ClientConnection August 2015

Transcription

1 ClientConnection August 2015 IN THIS ISSUE 1 Planning for Success 3 To Itemize or Not to Itemize 4 Helping You Help Your Employees 5 Life Insurance: Are You Prepared? 6 Administering Employee Benefits Planning for Success Failing to plan is planning to fail. Ron Watmough included this advice in his article in the Small Business section of the Canadian newspaper The Lethbridge Herald, May The quote, however, is often attributed to Alan Lakein, an author of several self-help books on time management dating back to the 1970s. Helping You Help Your Employees Learn more about flex fund account options. Page 4 ACCOUNTING FINANCIAL SERVICES GOVERNMENT AND NON-PROFIT CONSULTING HUMAN RESOURCES TAXES Kevin Boland, CPA Executive Vice President kboland@donnelly-boland.com I m on a need to know basis and I don t need to know yet. Me numerous occasions generally in response to any question about my vacation plans prior to the day of departure. My lack of attention to travel planning is legendary in our family. My wife and daughterin-law, two premier vacation planners, might describe it as notorious in their charitable moments and in their less charitable moments So the very thought of me promoting the virtues of planning no doubt has them rolling their eyes and shaking their heads. I have, however, spent a lot of time over the years developing and executing our business and family financial plans. So when is the right time to start planning for your financial future? The sooner the better! While I m thankful I started when I did, I often wish I had started even earlier. If I had started sooner, I could have found my particular strategy sooner and figured out the risks of a particular approach without having to learn them the hard way. In preparing for your financial future, the most valuable commodity is time time to educate yourself, time to consult with experts, time to identify and consider your options, time for earnings on your investments to compound, and so on. Continued on page 2

2 When you re young, planning can take a back seat to paying off student loans or enjoying the fruits of your labor the social scene, the new car, a memorable vacation. As you get older, raising children, furthering your career and other crises of the moment can distract you from the planning process. Before you know it, you are approaching retirement and the realization that time is slipping away starts to set in if it hasn t already. Rather than look back with regret, develop a plan and look forward with anticipation! You know where you are. Where do you want to be? What can you do to make the most of the time and resources that you have? Determine the stops or detours you may encounter along the way. The HD Vest brochure 8 Wealth Management Issues: How They Affect Your Financial Future can be a helpful tool in focusing your attention on specific issues to consider. Some of these issues affect just about everyone, some others will not. Determining which ones affect you now, which will affect you later in life and which you just don t have to worry about will focus your attention and help to move the planning process forward. yourself confronting and can help or know other experts that can. So why don t I plan vacations beyond discussion of time and location? Did I mention that I m married to a premier vacation planner and related to another? I d be remiss if I didn t acknowledge the invaluable vacation advice my wife and I received from our friends the Reinharts, the Saittas and the Shirys and my son and daughter-in-law for our most recent vacation two relaxing but eventful weeks on the West Coast that included baseball parks, safari parks and national parks and a detour to wine country with trips by not only Planes, Trains and Automobiles, but boats, and go karts as well. We never could have done everything we did in the time that we had without my wife s tireless planning efforts over a six month period. The picture below is from that vacation and a detour she squeezed in at my request Fay and I in front of the General Sherman tree in Sequoia National Forest, a prehistoric giant and the largest tree in the world by volume 36 feet plus in diameter at the base and not much smaller 250 feet up. It had time, thousands of years, and concerned people at the National Park Service to protect it in its advancing years. Plan for success. Work with advisors you trust to make the most of the resources available to you. The sooner you start, the better off you are likely to be investment portfolios, like trees, can grow impressively if you give them enough time. If you d like to have a conversation or get the financial planning process started there are plenty of resources available to you. Call us or stop in for a chat. We have experienced professionals in finance, accounting, taxes, and human resources at all levels and all ages within our organization. In addition to planning for themselves and in some cases their own businesses, they work with clients to budget time and resources and plan for success. We often have direct personal experience with the situations you find Fay and Kevin Boland in front of the General Sherman tree in Sequoia National Forest Kevin P. Boland Advisory Representatives. *Securities offered through H.D. Vest Investment Services sm, Member SIPC. Advisory Services offered through H.D. Vest Advisory Services SM Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value Donnelly-Boland and Associates is not a registered broker/dealer or independent investment advisory firm. Page 2 Client Connection

