Can You Make Life Insurance Tax Deductible?
YES!!!
Purchasing life insurance within a qualified plan may offer business owners a practical and tax-efficient way to fund needed personal life insurance protection. Why a qualified plan?
* Tax-deductible premiums
* Pre-retirement death benefit
* Death proceeds in excess of cash value received potentially tax-free
* Increased diversification among plan assets
* Potential for added creditor protection
It’s a difficult question to answer because it brings into play such a wide range of issues: Do you have enough money to retire? What will you do with your time in retirement? Will you have adequate medical coverage? When should you claim Social Security?
The answers are highly subjective and personal. https://fws.advisorprofiles.com/article/187398
Term life and whole life are two popular variations of life insurance policies. While the basic idea of providing much-needed cash in the event of your death is the same, there are some big differences between the costs and benefits of each one. Here’s a rundown https://fws.advisorprofiles.com/article/186629
….they should never plan on an inheritance. It is a dangerous game when you depend upon an inheritance because you never know what someone’s going to be worth at the time of their death, nor do you know if their situation may change and you may not end up being the beneficiary. If you independently save for your retirement, then no matter what happens to the inheritance, you will…. https://fws.advisorprofiles.com/article/188521
Not surprisingly, financial wellness studies consistently reveal that retirement is a top financial priority. But in reality, there is often a disconnect between “desired” retirement dates and the actual realistic target date for retirement. With retirement confidence levels remaining low these days, perhaps there are other more important questions that should garner more attention than a date on the calendar. Here are five simple questions that should be thought about today…no matter how near or far that season of life may be for you: https://fws.advisorprofiles.com/article/200067
Earlier this year, Grace who is a recent widow and longtime client, found herself questioning the need of an old whole life policy. The policy had a cash value of $100,000 and a death benefit of $220,000. With the passing of her husband and her two grown children financially independent, she wondered if she still needed the policy.
Continue to read here https://fws.advisorprofiles.com/article/202941
Insurance. One of the more boring products out there but also one of the most essential, especially in a privately-held business — even more importantly, in a business that is growing.
Here are five creative ways life insurance impacts a growing, closely-held enterprise.
Skydivers, cancer survivors and people convicted of drunken driving have something in common: They all might find an extra charge in their life insurance.
Your age, health and smoking status are the factors that most affect your life insurance rates. But other factors that raise your risk of death can spur insurers to impose a “flat extra” on your life insurance policy. The charge might be temporary, or it might last as long as your policy does.
Here are three common scenarios in which life insurance companies might charge flat extras.
Read more here….. https://fws.advisorprofiles.com/article/208655
Study finds many Americans dealy saving for their retirement. According to a recent study, only 35% of Americans are comfortable planning for retirement. Learn the best ways to kick-start your retirement savings. Read more here…… https://fws.advisorprofiles.com/article/214526
These policies are increasingly becoming popular as a long-term care funding strategy. Read more here…… https://fws.advisorprofiles.com/article/212620
Here’s what employers are looking for…. http://fortune.com/2019/03/28/recent-college-graduates-jobs-2019/
This deduction could be reduced or not available at all if taxable income is over the threshold. For example, if a business owner is married and files jointly and taxable income is:
> Less than $315,000: Full deduction
> $315,000 to $415,000: Partial deduction
> Above $415,000: No deduction
Click here to read more about “New Tax Deductions for QBI” »
QBI deductions are complex and results will vary based on the individual business’s circumstances. More information to come as proposed guidance regarding 199A becomes finalized.
Consider establishing a new plan or enhancing your current plan to take advantage of this opportunity. Call us today.
Many of the factors that can affect your financial health are out of your control and include:
Click here to download our 2018 Tax Reference Sheet »
1. Sell to co-owners, family members or outside third parties
2. Liquidate the business
3. Retain the business with the family
Click here to read about BUSINESS PLANNING STRATEGIES »
Protecting the Survival of Your Business
Often they want to keep the wealth within family lines — “what’s mine is mine and what’s yours is yours”, but this plan starts to break down when there are “our” children and/or when there is a significant disparity in wealth to which the lower-income family becomes accustomed.
