Understanding Group Health Insurance
Health insurance can easily be defined as bookended in volumes of mystery. You know you need the coverage, you want to have the coverage for your employees, but chances are you simply do not know enough about it to make the first two points happen. For an employer thinking about introducing group health insurance to your employees, it can be unclear why you should provide something that is surrounded with much confusion. In this installment of CenterStage, Kelley Bell, a Group Health Benefits Consultant at SAXON, sheds some light onto the darkness that group health insurance so often casts.
What is Group Health Insurance?
In its most basic definition, group health insurance is a plan that covers all the employees who work for a given company or organization, and it potentially covers their spouses and other dependents. As the individual marketplace continues to change, Kelley noted the “increasingly difficult task of finding desirable plan designs, lower deductibles and doctors and hospitals that are in the network”. “Individuals with marketplace plans have even been told by many doctors and hospitals,” Kelley added, “that they will not accept the ACA plans from the individual marketplace. Here are reasons that considering a group plan makes more sense than leaving your employees at the mercy of the exchange:”
- Group Health Insurance has larger networks of doctors and hospitals.
- Employee premiums can be deducted pre-tax. The premium can be divided among pay periods, allowing them the convenience of paying less in from a total income perspective and allowing the premium to be broken in pieces versus a monthly sum income.
- The employer still selects the health insurance plan(s) to offer, thus choosing an appropriate plan for the staff versus allowing them to choose the “cheapest” that will hurt them financially if they need to pay for the large deductible.
- Employer contributions are tax deductible, allowing the company to save versus paying payroll tax on any compensation provided to the employee in lieu of offering health insurance.
Do I Need Group Health Insurance?
Why should you consider a group health insurance plan? Outfitting your team with health benefits simplifies the process for employees to include regular and urgent doctor visits, hospital stays and medical treatments such as physical therapy.
Health plans are the primary benefit (aside from compensation) individuals seek out when applying for employment. Your overall benefits offerings are crucial to your company or organization’s ability to attract and retain employees. Therefore, why would you not want to offer health coverage as a part of your overall compensation package?
Group health insurance involves assuming the shared risk and shared costs. Kelley defines shared risk as covering a multitude of individuals who are fairly, healthy people. “This can help keep your premium rates lower than individual plans whose rates are based solely on a person’s age and assumed risk versus the sharing of risk over a pooled premium. This relationship creates savings that reward good behavior,” Kelley said. Shared costs mean the premium can be shared between you the employer and employees. Employers have the flexibility of paying varying percentages of the premium, which could reduce the amount the employee pays versus the individual market premiums.
Working alongside a broker such as SAXON is highly recommended for smaller businesses. SAXON specializes in assisting employers with 1 to 50 employees on how to discover and purchase the benefits they need within their budget. SAXON begins each engagement process by listening to you – the employer – to develop and discover the best course of action for your business or organization. We have a proven history of discovering healthcare plans that are vital to the recruitment and retainment of talented employees.
Saxon’s Role When Considering Group Health Insurance
It is important to understand the needs of every client and educate their employees on how to use their healthcare. SAXON values client education and service above all else. We make educating employees a priority and ensure their benefits are understood and easy to use, making them value the relationship they have with you that much more. SAXON represents you, allowing us to secure the best plans and rates for you and your staff, which we review annually.
If you are considering offering group health insurance to your employees, contact Kelley Bell today at (513) 774-5493 or (937) 672-1547 or via email at kbell@gosaxon.com to begin exploring the benefits of adding this superior level of coverage today.
What Happened to Employee Retirement Plan Education?
As an employer, you are the universal platform for your employees’ benefits and retirement knowledge. Every day, you must communicate and educate your employees on the benefits you offer. Whether that is through verbal communication, an office chatroom, or a simple email, you should act as a bridge between the gap that is, “What do I get for working here? How am I protected? How can I contribute to my savings?”
There is no doubt how much pressure this puts on your shoulders. When it comes to educating your employees about their 401(k) Plan, it is inevitable that you may feel lost. You don’t have anyone to advise you on the topic (except Google, of course); you have no proper guide for navigating the benefits and retirement landscape. How can you provide the best resources and tools to your employees, if you don’t have access to them to begin with?
