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Supporting Therapeutic riding for challenged Children and Veterans

Stirrups and Strides Charitable Event at Jumbolair of Ocala. December 2, 2017

Kevin Zylstra, CFP, friend and avid sailor of our Naples office joins Tom at “Jammin at Jumbolair” Charitable Extravanza.

Stirrups ‘n Strides is a 501 (c)3 non-profit organization Therapeutic Riding Center for challenged children and veterans.  Over 400 people attended this event celebrated a successful year of reaching out to those in need.

For further information you may contact Betty Gray at 352-427 3569 to learn more and consider what may be  on your heart today!

 

 

What is a SMA?

Also known as a SMA (“Separately Managed Account”), is a single investment account comprised of individual stocks, bonds, cash or other securities, tailored to achieve specific investment objectives.

Your portfolio manager oversees the investments according to your specific investment objectives and in an investment style with which you are comfortable.  Put simply, a SMA is for demanding investors who:
  • Seek the comfort of professional investment guidance and a heightened level of personal service
  • Still want to take an active role in their financial life
  • Desire the flexibility to invest in different strategies or styles, while seeking the liquidity and potential tax benefits that come from owning individual securities in separate accounts, versus mutual funds
  • May want a single fee to cover ALL account costs, including trading costs and performance reporting.
  • Low-cost, transparency and 24/7 online access

For those with more than $100,000 a SMA may be the smart way to manage portfolio assets, due to lower costs, greater tax efficiency and transparency.

Why the growth in Cash Balance Plans?

The Pension Protection Act of 2006 (PPA) is long and hard to read, but it played a crucial role in establishing cash balance plans as a viable and legally recognized retirement savings option. Before 2006, cash balance plans faced frequent legal challenges. Those bringing the suits argued that cash balance plans violated established rules for benefit accrual and discriminated against older workers. The rulings on these cases were inconsistent, and many business owners were reluctant to risk establishing a plan that just didn’t have firm legal footing.

The Pension Protection Act ended this uncertainty about the legality of cash balance plans. The legislation set specific requirements for cash balance plans, including:

  • A vesting requirement: Any employee who has worked for their company for at least three years must be 100% vested in their accrued benefits from employer contributions.
  • A change in the calculation of lump sum payments: Participants in a cash balance plan can usually choose to receive a lump sum upon retirement or upon the termination of employment instead of receiving their money as a lifetime annuity. Before 2006, some plans used one interest rate to calculate out the anticipated account balance upon retirement, but, when participants opted to receive an earlier lump sum, the plan called for using a different interest rate to discount the anticipated retirement balance back to the date of the lump sum payment. This could lead to discrepancies between the hypothetical balance of the account (as determined by employer contributions and accumulated interest credits) and the actual lump sum payout, an effect known as “whipsaw”. The PPA eliminated the whipsaw effect by allowing the lump sum payout to simply equal the hypothetical account balance.
  • Clarification on age discrimination claims: A cash balance plan does not violate age discrimination legislation if the account balance of an older employee is compared with that of a similarly situated younger employee (i.e. with the same length of employment, pay, job title, date of hire, and work history), and the older employee’s balance is equal to or greater than the younger employee’s.

There are, of course, many other points included in this lengthy piece of legislation, but the takeaway is this: the Pension Protection Act of 2006 removed the legal uncertainty surrounding cash balance plans and made them a much more appealing option for small business owners. The number of cash balance plans in America more than tripled after the implementation of the PPA. Additional regulations in 2010 and 2014 made these hybrid plans an even better option, and we anticipate that their popularity will continue to grow. There are thousands of high-earning business owners out there who can reap huge, tax-crushing benefits from implementing cash balance plan – they just have to know about them first.

The best charities to give to in the wake of Hurricane Harvey

Over the weekend, Hurricane Harvey slammed into the Gulf Coast, destroying homes and infrastructure in Texas, displacing tens of thousands of people, and killing at least eight. As many as 13 million people are under flood watches and warnings.

After landfall, officials ordered several Houston-area counties to evacuate, due to fears of more flooding. Experts are forecasting up to 50 inches of rain in and around Houston, making many homes inhabitable. An estimated 30,000 people will likely need to find refuge in shelters, since flooding will linger, according to The Washington Post.


People walk down a flooded street as they evacuate their homes after the area was inundated with flooding from Hurricane Harvey on August 28, 2017 in Houston, Texas. Getty Images


Victims in Texas and Louisiana will likely need millions of dollars in aid. On Monday, President Donald Trump said he believes Congress will act swiftly to provide funding to affected areas. Charities — both big and small — will also step in.

But not all charities are created equal. Charity Navigator, a nonprofit that has independently rated over 8,000 charities, compiled a list of some of the best organizations to donate to in the wake of Harvey. Its team considers several factors when giving a charity a score out of 100. These include program expenses (e.g. how much of the donations go straight to victims) and transparency (e.g. audited financials prepared by an independent accountant).

The charities that Charity Navigator recommends for Hurricane Harvey, along with their scores out of 100, are below.

Note: Right now, it is not clear whether all these organizations will spend 100% of donations received on Hurricane Harvey relief and associated expenses. But in past large-scale disasters, high percentages of donations have directly gone to victims.


