When to Call Your Financial Advisor

If you’re experiencing a major life change of any kind, or facing a crucial financial decision, it’s a good idea to make an appointment with your financial planner.

Here are some examples of major life passages when you may need some good financial advice – and some action items to bring up:

  1. Marriage.At a minimum, it’s critical to have life insurance in place to protect both spouses. Many planners also assist with budgeting tools, provide advice about spousal communications concerning money, and can help you develop a long-range financial plan together, as a couple. Other critical items to discuss include disability insurance, debt/credit management and starting retirement savings.
  2. A new baby.A pregnancy or new baby means it’s time to update your life insurance, and name a new beneficiary. Often, you’ll set up an UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act) trust to hold assets on your child’s behalf until he or she reaches adulthood. You’ll also want to name a custodian to make financial decisions and to control the assets in the trust.

It’s also an excellent time to begin planning for college by setting up a Section 529 Plan, a Coverdell Education Savings Account – or in some cases using cash-value life insurance strategies to accumulate assets that don’t get counted against your child for need-based financial aid purposes.

  1. Starting a business.An experienced financial advisor can help you separate your business assets from your personal assets, and set up small business retirement and employee benefit plans of all kinds. Your insurance professional can ensure you have vital coverage and protections in place – such as key person life insurance, disability insurance, general liability, and employment practices liability.
  2. Retirement.Your advisor can help you make critical decisions about Medicaid and Medicare that may affect the rest of your life. Make your appointment a few months before you turn 65, so that you won’t miss your Medicare and Medigap Open Enrollment windows.

    It’s also time to ensure your assets are structured to provide an income, and to minimize risk and needless taxes. Moreover, it’s time to review your will, power-of-attorney documents and your advanced health care directive.

  3. Getting a promotion.A promotion usually means more money – and also more decisions. You may be in a higher marginal tax bracket, for example, which may affect how you choose to save and invest. You may want to increase disability income and life insurance, or discuss protecting yourself and your family against high long-term care costs.

    Your advisor can help you prioritize your savings, investments and spending. If you’re changing jobs, you need to decide what to do with that old 401(k).

  4. Receiving a windfall.Your advisor can help you structure your windfall to minimize taxes, as well as help you invest the windfall as productively as possible. They may also be able to talk you out of some bad ideas!
  5. Hitting age 70½.If you have tax-deferred retirement assets or annuities, you need to look at required minimum distributions. It’s also a good time to double check on your will, advanced health care directives, power of attorney and other financial documents. Some people discuss passing wealth on to heirs and to charities via gifting, trust and life insurance strategies.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.


Hiring a Contractor? Make Sure They’re Insured

When you hire contractors, electricians or other home repair specialists, you may shop around on price and go with the least expensive one.

But if a contractor comes in with a bid that is much lower than the competition, it could mean they are cutting corners – and one of the top ways for them to do this is in the insurance they carry, or are supposed to carry.

Consider these scenarios:

  • An electrician’s faulty work starts a fire that guts your kitchen and dining room.
  • A contractor’s worker breaks a leg while working on your home.

If either of these events occurs and the contractor doesn’t have insurance, you’ll be on the hook for the damages.

Even if a contractor tells you they are insured and bonded, you need to verify that it’s true. After all, they could be stretching the truth by just having their vehicle insured, and they could be bonded for another project they have worked on in the past.

While your homeowner’s policy provides some liability coverage, it may not cover all the costs in an especially costly event.

The first thing you should do when hiring a contractor is to ask to see their certificate of insurance. If they don’t have it, they can call their insurance agent and ask them to send it to you. A certificate doesn’t provide all the insurance details, but it’s a good start.

However, if you are having major work done on your home, you need to delve further. You should look for the following:


Coverages on certificate of liability insurance

Current dates – Check to see that the coverage is current. If it’s past the policy expiration date, then it doesn’t tell you if they currently have insurance.

General liability coverage – The contractor should have this insurance, which covers bodily injury to you or third parties and property damage arising out of their operations. Check also to see if their coverage includes “products and completed operations,” which covers damages that may arise out of their finished work. If this is not included, then the contractor’s liability ends when they finish the job.

Workers’ compensation – This coverage is mandatory for all employers, except under very rare circumstances. It covers medical expenses and lost wages if an employee is injured on the job. If the contractor doesn’t have this coverage, you could be on the hook for these costs.

Sometimes small contractors will tell you that they don’t need to have it, but that is typically true only if they have no employees and it’s a sole proprietorship.