In this month’s installment of CenterStage, we spoke with Todd Yawit, Director of Employer-Sponsored Retirement Plans at Saxon Financial Services, hoping to scope helpful advice for employers struggling with benefits and retirement education. The conversation led to a prime focus on the power of 401(k) Plans, and employees’ extreme lack of knowledge about them, and ended with this simple fact:
Providing access to A to Z retirement services for your employees is not something you should skip on; and could lead to lower health insurance premiums in the long-run.
“Too many Americans are getting to their retirement age with no funds or no ability to provide the extra income they’re going to need over and above Social Security,” Todd said. “There needs to be a mechanism or tool available for people to save money, preferably tax-favored treatment of that money.”
That tool is a 401(k) Plan. Providing 401(k) Plan education in the workplace is an easy way for employers to show they care about their employees’ futures. It gives employees opportunities to save for their retirement, ultimately bettering themselves and their loved ones in the long run.
Getting Familiar With 401(k)s
People by nature tend to stick to the rule, “Out of sight, out of mind,” and 401(k) Plans are the epitome of that rule. However, this is the wrong path to take. 401(k) Plans can be a great tool for employers to leverage.
“At Saxon, we highly suggest employers look at advanced plan designs, instead of just a basic 401(k) Plan,” said Todd. These plan designs can lead to better retirement-readiness of plan participants, which will better prepare them for retirement, and can potentially lower health insurance premiums for the business in the long-run. Todd continued, “Advanced plan designs may also increase business tax deductions; provide better benefits for business owners and key employees; and eliminate most discrimination tests.
Automatic Enrollment
Once an employee becomes eligible for a 401(k) Plan, they are automatically enrolled in one. This tool helps increase enrollment in the Plan, because studies have shown few employees “opt-out” once they are automatically enrolled.
There has been a push for employers to add Automatic Enrollment to their 401(k) Plans. Participation has been at an all-time low, meaning more and more employees are getting to retirement with nothing to rely on except their Social Security. Automatic enrollment, and employee education can be great tools to help employees reach their retirement-readiness.
Automatic Increases in 401(k) Contributions
When employees do get involved with their 401(k) Plans, it’s usually with the initial set up, then it’s often forgotten about. Knowing how crucial those savings are for employees’ future livelihoods, there has been a push for automatic increases in annual 401(k) contributions.
“Ongoing education will help employees understand how small increases in their retirement savings, especially when they get a raise, will have a big impact on their ability to retire at a reasonable age”, Todd explained.
Saxon Financial Advisors
Saxon Financial Services offers A to Z retirement plan services for Simple IRAs, Safe Harbor 401(k) Plans, 401(k) Plans, 403(b) Plans, and Cash Balance Pension Plans. Saxon can act as a 3(38) Investment Manager, which can reduce the employer’s fiduciary liability with respect to investment selection, monitoring, and replacement. We can create and manage custom asset allocation models for participants in this role as well. “This allows employees to focus on what really matters, saving for retirement and not worrying about picking and managing their investments”, Todd concluded.
If you currently struggle with the education and support of your 401(k) Plan, then call 513.573.0129 or email Todd at tyawit@gosaxon.com.
How to Speak to Your Employees About Their Intimidating Benefits.
Employers spend thousands annually to secure and offer benefits to their employees. However, a small amount of time and money are devoted to ensuring employees understand and appreciate their benefits. Properly communicating – what you say, how you say it and to whom you say it to – can make a tremendous difference in how employees think, feel and react to their benefits, employer and fellow co-workers. In this installment of CenterStage, Jamie Charlton, founding partner and CEO of Saxon Financial Services, discusses the importance of offering sound education of benefits to employees, as well as how to effectively communicate their benefits in a clear, concise manner.
Through 18 years in the financial services field, Jamie has instilled a focus on stressing to employers the importance of communicating and educating employees on all that is available currently and what may change with each upcoming plan year. Jamie believes a focus on premiums leads to “next level benefits”, an offering Saxon delivers.
The Need for Benefits Communication
Clearly communicating benefits is an increasing issue due to the complex dynamics of benefits plans. Previously, benefits decisions have been made primarily by employers. As a result, employees have not become educated consumers about their benefits or on how to implement them. This absence of engagement, as Jamie notes, causes employees to enroll in benefits that don’t fit their needs, pay too much for their coverage and not discover the full advantage of their offerings.
Good communication is important and should cover all matters regarding plan offerings to employees and their dependents alike. The goal of a proper benefits plan, Jamie states, is to be enjoyable, comprehendible, and easily accessible. However, there currently exists an infliction point in employee benefits, and the entire process is changing.
