As tax returns for 2011 are soon to be put behind us and we head into a time of tax uncertainty, it’s helpful to know what financial strategies you can employ to reduce your overall tax bill for 2012.  Maxing out 401(k) or other retirement plan contributions can be one of the easiest ways to build wealth and save on taxes since taxes on the money put away in traditional retirement plans (and their growth) are deferred until retirement — when income is typically lower.  Most investors I speak with aren’t quite sure what their tax rates are, their retirement plan contribution limits or rules for education plan contributions, so here are a few figures to keep handy.

Long term capital gains and qualified dividends cap out at 15%.  Charitable givers can save on taxes too—especially when they donate appreciated assets like long-held stocks.   Warren Buffet avoided paying the Alternative Minimum Tax (AMT) as a result of substantial charitable gifting.  (Forbes 8/2011).

529 Plan contributions can reach $13,000 per year before a gift tax or contribute five years worth of gifting in a single year and max out at $65,000 or $130,000 for a married couple.   Another plus, 529 College Savings Plan contributions not only help your beloved recipient, but they reduce the taxable estate of the giver.  Lastly, many may be relieved to know that the estate tax doesn’t kick in until your estate exceeds the $5,120,000 mark—at least for now.

Jayne Di Vincenzo, AIF ® (Accredited Investment Fiduciary),  CEP ® (Certified Estate Planner) has provided investment advice, financial planning and insurance services to individuals and business owners for over 15 years and holds her 24 General Securities Principal, 53 Municipal Principal registrations, Series 7, 63, 65, 31 with LPL Financial and life and health insurance licenses.  Securities and advisory services offered through LPL Financial, A Registered Investment Advisor, member FINRA/SIPC. Please consult with your tax advisor regarding your tax situation. 

Amp Up Your Employee Benefits—Without Breaking the Budget

Jayne  Di Vincenzo, CEP,  AIF ®President, Lions Bridge Financial

There are at least three good reasons to review your company’s benefits — to attract new employees, to keep the ones you have, and to build a reputation for offering the best benefits. The competition is fierce for the best employees regardless of the economy, and if you’re known for offering great benefits, you’ll have an advantage at landing the top dogs.

You might be surprised to learn that improving your offerings doesn’t necessarily cost a lot of money. Consider:

1) College savings plans. These cost nothing to create or maintain.  There are no reports to file or records to keep.  Once established with a financial advisor, it’s between your employees, the advisor and the provider. Benefit to employees—lower costs and lower investment minimums. Cost: Nothing.

2) Health Savings Accounts.  HSA accounts are an inexpensive way to help your employees save for medical expenses and co-pays and reduce their taxes at the same time. They are easy to establish and easy to maintain.  Cost: $0 to $35 per employee per year.

3) Monthly lunch for the office. Pick a good time to offer a monthly lunch at the office.  The key to making it a valuable perk:  don’t set an agenda and let employees do the talking.  You’ll be surprised at how this can build trust and camaraderie and sometimes even what you learn about your employees, your customers, and even your company.   An informal forum will open up communication and build trust that overflows into improving your bottom line.  Cost: About $10 per employee per month.

4.) SIMPLE IRA.  Matching requirements are reasonable at 3 percent of each employee’s elective deferrals on a dollar-for-dollar basis up to 3 percent of the employee’s compensation.   Example:  Sam participated and his earnings, before SIMPLE contributions, was $30,000 ($575 per week). Instead of taking it all in cash, Sam had 10% of his weekly pay ($57.50) contributed to the SIMPLE IRA. For the year, Sam’s salary reduction contributions were $2990, less than the $11,500 limit on contributions. The employer’s matching contributions must equal Sam’s salary reductions, but no more than 3% of his compensation (before salary reductions) for the year.  His employer’s matching contribution was limited to $900 (3% of $30,000). Learn more by contacting an advisor experienced in retirement plans and visiting * http://www.irs.gov/retirement/article/0,,id=111403,00.html. Cost: 3% of each participant’s compensation (in most cases*).

5) Flexible work schedules. Employees love them, whether it’s working from home part or full time or working hours that are different than most of your employees. Many employees, particularly mothers, may not be able to work 9-to-5 hours for whatever reason. Studies show that people who work from home often work more than if they came into the office, so productivity increases, as does employee satisfaction. This should not be an across-the-board benefit but one given to those who’ve earned it by showing they can work well without supervision. Cost: Nothing. 

You can see that enhancing the benefits you offer your employees doesn’t have to boost your expenses much, if at all. When it does cost you something, consider it an investment in your firm.

