologies and procedures. For example, MRIs in the United States occur twice as often compared with the average country in OECD data.
3. Fragmented and uncoordinated care. Because care providers often treat the same patient with little consultation, unnecessary care, errors and dissatisfaction proliferates.
4. Lack of cost consideration from patients. There is an assumption among patients that the most expensive care leads to the best quality, but expensive care has no correlation with quality. Patients have limited capabilities to participate in the cost decision making process of their care.
5. Fee-for-service. Hospitals and physicians are reimbursed for every service they provide, which often leads to a focus on volumes instead of a focus on care.
6. High administrative expenses. The morass of health insurers and billing processes cost the U.S. healthcare system billions in wasted costs every year.
7. Unhealthy behaviors. Chronic illnesses — like heart disease, cancer and diabetes — cause about 70 percent of all deaths in the United States, and they are the most expensive to treat. A majority of chronic illnesses stem from unhealthy behaviors.
8. Expensive end-of-life care. The last year of an American's life is the most expensive for medical treatment, and the unnecessary procedures and repeated hospitalizations provide little value to the patient and the system at large.
9. Provider consolidation. Hospitals and health systems are merging and acquiring each other at a feverish pace, and the same goes for physician groups. Studies have shown that although provider consolidation leads to some economies of scale, the increased market power leads to higher prices and oligopolistic behaviors.

Health Care, Need to follow ACA rules until there is a change.

House Republicans have released their first draft of a bill to "repeal and replace" the Affordable Care Act (ACA). It is important to understand that significant changes to this proposed bill are expected. Until such time as a "repeal and replace" bill is signed into law, your clients must comply with all existing ACA requirements to avoid penalties for noncompliance. HR360 has prepared a news alert that you may choose to email your clients in order to clarify their understanding of the process that has begun with the first draft of the "repeal and replace" bill.

Life and Health News from AMS

What to Consider When Choosing a Place to Retire When planning for your retirement, where you’ll live will be one of your biggest and most important decisions. According to AARP, most Americans “retire in place.” They enjoy being near family, friends and their current amenities. Those who want change can be satisfied by frequent vacations or stays at a getaway home. Read on for details.

Take Charge – DIY Healthcare Cost Reduction Although healthcare costs are expected to grow modestly in 2017, you still can be hit with some high medical bills. Read on for details.

Ensuring a Good Life for Your Family with Life Insurance Once you’ve decided you want to purchase life insurance to protect your family, you have more decisions to make. For example, how much life insurance coverage do you need, and how much will it cost? Read on for details.

Retired? Need a Dentist? Here Are Your Options Medicare does not cover dental procedures, unless they are part of a medical emergency and you receive care in a hospital. That means Medicare enrollees usually must pay for dental care out-of-pocket. Read on for details.

ACA Employer Mandate Penalties Over The Next Ten Years Projects Billions

ACA Employer Mandate Penalties Over The Next Ten Years Projects Billions

Caren Adams, MBA, Employee Benefits

ACA Employer Mandate Penalties Over The Next Ten Years Projects Billions Share this...

Managing Your Benefits When Changing Jobs

Starting a new job can be exciting. But, as you look forward to your new opportunity, consider carefully how you will manage your employer-provided benefits while transitioning from one workplace to another.

When you leave a job, your employee benefits generally end, unless you elect to continue them. While you may receive benefits from your new employer, they will most likely differ from your previous employer's benefits package. So, if there are any benefits you want to take with you, for example, accumulated savings in a 401(k) plan or similar retirement account, you will need to decide how to manage those funds before you exit.

Insurance Conversions

Your new employer may not offer health insurance, or there could be a waiting period before health coverage begins, which sometimes can be from 30 to 90 days. To avoid becoming uninsured, even for a short period of transition, explore the possibilities of continuation or conversion under your former employer's health insurance.
Under a Federal law known as the Consolidated Omnibus Budget Reconciliation Act (COBRA), you are permitted to continue as a member of your previous company's health plan for up to 18 months after termination of employment, unless you are terminated for cause. Under COBRA, you are responsible for paying the entire premium, including the employer's contribution to the insurance, making COBRA premiums generally expensive. However, premiums may be less than you would pay for an individual policy. To continue coverage under COBRA, you must advise your employer that you are electing COBRA coverage.
COBRA continuation rights may not apply if you work for an employer with fewer than 20 employees. But, you may be able to convert your group health insurance policy to an individual policy without having to undergo a separate application for individual coverage. There may also be "interim" or "short term" policy options that could provide coverage for a couple of months for people between jobs. Or, you may need to secure individual health insurance coverage with a new provider that is not tied to your place of employment.
You may also have the option of converting other types of employer-sponsored insurance into individual policies. Depending on the group plan, you may be permitted to convert life insurance, disability income insurance, or long term care insurance. Be sure to talk with your benefits administrator about all your options.

Retirement Plan Rollovers

If you have a retirement savings account in your current employer's 401(k) plan or comparable account, you will have the choice of reinvesting, transferring, or cashing in the funds.
To keep your retirement savings on track, you may want to consider rolling over the funds into another qualified retirement savings account, such as a rollover IRA. There are two ways to roll over funds. With an indirect rollover, your former employer makes the distribution payable to you, less 20%, which is withheld for Federal taxes. You must then reinvest the distribution into an IRA or other qualified plan within 60 days. In order to achieve a tax-free rollover, you must reinvest the full distribution amount, which includes the 80% you receive in cash, as well as 20% from your own funds to cover the amount that is withheld. Your withheld funds are refunded after you file your tax return, provided your rollover occurred within the 60-day time limit. Failure to reinvest the 20% withheld may result in income tax and a tax penalty if you are under the age of 59½.
To avoid the 20% withholding requirement, you may request a direct rollover to an IRA set up in your name or another qualified plan. Be aware that not all qualified plans accept this type of transfer. Because this method is considered a distribution option, spousal consent and other similar participant and beneficiary rules of protection may apply.
Another option is to roll over your funds from your previous employer's retirement plan into your new company's plan. In some cases, however, it may make sense to leave the funds where they are. Ask both employers about restrictions on these options, as well as any tax implications.
You have the option to take the funds in your 401(k) account as a cash distribution. For most people, however, this is not the best choice. After cashing in, you owe taxes on the funds, and you may also be required to pay a 10% tax penalty if you are under age 59½. Further, you forfeit the long-term benefits associated with tax-deferred earnings, making it more difficult to build the financial resources for your retirement income.
Your decisions regarding benefits when changing jobs can have a great impact on your financial future. Before making such important decisions, be sure to discuss your circumstances with the benefit administrators at both companies and consult your professional advisors.

Physician shortages affect health plan network size

Physician shortages affect health plan network size Certain regions of the country have shortages of primary care physicians, psychiatrists, obstetricians, gynecologists and general surgeons, and those shortages may hinder health plans' ability to form high-value networks, according to a new report from AHIP. Policy proposals that could alleviate the issue include expanded telemedicine use and broadening the scope of practice for nurse practitioners and physician assistants.

California Obamacare rates to rise 13% Los Angeles Times | July 19, 2016 | 10:04 AM Premiums for coverage through the Covered California health exchange will rise by an average of 13.2% next year, officials announced today. The increase is more than three times that of the last two years and is bound to raise debate in an election year. Read more>>