This change is a factor of two main topics: (1) the continuing rise in medical costs and health insurance premiums and (2) a truly multigenerational workforce within the workplace. So how does an employer communicate their benefits to their employees?
Employers seeking to spread the word about their benefits offerings are continuing to seek out the expertise and experience found through Saxon. Understanding there is no one-size-fits-all method for every employer, Saxon delivers tools through tested methods to get your message across to employees. We explore your company’s offerings and assist you in crafting the perfect method to communicate and educate your employees on their existing plan offerings. Jamie gives the example of wellness programs and how to broadcast these offerings. Utilizing channels in which employees are bound to check – computers and smartphones – Saxon places the knowledge of how to display these offerings through informational web pages or email blasts.
Proper Benefits Education Begins with Saxon
While the methods above serve as channels for reaching employees, nothing compares to a direct, in-house explanation of your benefits to ensure your message is addressed and comprehended. Unique to Saxon is what Jamie notes as the “secret sauce” of Saxon’s employer and employee empowerment – the annual open enrollment meeting, which consists of nothing more than a step-by-step walk through of your entire health plan. This annual ‘seminar’ within your office closely examines the “nuts and bolts” of your plan to ensure everything is in-tact, working and done so with comprehension across the entirety of the organization.
Saxon understands the complexity of the modern healthcare scene and therefore is driven to provide the most comprehensive breakdown of your plan. Have more than one? No problem – We can compose a side-by-side analysis of your plans to show not only employers but employees where the strongest assets lie. Additionally, we stress the importance of shopping around at renewal time to make sure you get the best you can for your money. Jamie explained the goal of the meeting, as well as Saxon’s continued service year-round, is to “empower employees to have a choice.”
Empowerment from Saxon comes in many different forms. Just one of these many ways discovered through Saxon’s annual meeting is placing the power of online benefits administration at the fingertips of employees. Traditionally, when an employee needed to update their plan (i.e. having a new baby in the middle of a plan year), they were entitled to visiting their employer’s office and updating their plan by filling out a form. Risks associated with this older process included the “potential loss of documentation and therefore an inaccurate reading of an employee’s coverage needs”, said Jamie. The online method saves time, stress and paper.
How Can Saxon Help?
At Saxon, we want to invest in you. We begin by engaging experts that truly listen, building successful strategies that stay focused on your vision and goals. We strive to not be a name you turn to for assistance but a knowledgeable face always at your service. Saxon exists to care, cultivate and empower through relationships, expertise and exceptional standards of service. From finding a doctor, solving a complicated claim or partnering with an insurance agency to help protect your company’s sensitive medical data to ensure you are HIPAA compliant – with us; it’s personal.
To begin the conversation with Jamie on how to better communicate with your employees, contact him at (513) 573-0129.
How to Speak to Your Employees About Their Intimidating Benefits
Employers spend thousands annually to secure and offer benefits to their employees. However, a small amount of time and money are devoted to ensuring employees understand and appreciate their benefits. Properly communicating – what you say, how you say it and to whom you say it to – can make a tremendous difference in how employees think, feel and react to their benefits, employer and fellow co-workers.
In this installment of CenterStage, Jamie Charlton, founding partner and CEO of Saxon Financial Services, discusses the importance of offering sound education of benefits to employees, as well as how to effectively communicate their benefits in a clear, concise manner. Through 18 years in the financial services field, Jamie has instilled a focus on stressing to employers the importance of communicating and educating employees on all that is available currently and what may change with each upcoming plan year. Jamie believes a focus on premiums leads to “next level benefits”, an offering Saxon delivers.
The Need for Benefits Communication
Clearly communicating benefits is an increasing issue due to the complex dynamics of benefits plans. Previously, benefits decisions have been made primarily by employers. As a result, employees have not become educated consumers about their benefits or on how to implement them. This absence of engagement, as Jamie notes, causes employees to enroll in benefits that don’t fit their needs, pay too much for their coverage and not discover the full advantage of their offerings. Good communication is important and should cover all matters regarding plan offerings to employees and their dependents alike. The goal of a proper benefits plan, Jamie states, is to be enjoyable, comprehendible, and easily accessible. However, there currently exists an infliction point in employee benefits, and the entire process is changing.