3 To Itemize or Not to Itemize: That is the Question By Ryan Babiak Branch Manager Each year when tax season rolls around, people ask me if they should itemize or if they should take the standard deduction. The short answer is that the decision is different for each situation. There are two basic types of taxpayers: those who claim the standard deduction and those who itemize. Your answer may change from year to year, because in the normal course of events you should choose the method that gives you the larger deduction. Here s a refresher of how the deductions work. The standard deduction is a flat amount that is indexed annually for inflation. For 2015, the standard deduction is $12,600 when you re married filing jointly and $6,300 when you re single. There s no record keeping involved as there is for itemized deductions, such as charitable contributions and medical expenses. All you have to do is claim the standard deduction on your federal income tax return. In contrast, for itemized deductions you must keep adequate records and attach Schedule A to your return. The list of deductible expenses includes the following: Home mortgage interest Real estate and personal property taxes Donations to charity State and local income taxes Medical and dental expenses Casualty and theft losses Miscellaneous expenses If the total amount of itemized deductions exceeds the standard deductions ($12,600 married filing jointly and $6,300 filing individual), it is to your advantage. There are also some expenses that can be claimed by both itemizers and nonitemizers. The list below includes the approved deductions: Contributions to traditional IRAs. Certain expenses of performing artists. Retirement plan contributions for self-employed individuals. Self-employment tax. Job-related moving expenses. Student loan interest. Jury duty pay given to your employer. Alimony payments. If you plan to itemize your taxes this year or even if you are considering doing so, you must plan accordingly and keep all of the necessary documentation. Instead of scrambling before the tax deadline, it is best to prepare and organize your files. If you d like help deciding whether you should itemize or not, please give me a call. I can help you plan so you can maximize the tax benefits on this year s return. Tax Season Client Satisfaction Survey Winners! Thank you to all who participated in our Tax Season Client Satisfaction Survey. Our ongoing focus is to continue to improve the service that we provide for our clients. Congratulations to our two gift card winners! Kim Lex & John Orndoff Page 3

4 Helping You Help Your Employees Kim Latzy Staff Accountant x1165 Samantha Clark Staff Accountant x1152 When it comes to employee benefits, employers may choose to offer a multitude of options that will not only be valuable to the employee, but their families as well. In particular, one type of benefit that can be made available to employees is a Section 125 Plan flexible spending account or Flex Fund. What is a Flex Fund? A Flex Fund allows employees to pay for out-of-pocket health care and dependent care expenses using pre-tax dollars. These Flex Funds are funded directly through the employee s paycheck and are based on a calendar year, allowing the employee to contribute up to $2, per year. Employees are not required to be reimbursed for dependent care claims until the employee has sufficient amounts withheld. However, employees are required to be reimbursed for medical care claims as they are submitted up to the amount of the employee's annual deferral. The IRS provides information on what expenses are eligible for reimbursement through a Medical Flex Fund in Publication 502, Medical and Dental Expenses. For a Dependent Care Flex Fund, employees can submit expenses related to daycare or child care. Whose Medical Expenses Can You Include? Eligible medical expenses include those incurred by the employee, the employee s spouse, or a dependent. All expenses must be paid for by the employee and proof of payment must be submitted in order to be eligible for reimbursement. Why your Company Should Offer a Flex Fund Option? Giving your employees an option to pay for out-of-pocket health care and dependent care expenses using pretax dollars will ultimately save your employees money. This benefit is very attractive especially for families who pay for child care, employees who regularly exceed their yearly limits for health care costs, and others who wish to plan for their health care expenses. As a bonus, the employer's payroll taxes are calculated on compensation net of these deferrals. For further inquiries regarding employee benefits, please contact us! Donnelly- Boland and Associates can assist with setting-up a Section 125 Plan or Flex Fund benefit as well as answer any questions you may have regarding payroll and employee benefits. Page 4 Client Connection