Some Statistics on Blended Families:
~ 40% of U.S. households include at least one
step-relative or a half-relative
~ 52% of all Americans under age 30 have a step-
or half-relative
~ 45% of families in the West include step- or
half-relatives
~ 18% of families have a living stepparent
Click here to see more details and sources »
It is important to become familiar with these financial situations and the solutions available. We at Financial Wealth Solutions can help. Contact us today.
Small businesses sometimes choose to purchase life insurance as a funding option for their qualified retirement plan. There are a number of advantages in doing so:
~ Tax-Deductible Premiums
~ Income Tax Advantage at Death
~ Reduced Personal Expense
~ Pre-Retirement Death Benefit
~ Easily Understood Benefit
~ Conservative Plan Funding
~ Guaranteed Issue and Simplified Issue
Click here to see more details »
To purchase life insurance outside the plan, an individual bears the entire cost of the premium. Purchasing life insurance through a qualified plan can be cost effective for the business as well as an added benefit to eligible employees.
Are you concerned about your retirement? Do you need tax deductions for your business?
One Solution: A 412(e)(3) Fully Insured Defined Benefit (DB) Plan
It may surprise you to know that 412(e)(3) fully insured DB plans have been around for over 50 years and there are several factors that have contributed to the current interest in them, such as:
~ Market risk associated with the stock market
compared to a guaranteed annuity contract
~ Demographics; retirement is rapidly approaching
for the “baby boomers”
Why a 412(e)(3) Fully Insured DB Plan?
~ Guaranteed benefits
~ Tax deductions
~ Larger contributions for older
participants
~ Life insurance with tax-deductible
premiums available
Click here to read Q&As about the 412(e)(3) Fully Insured DB Plan »
> One service provider for the plan document, funding, annual valuation and federal filing.
> Consultation and evaluation by an experienced pension staff.
> Your local FWS representative services your account.
Most small business owners would like more options in the amount of their contribution to employees. Flexibility is now available. Section 401(a)(4) of the Internal Revenue Code allows profit sharing allocations to be divided differently among employees based upon identifiable classification groups. Not only is the amount of contribution flexible, but there is flexibility in the way it is divided among the employees.
This type of profit sharing plan is referred to as a cross-tested profit sharing plan. There are two formulas:
~ Age-weighted plans, in which older employees
are favored.
~ Classification groups, in which employees are
divided into groups, which each group receiving
a different share of the contribution.
The cross-tested profit sharing plan allows the owner to decide who will benefit more from the firm’s profit sharing contributions based upon objective criteria. The options for classification groups and contribution amounts maximize the effectiveness of the firm’s retirement plan using a cross-tested plan design.
Click here to see more information on
“Cross-Tested & 401(k) Safe Harbor Profit Sharing Plans” »
> One service provider for the plan document, funding, annual valuation and federal filing.
> Consultation and evaluation by an experienced pension staff.
> You local FWS representative services your account.
Many business owners wish they could have the best of both worlds with their retirement plan, combining the large benefit and tax deduction provided by a defined benefit plan with the flexibility of a defined contribution plan. The solution may be a type of defined benefit plan referred to as a cash balance plan.
A cash balance plan is a hybrid plan that allows greater contributions than a 401 (k) or profit sharing plan while still maintaining the look of a defined contribution plan.
Click here to see “Your Business and a Cash Balance Plan in Action” »
A cash balance plan can be a centerpiece for attracting and retaining employees, while providing a large contribution for the owner and a sizable tax deduction for the business. Since benefits are expressed as a hypothetical account balance, it’s easier for employees to understand the true value of the benefit being provided. The cash balance plan provides an attractive benefit to owners in a mobile workforce, encouraging stability in a business’s workforce.
Click here to see a Plan Comparison »
The Number 1 enemy of your client’s wealth creation besides procrastination is TAXATION! Don’t let their liefelong success be erased by taxes and unintended inheritors.
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