This change is a factor of two main topics: (1) the continuing rise in medical costs and health insurance premiums and (2) a truly multigenerational workforce within the workplace. So how does an employer communicate their benefits to their employees?
Employers seeking to spread the word about their benefits offerings are continuing to seek out the expertise and experience found through Saxon. Understanding there is no one-size-fits-all method for every employer, Saxon delivers tools through tested methods to get your message across to employees. We explore your company’s offerings and assist you in crafting the perfect method to communicate and educate your employees on their existing plan offerings. Jamie gives the example of wellness programs and how to broadcast these offerings. Utilizing channels in which employees are bound to check – computers and smartphones – Saxon places the knowledge of how to display these offerings through informational web pages or email blasts.
Proper Benefit Education Begins with Saxon
While the methods above serve as channels for reaching employees, nothing compares to a direct, in-house explanation of your benefits to ensure your message is addressed and comprehended. Unique to Saxon is what Jamie notes as the “secret sauce” of Saxon’s employer and employee empowerment – the annual open enrollment meeting, which consists of nothing more than a step-by-step walk through of your entire health plan. This annual ‘seminar’ within your office closely examines the “nuts and bolts” of your plan to ensure everything is in-tact, working and done so with comprehension across the entirety of the organization.
Saxon understands the complexity of the modern healthcare scene and therefore is driven to provide the most comprehensive breakdown of your plan. Have more than one? No problem – We can compose a side-by-side analysis of your plans to show not only employers but employees where the strongest assets lie. Additionally, we stress the importance of shopping around at renewal time to make sure you get the best you can for your money. Jamie explained the goal of the meeting, as well as Saxon’s continued service year-round, is to “empower employees to have a choice.”
Empowerment from Saxon comes in many different forms. Just one of these many ways discovered through Saxon’s annual meeting is placing the power of online benefits administration at the fingertips of employees. Traditionally, when an employee needed to update their plan (i.e. having a new baby in the middle of a plan year), they were entitled to visiting their employer’s office and updating their plan by filling out a form. Risks associated with this older process included the “potential loss of documentation and therefore an inaccurate reading of an employee’s coverage needs”, said Jamie. The online method saves time, stress and paper.
How Saxon Helps
At Saxon, we want to invest in you. We begin by engaging experts that truly listen, building successful strategies that stay focused on your vision and goals. We strive to not be a name you turn to for assistance but a knowledgeable face always at your service. Saxon exists to care, cultivate and empower through relationships, expertise and exceptional standards of service. From finding a doctor, solving a complicated claim or partnering with an insurance agency to help protect your company’s sensitive medical data to ensure you are HIPAA compliant – with us; it’s personal.
To begin the conversation with Jamie on how to better communicate with your employees, contact him at (513) 573-0129.
Addressing Long-Term Care Concerns
When insurance plan conversations lead to discussions about after retirement, there are certain hot-button issues that will swing employee conversations out of your control. When helping older employees with retirement and beyond, two topics will change the atmosphere in the room. One is the long-term viability of Social Security, which frequently comes up as a question. The second is on the conversation of long-term care, which has the possibility to make or break a retirement plan. In this installment of CenterStage, Donald McClurg, one of our financial advisors, breaks down what matters and offers answers to many of the questions concerning long-term health.
What Exactly is Long-Term Care? What’s Gobbling up Your Retirement?
You place insurance on the things that are valuable to you, such as your car, your home and possibly your pet. What about your life? Is your family of importance to you, and beyond that, what about your legacy (i.e. any funds left over from your lifetime given into your living family members)? Currently, there’s about a 50% chance a 65-year-old will require care such as an in-home nurse or a medical/assisted living facility that can deliver optimal, specialized care. For employees near retirement or the 65 years-old mark, there is a trove of questions surrounding long-term care, including:
- Should I consider a hybrid long-term care plan?
- Is the insurance worth it for me, given how insurers have been increasing the price of premiums?
- How do I avoid a government facility should I need care?
- How much money should be saved and when should saving begin?
- Can I afford this/Will I make it?
- What are my blind spots?
Unfortunately, the “right” answer to these vexing questions regarding long-term healthcare is exclusively individual-specific. Factors in the determination are dependent upon the individual’s wealth, age, desire to leave a bequest and a need for peace of mind, amongst all other factors. Donald believes, “The biggest risk to a financial plan is not running out of money, it is incurring a financial catastrophe later in life and not having protection. Right now, that catastrophe has the highest probability of showing up in the form of long-term care.”