Other coverages to look for

Builder’s risk – If you are building a new home or adding onto your home, this provides protection for the new construction and building materials while it is being built.

While most contractors will buy this coverage, some of them will ask the homeowner to do so. Make sure you are clear who should buy this coverage and, if it is the contractor, make sure you ask for proof that it’s been purchased.

Fidelity bonds – The most common type of bond you could encounter provides protection if a contractor’s workers steal from you. While better than nothing, actually getting paid from these bonds can be somewhat difficult.

It’s probably a better bet to lock up or remove your valuables when contractors are working in your home. Although you have hopefully picked a contractor you trust, he or she is probably not going to be the only one that enters the job site.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Identity Theft Goes Beyond Online: Shred Docs

Much has been made of people’s identities being stolen through cyber attacks and other online means, but the majority of identity thefts are still being carried out the old-fashioned way by criminals finding documents bearing social security numbers and other personal information.

Identity theft is a growing problem with consumers reporting more than 490,000 incidents in 2015, up an astounding 47% from the year prior, according to the Federal Trade Commission.

Certainly, a good reason for this increase is online data theft, but a surprising number of Americans are still having their personal information stolen because of improper disposal of paper documents.

The best way to combat this kind of identity theft is by regularly shredding paper documents when it’s time to dispose of them. But what documents should you shred and which ones can you just toss in the recycling bin? Here are our tips:

Anything containing your social security number – This is the number one bit of data that identity thieves want to get a hold of. With your Social Security number they can open checking accounts and credit cards – and sometimes even take out loans.

Your social security number can be found on a number of documents, including:

  • Pay stubs
  • ax returns
  • Medical bills
  • Health insurance cards
  • Loan statements

Bank and mortgage statements – First off, you should keep these statements for up to seven years for tax audit purposes. After that time, there is no need to keep them and you should dispose of them.

These documents should be shredded. While they sometimes may contain your social security number, they do contain your bank account statements and crafty scammers can produce bogus checks that they can use to cash checks from your accounts.

Utility and other bills – Utility bills may contain personally identifiable information. Experts recommend that you keep these bills no more than a year. To avoid having your data exposed, you should then shred them.

Anything with your signature – It’s highly recommended that you shred any documents that have your signature on them.

That’s because a clever criminal can learn to copy your signature, and combined with other personally identifiable information they get their hands on, they could open accounts in your name and do real damage to your credit.

Receipts – While you may want to keep some receipts for your tax records, any others you don’t need to shred and can toss into the recycling bin.

Credit card receipts don’t contain your entire credit card number, so you don’t run the risk of someone gaining access to your card should they come across these receipts.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Why Every Workplace Should Use Drug Tests and Have Strict Policies

Millions of people use illegal drugs every year, and experts estimate that about 60 percent of the world’s illegal drugs are consumed by Americans. A survey showed that almost 23 million Americans reported using marijuana more than three times per week. In addition to this, more than 15 million Americans abuse alcohol. Almost 75 percent of illegal drug users and alcohol abusers are actively employed today. Studies have shown that drug use causes both physical and mental impairments, which can be disastrous in the workplace. In dangerous industries such as construction and mining, studies conducted by experts found that drug use was even more common.

In addition to putting their businesses at risk for fatal or serious accidents, employers who hire drug users may wind up paying for their mistakes. The following are some disadvantages about hiring drug users:

– They perform their work poorly.

– They usually change jobs frequently.

– They often file workers’ compensation claims and collect benefits for longer periods.

– They are not very productive.

– They usually arrive late or call in sick.

– Their negligence often results in lawsuits.

By forming a solid plan against drugs and alcohol abuse, employers can help reduce their own risks. Every employer should require drug testing for new hires as a condition of employment. Random drug testing during employment is another way to discourage drug users from applying in the first place. This is especially important for larger businesses, and about 70 percent of big businesses already have these plans in place. Some small businesses may not be able to afford extensive testing and screening plans. However, some businesses may be able to find solutions by searching and using outside resources. Since drug users are starting to target small businesses they know do not have such plans in place, it is in these business owners’ best interest to form screening programs. The benefits of having such a plan include the following:

– Employees have better attitudes about work.

– There is not as much theft in the workplace.

– There are less accidents in the workplace.

– Employers have lower staff turnover rates.

– Drug-free workplaces are more productive.

– Employers have less insurance costs.

– Employees enjoy a safer workplace.