Jayne Di Vincenzo AIF ® (Accredited Investment Fiduciary), CEP ® (Certified Estate Planner) has provided investment advice and insurance services for over 14 years and holds her 24 General Securities Principal, 53 Municipal Principal registrations, Series 7, 63, 65, 31 and life and health insurance licenses with LPL Financial.  Securities and advisory services offered through LPL Financial, A Registered Investment Advisor, member FINRA/SIPC.  Lions Bridge Financial 2110 William Styron Square, Newport News, VA 23606 and 440 Monticello Ave, Suite 1800, Norfolk, VA 23510.   Jayne’s (T) 757.599.9111 and  email: Jayne@LionsBridgeFinancial.com .

  Jayne Di Vincenzo CEP, President, Lions Bridge Financial

How did you react to this summer’s stock market rollercoaster ride? Did it scare you so much that you decided to sell your equities and stash your cash under a mattress? Or did it cause you to call a financial advisor for the first time and ask for help?

If you did the latter, you should be aware of all the things you’ll need to bring to your initial meeting.  That meeting is a great opportunity for you to share as much as you can about your current situation, your goals, and your comfort with risk.

 I hope this column is something you can clip and put under a refrigerator magnet and refer to it when you need it.  Here’s what most financial advisors would like you to bring:    

 Personal Information

• Family member names, dates of birth, and social security numbers (if they will be joint account owners or beneficiaries).

• General information on any dependents (i.e., parents, grandparents) you’re caring for or supporting, and the cost their care and your contributions and obligations.
•  Estate planning documents.
•  Separation and support agreements.
•  Life insurance policy statements, these can be more helpful to establish current value and benefits.
• Long term care insurance policy.
•  Most recent tax return.
•  Addresses of real estate you own and approximate value.

Retirement Income and Investment Statements

• Company pension statements
•  Social Security statements
• Disability benefit statements
• Military pension information
• Checking and savings account statements
• 401(k), IRA and other retirement plan statements
• College savings accounts and prepaid tuition plan information
• Alternative investment statements
• Annuity statements
• Income from rental/investment property

 Debt-related Documents

• Mortgage statements
• Credit card statements
• Student loan statements
• Car loan balances and interest rates
• Personal loan balances and interest rates

 You might be thinking you’ll need to use a wheelbarrow to haul all of your documents to the meeting, but there are some documents you can throw away, such as:

•  Paystubs for prior tax years.  If your paystubs match your W-2 for the year, you can shred them.
• Tax returns more than seven years old.
• Quarterly 401(k) statements if the totals match your annual summary.   
• Prospectuses and proxy statements for investments you haven’t owned in over a year
• Most of the time you can shred bills once you get a canceled check. However, it’s wise to hang on to bills for big items permanently.

The Securities and Exchange Commission and FINRA require investment firms to keep client records for six years, so they can provide a copy (perhaps for a fee) should you need one that isn’t available to you online. 

 Being prepared for your financial check-up and will give you a clearer picture of your financial progress and retirement, and perhaps help you purge some of your files.

Jayne Di Vincenzo CEP ® (Certified Estate Planner) has provided investment advice and insurance services for over 14 years and holds her 24 General Securities Principal, 53 Municipal Principal registrations, Series 7, 63, 65, 31 and life and health insurance licenses with LPL Financial.  Securities and financial planning offered through LPL Financial, A Registered Investment Advisor, member FINRA/SIPC.  Lions Bridge Financial 2110 William Styron Square, Newport News, VA 23606.   Contact Jayne at 757.599.9111 email: Jayne@LionsBridgeFinancial.com .

D. Michael Smith, Investment Executive, Lions Bridge Financial

Most of us bought life insurance at some point and it could be years since you’ve thought about that policy or even considered your need for life insurance. Many insurance products are available and it can be difficult to evaluate what’s best for you — term, whole life, universal life, long-term care and disability insurance.  What you need depends on your unique situation, and it’s important to review the alternatives with an experienced insurance specialist to make sure you make the right choice. 

 Why is it so important to review your life and long-term care insurance policies?  Studies have shown that the majority of Americans are underinsured and as life changes, so should insurance. For example:

1)      Life insurance contracts issued more than five or six years ago may not guarantee your death benefit — even if premiums have been paid as planned.  This can happen because of changes in interest rates in the contract or in the economy, or a negative change in the financial condition of your insurance company.

2)      Older policies may not have earned as high a return as originally projected.  This not only decreases the cash in the contract, it also increases your total cost of insurance deductions, potentially accelerating the decline of your remaining cash value.