Commonly viewed as less superior to other insurance options already being taken out of a paycheck, the fact of the matter is this is not another out-of-pocket expense placed on you, such as renters or car insurance. Rather, long-term care should be seen as a valuable choice; an investment in your future and for your family. As a “numbers guy”, Donald brings up the importance of three variables in particular: 70, 90, and 5, which mean:
- Singles 65 and older stand a 70% chance of needing long-term coverage
- Couples 65 and older stand a 90% chance of needing long-term care
- Only 5% of Americans have long-term coverage plans
The Driving Factor for Long-Term Care
Individuals display an adversity to paying for long-term coverage, as they are worried about the chance of paying for it and not needing it or having to leave their homes and live out their lives in a facility. If that’s you, you may consider a hybrid plan. Most hybrids solve the two main deterrents of long-term care insurance by:
- Allowing for in-home care (that’s right, they don’t force you into a facility)
- Return of unused premiums. (i.e. whatever portion you don’t use is returned to your beneficiary)
According to the U.S. Department of Health and Human Services, the average cost for a semi-private room in a nursing home is $6,844 per month, with the average stay being around 2.5 years. As previously listed, 52.3% is the expected percentage of people turning 65 who will have to have a long-term care need during their lives. That is over half the population of individuals turning 65 years of age who will need the assistance offered through long-term care.
The most misleading stat is that 63% of people spend $0 on long-term care. This is because roughly half of Americans have exactly $0 in savings or will have $0 when/if they need long-term care. Those individuals typically find themselves at facilities who accept Medicaid, meaning they are more than likely falling short of the care they need. Here’s the most under reported and most impactful fact of long-term care: the burden is falling on your employees. In total, an estimated $3 trillion in lifetime wages is lost due to unpaid care-giving responsibilities.
How Can Employers Offer Better Long-Term Care Solutions?
It has been said that happy employees are productive employees, and as an employer, you naturally want to increase both the productivity and well-being of employees. Of the many things your employees stress about (home, kids, work, etc.), money is always at the top of the list. In fact, a study investigating employee productivity and well-being found that employees spend 3-4 hours per week, 4-5 times per hour worried about finances. At Saxon, we are happy to help employers implement useful financial tools for their employees to leverage.
For the majority of the working world, healthcare derives from employers, thus, the head of the organization is the one responsible for properly educating employees on their coverage. As the saying goes, “proper planning prevents poor procedure.” With Saxon, employers can schedule a brief, in-house seminar with one of our stellar financial advisors and a long-term care specialist. Through these seminars, clients and employees will discover clear solutions to anything that may still have them on the fence about investing in long-term health. Employees will come to learn the real value in long-term care, such as the reason behind asset location mattering more than asset allocation.
Ready to explore your options and become one of the 0.5% of businesses currently offering long-term care insurance to their employees? If so, don’t hesitate; pick up the phone and call Donald with Saxon Financial today at (513) 609-4404 or toll-free at (800) 847-1733 to discover how you can avoid the single largest threat to your employees’ retirement.
Why Saxon Is the Right Choice for You
At Saxon, we care about you – your family, your company, your finances, and your future. We cultivate our years of practice and experience to deliver exceptional service to you every time. We empower you by placing the tools and knowledge necessary into your hands to deliver remarkable returns on investment. An engagement with Saxon is unique. This is because we have invested in developing a culture where business is personal. Our clients are the central heart of our organization; meaning that without you we have no purpose.
To Saxon, experience matters. We know that outcome is crucial, but to us, it matters how we get there. By taking intentional action in an authentic manner, we are a catalyst for your success that is positively refreshing. We invite you to explore the Saxon way.
Medicare: Why an Advisor Makes All the Difference
Often those approaching Medicare eligibility are overwhelmed by the quantity of information available – and understandably so. As a form of insurance, Medicare is fundamentally different from other group/employer, individual, or family plans in that it is centered around the individual, yet any decisions made could potentially affect family members. In order to understand the costs, benefits, plans, and overall structure of Medicare, professional advice is strongly recommended when weighing options. That’s why, in this installation of CenterStage, Rob Glover, our Senior Solutions Advisor at Saxon, provided the following insightful information. Generally speaking, Medicare plans are explored during a significant lifestyle change. Having an insurance sales agent to facilitate retirement planning can help in adjusting Medicare options.