5 Life Insurance: Are you prepared? Part of being a responsible adult means making sure the loved one that depend on you are financially secure if you unexpectedly leave them behind. One of the best ways to provide protection is with a life insurance policy. Life insurance is one of the most important financial purchases an individual can make. In the event of a tragedy, life insurance proceeds can help pay bills, continue a family business, finance a child s education, protect a spouse s retirement plans, and much more. If a wage earner passes away, a family could be devastated financially without life insurance. By Mike Wilson Branch Manager mwilson@donnelly-boland.com (724) Types of Life Insurance There are many different types of life insurance policies and the type of policy chosen is based on the needs and goals of the owner. Life insurance is broken down into four main types: term insurance, universal life insurance, variable universal life insurance and whole life insurance. 1. Term Life Insurance- Term life insurance is the simplest of the life insurance options. It is designed to cover an individual for a pre-defined period of time and it typically only pays out a death benefit to the beneficiary if the owner dies during the term period. Term insurance premium payment amounts may be level or increasing over the term depending on the policy, and the premiums are typically lower than other insurance options. This type of policy is typically best suited for those with temporary insurance needs such as paying off a mortgage or protecting a child s education needs. Talking about life insurance makes many people feel uncomfortable, but it is an important topic that you should probably learn more about. What is life insurance? A life insurance policy is a contract with an insurance company. In exchange for premiums (payments), the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries in the event of the insured s death. This benefit is typically tax free to the beneficiaries and bypasses probate.* 2. Guaranteed Universal Life Insurance- Guaranteed universal life insurance is a permanent insurance policy that protects the owner for life assuming death benefit guarantee premium payments are made. It has components of both term and permanent life insurance. This type of policy has a death benefit as well as a cash account that is held in the insurer s general account. As long as the premiums are paid as illustrated and no loans are taken on the policy, the death benefit is guaranteed to remain in force for the period illustrated. This type of policy is best suited for individuals who need a permanent life insurance policy but are not concerned with cash value accumulation. 3. Variable Universal Life Insurance- Variable universal life insurance is a permanent insurance policy that builds up cash value. The owner has the flexibility to increase or decrease premium payments. The death benefit will be paid if the insured dies any time as long as there is sufficient cash value to pay the costs of insurance. The policy allows the owner to invest the cash value in variable subaccounts. The policy value will increase or decrease based on the performance of the subaccounts selected. This type of policy is best suited for individuals who need permanent insurance coverage but would like to grow and access the cash value of the account through potentially tax-free loans and/or distributions.* 4. Whole Life Insurance- Whole life insurance is a permanent insurance policy that builds cash value based upon a set schedule. The exact cash value of the policy is known for each policy anniversary. If a loan or withdrawal is taken from the policy the cash value and death benefit will decrease. Whole life insurance policies may also pay dividends which helps to increase the cash value of the policy. This type of policy is best suited for individuals who need permanent insurance coverage and who may want to accumulate tax-deferred savings. Michael C. Wilson, Advisory Representative. *Securities offered through H.D. Vest Investment Services sm, Member SIPC. Advisory Services offered through H.D. Vest Advisory Services SM Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value Donnelly-Boland and Associates is not a registered broker/dealer or independent investment advisory firm. Continued on page 6 Page 5