3)      Changing life events, such as those listed below, can trigger the need for a policy review. 

a)      Change of employment status

b)      Marriage or divorce

c)       Birth or graduation of a child

d)      Transition to “empty nest” status

e)      Sale/purchase of major assets (like a primary or secondary residence), or a significant change in ownership in a business

f)       Inheritances

g)      Charitable giving such as leaving money to a favorite charity, religious organization, college, church or hospital.

So who, in particular, should review their insurance situation?

1. Anyone 35 to 80.  There may be important reasons to invest in life insurance even if you are already retired.
2. If you’ve owned any permanent life insurance products for more than five years.
3. If you’re in good or improved health.
4. If you’re concerned about creation of wealth for your heirs.
5. If your estate could be facing a federal estate tax.
6. If you own a small business or are self-employed.  No one wants their assets or business sold in a “fire sale” after their death, or in the case of large land owners, to provide liquidity to pay federal estate taxes.  Your small business or land may be worth millions, but you don’t have anywhere from 35 percent to 55 percent of that in cash.  Life insurance can inject an immediate lump sum of cash to alleviate this situation and can do so using pennies on the dollar.

A couple of hours of planning today may result in a huge financial benefit for you and your loved ones in the future.

D. Mike Smith has been in insurance and financial services for over 22 years and holds his securities registrations with LPL Financial, A Registered Investment Advisory firm. Securities offered through LPL Financial. Member FINRA/SIPC. He can be reached at (757) 599-9111 or mike.smith@LionsBridgeFinancial.com.

 Jayne Di Vincenzo CEP®, President, Lions Bridge Financial

If you’re a baby boomer, you may worry about getting sick and then having to pay for long-term care. If you’re a woman, you should be especially concerned. You usually live longer than men. You usually end up disrupting your lives to care for ill husbands. And you usually have less money left over to care for yourself. All of that helps explain why two out of three nursing home residents are women, doesn’t it?
The latest statistics show that a whopping 40 percent of those who reach age 65 will need long-term care for about two years, and 20 percent will need it for five or more years.  Seniors seem aware of this. In a 2010 study, they said their biggest fear is “being a burden to my family.” Another big fear is ending up in a nursing home.
If long-term care is something you’re thinking about – or should be thinking about – here’s some information for you:

Types of LTC Policies
Traditional long-term care insurance provides coverage in return for annual premiums for life – or until coverage kicks in.  Most policies allow for in-home care, adult day-care, assisted living facilities and skilled nursing facilities. Benefits may include protection against inflation and a specified maximum coverage period.  And sometimes couples can share a policy and save money. The downside is you may pay premiums for decades but never file a claim, like homeowners insurance.
Hybrid products, which combine either insurance or annuities with long-term care insurance, have become very popular. They pay for long-term care, and if you never need it, money goes to your heirs. Hybrid products are popular because they’re often cheaper over the long term than traditional insurance and you can cancel and get your premium returned with most policies. With almost all traditional LTC policies, you use your benefits or you lose them (and your premium).

When to Buy?
The younger you are when you apply for this insurance, the more likely you’ll be approved and the more likely your rates will be lower. The average age of purchase:  57.   According to the American Association for Long-Term Care Insurance:

Ways You Can Save on Premiums:
•    Buy through your employer if you can, but do your homework because some of these policies are not as comprehensive as private policies. (If you own a company and want to offer this benefit to your employees, you may be eligible for special tax breaks.)
•    Comparison shop policies with an insurance broker who understands and represents multiple products from many different companies, not with an insurance agency that typically sells only their company’s products.
•    Buy when you’re relatively young and may qualify for health-related discounts you can keep for the life of your policy.
•    Lower your premiums by choosing longer “elimination periods,” the period (days) when you pay out of pocket.
•    Consider a shorter coverage period rather than one that’s unlimited.
•    Buy a couples policy to share benefits and costs.
•    Consider a less expensive blended approach using hybrid and traditional products together.

What’s Ahead?
Health care reform, which passed in 2010, addresses long-term care, but premiums and benefits are not expected to be set until the fall of 2012. Those who want to participate should expect to pay an average of $1,800 to $3,000 in annual premiums.

Jayne Di Vincenzo CEP ® (Certified Estate Planner) has provided investment advice and insurance services for over 14 years and holds her 24 General Securities Principal, 53 Municipal Principal registrations, Series 7, 63, 65, 31 and life and health insurance licenses with LPL Financial.  Securities offered through LPL Financial, member FINRA/SIPC.  Lions Bridge Financial 2110 William Styron Square, Newport News, VA 23606.
Jayne can be reached at 757.599.9111 email: Jayne@LionsBridgeFinancial.com

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