A Two-Way Relationship
Insurance agents are able to conform Medicare options around desired preferences and requirements. Each beneficiary is unique and therefore deserves a plan that delivers a standard of quality that is suited to varying budgets and ways of life. Agents can act as personal advisors and offer close collaboration when sifting through insurance plans. After becoming aware of defined healthcare coverage needs, Medicare advisors can narrow the search and find a solution that will safeguard both the individual and his or her family from looming financial damages.
It’s best to have a licensed agent with years of experience in Medicare. While textual knowledge is certainly important, learned wisdom is paramount in avoiding pitfalls throughout the process. Agents with real experience in the field are the best guides in navigating the processes, policies, and terminology of Medicare. Also, there are benefits in maintaining a relationship with them, since they are well-versed in the details of plans germane to the area. They are likely more familiar with supplier and provider networks and, using this knowledge, can provide guidance on which Medicare plan to choose.
The beneficiary-advisor relationship doesn’t end after the sale. In fact, they are often an advocate for many years after, offering consultations that address subsequent concerns with coverage. Medicare advisors can help review healthcare needs on a yearly basis to ensure the plan is lining up with changing criteria.
Services Worth Using
Independent advisors can offer many options across a multitude of carriers. Some agents are able to compare dozens of providers by contracting many different insurance companies. This method of contracting also aids in eliminating biases during plan research and comparison. The independent advisor can assist in making an informed decision on a Medicare insurance plan that is in line with the individual needs of the beneficiary. There aren’t any fees associated with merely utilizing an advisor. To elaborate, the rates linked to insurance plans already cover advisors’ commissions and thus render the decision on whether or not to employ one free from frugal urges. Therefore, there’s no reason not to seek the advice of a discerning sales agent to make the enrollment process easier. Licensed sales agents in the Medicare field take part in numerous hours of continued education and training annually. They are knowledgeable to pertinent information that could shape the decision-making process in addition to their understanding of a client’s defined parameters. Nevertheless, beneficiaries can only change insurance once within a year and can wind up “stuck” in a chosen plan unless the said beneficiary is eligible for a Special Enrollment Period. Regardless of position in the retirement process, time becomes increasingly more important. Utilizing an informed advisor will lead to time saved on plan comparison and research as they can help pinpoint a solution that fits the circumstances rather than waste time through trial and error. Licensed advisors are able to grant a one-stop shopping experience. Through innovative technology, they can access any and all relevant information at any time. Some create webinars regarding important issues, answer frequently asked questions, and elicit 24/7 assistance. Within some websites, beneficiaries can enroll in Medicare Advantage plans, request proposals, and research and compare options.
If you would like to learn more, contact Rob Glover at 513.703.7720 or rglover@gosaxon.com.
Cash Balance Plans for Business Owners
The new tax law is a lucrative opportunity for many pass-through businesses. As long as the owner’s income does not exceed a certain threshold, businesses can earn significant tax savings. In this installment of CenterStage, Todd Yawit – the director of retirement services at Saxon – has provided the following insightful information on Cash Balance Plans and how they can be used to help businesses earn significant tax savings.
The New Tax Law
With the new tax law, some business owners can now deduct up to 20 percent of their qualified business income (QBI) as long as their income falls below a certain threshold. Todd explained, “The new tax law that went into effect treats certain business types differently than it used to. In order to take advantage of the full deductions, certain business owners might need to lower their income to accommodate getting the deductions.”
deductions.” The full 20 percent deduction is available to companies that have an income that falls below the set threshold amount. Because of this, many businesses will have lower effective tax rates. Business owners whose income does not fall below the set threshold amount can still reap significant benefits by placing the difference of their income in a Cash Balance Plan. This will cause their taxable income to fall below the set threshold.
What Are Cash Balance Plans
Cash Balance Plans are a type of retirement plan that combines the maximum benefit amount associated with Defined Benefit Plans with the flexibility and portability of a 401(k) plan.
Cash Balance Plans are trustee directed and assets are invested into a single pool. Participants receive individual statements with hypothetical account balances on them.
Cash Balance Plans are often preferred over traditional Defined Benefit Pension Plans. Individual statements received by participants reflect what participants could potentially collect in the form of a lump sum, if eligible.