St. Bernard Project — 93.66

Founded in 2006 after Hurricane Katrina, St. Bernard Project works out of a parish near New Orleans. After disasters, the organization rebuilds homes, advocates for recovery strategies, and advises policy makers, homeowners, and business owners about resilience.

Samaritan’s Purse – 96.32

Smaritan’s Purse is a nondenominational, Christian organization that provides spiritual and physical aid to people affected by disaster and poverty around the world. It focuses on helping victims of war, poverty, natural disasters, disease, and famine.

GlobalGiving — 96.46

Founded in 2003, GlobalGiving is a funding platform that helps people find causes they care about. Users select projects they want to support, make a contribution, and get regular progress updates.

Convoy of Hope — 96.46

Convoy of Hope is a faith-based nonprofit that works to fight hunger around the world. Founded in 1994, the Springfield, Missouri-based charity also responds to disasters.

All Hands Volunteers — 96.66

All Hands Volunteers works to address the long-term needs of communities affected by disasters. Over the last 12 years, the organization has enlisted over 39,000 volunteers who helped 500,000 people worldwide.

Americares — 97.23

Since its founding in 1979, Americares has provided more than $13 billion in aid to 164 countries, including the United States. It is headquartered in Stamford, Connecticut, and specializes in fighting ongoing health crises.

Direct Relief — 100

Direct Relief is California’s largest international humanitarian nonprofit organization. It provides medical assistance to help people affected by poverty and disaster in the US and around the world.


Other local organizations

  • Houston Food Bank
  • United Way of Greater Houston
  • Food Bank of Corpus Christi
  • Houston Humane Society
  • San Antonio Humane Society

These local charities have all received scores between 85 and 100, and work in the most heavily affected areas of Houston.

Sara Nason, a Charity Navigator spokesperson, told Business Insider that choosing between donations to a local or national organization is a matter of preference. The main thing to look for is that the charity is an established and highly-rated organization.

“Local organizations will continue to work in the community long after the disaster has happened, as they have an established presence in the community. National and international organizations deal with disasters at a large scale, with an established infrastructure and coordinated teams that specifically hold a skill-set for responding to crises,” she said in an email.

400% Top-line Deductions?

Despite the explosive growth and substantial tax benefits of cash balance plans, most Americans are unfamiliar with one of the best tax-deferred savings opportunities in existence. When combined with a 401(k) profit-sharing plan, cash balance plans substantially increase the contribution limits for retirement plans, sometimes increasing available top-line deductions by over 400%. This means that participants, particularly older contributors, can accelerate their retirement savings and simultaneously take advantage of significant tax savings.

Cash balance plans are classified as “hybrid” retirement plans: defined benefit plans (think traditional pension plan) that function like defined contribution plans (think 401(k)). Like a defined benefit plan, the ultimate benefit received is a fixed amount, independent of investment performance. The plan sponsor directs investments and ultimately bears investment risk. What sets a cash balance plan apart, though, is its flexibility and hybrid nature that makes its function appear similar to that of a 401(k).

When businesses choose to add a cash balance plan, they generally do so on top of an existing 401(k) profit-sharing plan. This allows high-earning employees to put away more money for retirement at a much faster rate while providing significant tax savings.

Those who stand to benefit the most from a cash balance plan include:

• Professionals with high incomes such as doctors, engineers, lawyers, orthodontists, etc.

• Business owners over 45 looking to substantially increase their retirement savings in the coming years

• Highly-profitable companies

• Business owners wanting to contribute more than the traditional 401(k) limits to their retirement while accruing substantial tax savings

For Americans earning over $400,000 per year, cash balance plans are a game-changer. With the potential for hundreds of thousands of dollars in annual tax savings, a closer look is well worth the time.

How do Cash Balance Plans differ from 401(k) plans?

Cash Balance Plans are defined benefit plans. In contrast, 401(k) plans are a defined contribution plan. There are four major differences between typical Cash Balance Plans and 401(k) plans:

  1. Participation – Participation in typical Cash Balance Plans generally does not depend on the workers contributing part of their compensation to the plan; however, participation in a 401(k) plan does depend, in whole or in part, on an employee choosing to make a contribution to the plan.
  2. Investment Risks – The employer or an investment manager appointed by the employer manages the investments of cash balance plans. Increases or decreases in plan values do not directly affect the benefit amounts promised to participants. By contrast, 401(k) plans often permit participants to direct their own investments and bear the investment risk of loss.
  3. Life Annuities – Unlike 401(k) plans, Cash Balance Plans are required to offer employees the choice to receive their benefits in the form of lifetime annuities.
  4. Federal Guarantee – Since they are defined benefit plans, the benefits promised by Cash Balance Plans are usually insured by a federal agency, the Pension Benefit Guaranty Corporation (PBGC). If a defined benefit plan is terminated with insufficient funds to pay all promised benefits, the PBGC has authority to assume trusteeship of the plan and begin to pay pension benefits up to the limits set by law. Defined contribution plans, including 401(k) plans, are not insured by the PBGC.

For more information, please contact us.