6 How Cost is Determined Insurers use rate classes, or risk-related categories, to determine premiums. A few of the elements of the traditional rate classes are: Standard: Good health, average cholesterol, relatively low-risk lifestyle Preferred: Very good health and family medical history, low cholesterol, low-risk lifestyle Super-Preferred: Excellent health and family medical history, very low cholesterol, low-risk lifestyle The rate class is determined by a number of factors including overall health, family medical history and lifestyle. Tobacco use would increase risk and therefore cause the premium to be higher than that of someone who doesn t use tobacco. Coverage Amount The amount of insurance each individual needs varies depending on their unique situation. Call me to make an appointment to learn more about your particular situation. Life insurance is the foundation of an individual s overall financial plan. No matter how much financial planning someone has completed, it could all be for naught with the death of a family member. Schedule an appointment today to learn more about your options and ways to plan for your family and loved ones. Administering Employee Benefits By Jenna Hoover HR Assistant jhoover@donnelly-boland.com ext One of the most appealing employee benefits is a 401(k)* plan. Companies who offer great employee benefits are often the companies who keep their employees working for them. And having a 401(k) plan may even attract top talent to your company. Donnelly-Boland and Associates believes in offering an exceptional 401(k) plan to employees. After all, this will be what many employees will rely on for a large portion of their retirement. A good 401(k) plan will give employees the incentive to stay with your company until they are ready to retire. Do you know if you are offering the best plan possible? Are your employees aware of what their options are? Or perhaps you are not even offering a 401(k) plan at all. Regardless of your situation, let us help you figure that out. We can help develop, implement, and administer your 401(k) plan. Whether you need help with daily administration of your existing plan, want to improve or refresh your existing plan, or would like to start from scratch and create a plan, we can assist. We can help you coordinate and administer your enrollment for newly eligible employees. We can even take care of managing the distribution and collection of paperwork, writing procedures, and coordinating changes for payroll. We also believe in the importance of employees understanding their benefits. A benefit plan is not a benefit if your employees don t understand it or utilize it. We can help you educate your employees on what you have to offer! We can conduct meetings with employees to explain the plan, and changes that may occur from year to year. If you'd like to learn more about how you can help your employees, we can consult with you on how to create a more desirable plan, or how to make sure your employees are aware of what you already have to offer! Your employees are the most vital asset of your business and need to know all of their options with your company! Kevin P. Boland, Fay K. Boland, Susan E. Levi, and Michael C. Wilson, Advisory Representatives. Dominick Claudio, Registered Representative. *Securities offered through H.D. Vest Investment Services sm, Member SIPC. Advisory Services offered through H.D. Vest Advisory Services SM Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value Donnelly-Boland and Associates is not a registered broker/dealer or independent investment advisory firm. Page 6 Client Connection

7 About Us Donnelly-Boland and Associates, a certified woman-owned business enterprise, is a CPA and management consulting firm that provides an array of professional services including accounting, financial services, government and nonprofit consulting, human resources, and taxes. We have extensive experience in providing these services to governments, nonprofits, individuals and service businesses. Donnelly-Boland and Associates was incorporated in 1992 and is headquartered locally with offices in Baldwin, Brentwood, and Waynesburg as well as an office in Orlando, FL. We assist a variety of organizations, large and small, on both an interim or more permanent basis. The Value of Proven Results We serve every client with a depth of resources and the highest level of expertise, yet offer the personal attention and accessibility that builds strength and trust. We ve proven it s possible to offer comprehensive accounting, financial services, government and nonprofit consulting, human resources, and taxes by top-notch professionals without sacrificing value. Let Donnelly-Boland and Associates be the breath of fresh air you need to find temporary or long term solutions, project assistance, or a different perspective. Our owners and many of our employees are not just accountants, they are business owners and entrepreneurs themselves and have confronted many of the same challenges you face every day. Feel assured that your financial information is accurate, precise and always available in a timely fashion. Now you ll have the time you need to focus on the growth and success of your business or organization. Offices Baldwin 2801 Custer Avenue, Suite G Pittsburgh, PA Phone (412) Fax (412) Brentwood 3730 Brownsville Road Pittsburgh, PA Phone (412) Fax (412) Orlando Hartford Run Orlando, FL Phone (412) Fax (412) Waynesburg 69 S. Washington Street Waynesburg, PA Phone (724) Fax (412) Page 7

8 The Hough Building, Suite G 2801 Custer Avenue Pittsburgh, PA 15227