Here are the top 6 features of a Cash Balance Plan:
- Niche Retirement Plan – Cash Balance Plans are a great fit for physician groups, dental groups, and other professional practices, as well as small business owners or self-employed individuals.
- Tax Deferred Contributions – All contributions are tax-deductible, and the investment earnings are tax-deferred. Assets are not subject to income tax until they are withdrawn from the Cash Balance Plan or a rollover IRA.
- Higher Contribution Limits – Cash Balance Plans allow for high tax-deductible contributions than a 401(k). The maximum contribution amount is dependent on the individual’s age and normally increases as participants get older.
- Creditor Protection – Plan assets in a Cash Balance Plan are ERISA creditor protected.
- Flexible Plan Design – Cash Balance Plans can easily provide for many different levels of benefits and contributions.
- Supplement to a 401(k) Plan – Cash Balance Plans can be used as a companion to a 401(k) plan, providing a more favorable contribution cost design.
How Can Cash Balance Plans Help Business Owners Take Advantage of the New Tax Law?
“One of the best ways for a business to lower their income is to make contributions into a retirement plan. The advantage of a Cash Balance Plan retirement plan is it benefits the owner and key other people, as opposed to a 401(k) where it’s benefiting everybody,” explained Todd.
The 20 percent pass-through deduction is “phased out” for business owners with taxable income between the threshold limit and phase-out limit. By taking advantage of Cash Balance Plans, businesses can fall within these limitations.
Please contact Todd Yawit with any questions regarding Cash Balance Plans. You can reach him at (513) 573-0129 or send him an email at tyawit@gosaxon.com.
What’s the Deal With 529 Plans?
It’s never too early to invest. A 529 Savings Plan, prudent financial direction, and steady contributions are paramount to a successful college fund. Due to the intricacies of the financial instrument, an advisor is recommended to guide contributors throughout the process. In this installment of CenterStage, Cyrus Dhatigara – an investment advisor representative – has presented new contributors with his advice on 529 Savings Plans and how they can be beneficial for costly tuition fees.
How are they beneficial?
The 529 Savings Plan is a great way to save money for college. First, there are comparatively high limits on the amounts that parents or grandparents can contribute. Second, these plans are tax free: unlike with a tax-deferred 401(k), funds are exempt from taxation once they are eventually withdrawn. Third, mutual fund companies that are affiliated with state Tuition Trust Authorities are able to offer professional management leveraging a diverse array of funds. Fourth, 529 Savings Plans allow contributors to change the focus of their investments, typically starting with an aggressive strategy during a child’s younger years and moving towards a more conservative approach when he or she gets older.
How much to start?
Parents would naturally like to know how they can foster such an investment. Most have the basic idea of what a 529 Savings Plan is, but not much more. Seeking sound financial advice should fill any gaps in proficiency. Also, there’s no excuse to wait – it takes a mere $25 per month to initiate a plan. Further, 529s can make use of automated checking account withdrawals to enable healthy growth. This is a flexible product, though annual contributions will likely need to increase on that basis. The maximum limit per child is around $300,000; parents can contribute whatever they want and supplement the fund via one-off investments from grandparents.
What do they cover?
Anything that’s necessary for class is covered: books, tuition, fees, and computers or iPads, among other things. In fact, a 529 Savings Plan even covers grad school. Since the investments are earmarked for higher education, money is transferred directly from the mutual fund to the university without any contributor intervention. As a result, parents shouldn’t be concerned about quarterly or semester requirements, and there isn’t room for IRS violations since their only further interaction is taking a receipt.
How can Saxon help?
Cyrus crafts strategic savings plans around children to help fund college tuition, while providing the tools for protection and investment. His largest passion project is an extension of the daily work he does. He revels in contributing financial education to all ages. Saxon’s goal is simple, to mold this program to fit contributors’ individual needs, right from the beginning. We know college savings plans are not one-size-fits-all. Whether you are looking to save for tuition, room and board fees, books, supplies or required computer equipment and technology, Saxon can help.
Please contact Cyrus Dhatigara with any questions you may have on 529 Savings Plans. You can reach him at 513.236.9334 or send him an email at cdhatigara@gosaxon.com.
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Saxon's Go365 Clinic: A Can't Miss Wellness Event
In this installment of CenterStage, we are spotlighting our upcoming event, as presented by our Wellness Director, Abby Graham!
Saxon, along with Humana and HealthWorks, will host a wellness seminar about Humana’s wellness program on Wednesday, May 23. This exciting wellness clinic will aid employers in creating a more engaged workforce around wellness. Plus, there may be an awesome incentive involving a discount on insurance premiums, so keep reading!
Relationship Status - Going Strong
Humana is an insurance carrier represented by Saxon. Humana offers a personalized wellness and rewards program that we find to be exceptional for helping workplace environments create a great sense of community and health. HealthWorks is an outside vendor that works alongside Humana to provide wellness guidance and related services. HealthWorks will have a roundtable discussion explaining how they coordinate benefits with the Go365 program. With all three of us together at the event, employers will have the ability to have all their questions answered and have educational resources at their disposal.
Things to Look Forward to
“If you are someone in your company that is into wellness and is wanting to get others involved in a health initiative, then this event is for you! It will allow you to become an expert on Humana’s Go365 program and see why it is a fantastic incentive-based wellness program.” - Abby Graham
The event will feature several individual round tables, each one covering a different topic (see next page for topics). There will even be a 15% discount on premium insurance once you reach Gold Status in the program. The event is free to attend, and breakfast and lunch will be provided.
Sounds pretty great, right? If you are interested in saving money, increasing employee incentives, and creating a healthier workforce, be sure to sign up now to attend our Go365 seminar.
All questions and concerns regarding the event can be directed to Abby Graham at 513.334.0371 or send her an email via agraham@gosaxon.com. We can't wait to see you there!
Saving For Your Children's Education
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This month’s CenterStage features Kevin Hagerty, a Financial Advisor at Saxon. With over 18 years of experience specializing in financial planning solutions, Kevin provides his best advice on educational funding, specifically on 529 Savings Plans.
Educational Funding from Every Angle
In the long run, saving for your children’s education is considerably less costly than borrowing money later. Now more than ever, parents and grandparents are interested in alternate forms of schooling, such as private school. This means educational debt takes place long before college and is why President Trump implemented tax law changes to allow 529 Savings Plans to be used on more than just college.
A key benefit of 529 plans is the potential for compounded, tax-free growth on account funds. Similar to other investments, the earlier the account is started and left untouched, the more funds can grow over the years.
Kevin says, “Whether it’s a car, a TV, a refrigerator, education, retirement, or healthcare – the cost of everything continues to increase.” Having savings to fall back on through the 529 Savings Plan is immensely helpful but most importantly, it gives you options. One of the most frequently asked questions by parents is when they should start saving for their children’s education, and the unfortunate fact is – with inflation – you’re likely already behind. It’s tough for parents, especially new parents, to juggle the high costs of every little thing. “I recommend plugging estimates into an online cost calculator,” Kevin suggests. “Nowadays, those calculators will take into consideration everything – from taxes to inflation to annual income. It’s a great way to see how much a parents’ savings account should aim for.”
What is a 529 Savings Plan?
“529 plans are versatile savings accounts that offer federal, and sometimes state, tax benefits. depending on the state you live in, plans are operated in many different ways. You may be able to purchase prepaid tuition credits to use in the future or invest in mutual fund options that grow your 529 account value toward the future educational cost of your child.”
-SavingForCollege.com
K-12 Educational Funding & Unused Funds
Kevin cites the 529 Savings Plan as one of the best educational saving plans on the market due to the new tax law changes. Under the Tax Cuts and Jobs Act, families can now use up to $10,000 annually on tuition expenses at a private elementary or secondary school, increasing educational opportunity for many families. Additionally, under this type of plan, anyone can contribute to the savings – not just the parents. So, family members who would like to help the kids out can contribute.
Many people mistake the 529 Savings Plan to just be for tuition, when in fact the list of eligible educational expenses that it covers is quite broad, including things like books, room, board and supplies. So, that expensive laptop your child’s school requires? Covered. Ask your advisor for a complete list. As far as unused funds in an account go, if you have more than one child and the first child doesn't use all the funds for his or her educational expenses, then you can transfer the funds into the other child's name.
Conclusion
Like most financial planning matters, what will ultimately benefit your family most will be unique to your specific situation. Working with a financial advisor, such as Kevin, to discuss factors unique to your situation and design an appropriate strategy can be easier than you think. Contact Kevin today at 513.333.3886 or shoot him an email at khagerty@gosaxon.com for more information.</span style>
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