Overall, drug programs can save money, so they are worth the time and money to implement. To create an effective program, employers should outline their expectations for employees. A plan should also outline how offenses and infractions will be handled. Some states have specific laws regarding employees and drug addiction, so it is important to keep applicable laws in mind. Whenever possible, an ideal program should include a no-tolerance policy. Employers should also outline what they consider to be illegal and intolerable drugs. Some policies may include designated smoking areas for cigarette users, and employers should always make it clear that alcohol use shortly before or during work is strictly prohibited.

With so many people struggling to fight their own personal battles today, it is important for employers to also show that they care about employees. While it is still good to have a zero-tolerance policy for drugs or alcohol, employers should make provisions in their programs for assistance to struggling workers. For example, a worker who comes to his boss to admit a drinking problem at home may not be violating any rules but may be in danger of violating them. If an employee honestly expresses concern, it is important for employers to provide information about alcohol treatment programs. Some workplaces may also do the same for people who have struggled with addiction in the past. Many workers do not know there are assistance programs available, so this information should be repeated frequently in the workplace.

Employers should also know how to identify possible signs of drug and alcohol abuse. Workers who seem depressed, angry or withdrawn should be monitored. If a worker is late frequently or calls in sick, these may also be signs to consider. Employees who seem anxious, distracted or paranoid may be using drugs. The key idea employers should remember is to look for noticeable changes in all workers. Employers can also offer incentives for employees maintaining a drug-free workplace.

Research Shows Decline in Retirement Confidence among Baby Boomers

Researchers recently found that the Baby Boomers generation is showing a lack of confidence regarding retirement plans. They noted that this trend started in 2011 when they began tracking this group’s views and expectations. Between the two points in time, that generation’s confidence dropped from nearly 45 percent to 35 percent. Although their subjects’ confidence keeps falling, researchers said there were some improvements with important issues such as the number of people who were saving for retirement and the total amount of their savings. In addition to that, they said this generation also showed a great interest in setting savings goals and target retirement ages.

Experts said that one of the most notable findings in their research was the declining number of people who were unsure about what age they would retire. The number decreased to half of what it originally was, and researchers said their findings showed people were retiring later in life. However, they were pleased to see that their survey subjects were looking at the most important elements of retirement and taking steps to develop plans of action as well as looking at retirement more realistically.

Although this generation’s economic outlook is not good, the people are showing hope that their finances will recover and improve. More than 40 percent of participants said they expected improvements within five years, which was up from slightly more than 30 percent one year prior to that. Researchers also found that about 25 percent of participants put off plans to retire. Nearly 30 percent said they would retire after reaching the age of 70. About 10 percent had already reported withdrawing money from retirement plans within the last year. Another 80 percent said they had retirement savings accounts. Nearly 50 percent who had savings accounts had more than $250,000 set aside.

More than 50 percent of Baby Boomers reported having a savings goal, which was a 50 percent increase from the prior year’s tally. From the amount of people with retirement savings goals, more than 75 percent were factoring in health care costs. About 75 percent of this generation said tax deferral was important for retirement investments. Slightly less than 40 percent said they would not be as likely to save if there were no tax incentives or if tax incentives were reduced. Those who use the services of financial advisers are two times as likely to be confident about retirement planning as those who do their own planning.

The survey was based on 800 participants who were between the ages of 51 and 67. While the results showed that seniors improved in this area, it is still important for everyone to ensure they are adequately prepared for retirement. The first step is developing a solid plan, so contact ACBI to discuss any concerns.

Tips for Business Owners to Prevent Burglaries

About 90 percent of preventing burglaries consists of physical security measures. If a business or business complex is locked, it is harder for criminals to enter the property. They are less attracted to it because of the difficulty of breaking in, the noise they may cause, the time it takes to break in and the likelihood of getting caught. In most cases, burglars will move on and look for an easier target. By thinking like criminals would, business owners can go over the details of their businesses and look for any possibilities of easy entrances or other opportunities for criminals. To improve the chances of finding any weaknesses, go over the blueprints physically. Also, follow these tips.

Use deadbolt locks. For all entrance locks, use deadbolts. This includes gates as well as doors. Make sure they are double cylinder and have movable collars with the ability to recess into the door. There should be a throw of at least one inch that contains an insert with hardened steel, and a latch guard should protect it. For current safety requirements, check with the local fire department.

Use steel padlocks. When it is necessary to use padlocks, make sure they are made of case hardened steel. The locks should always be locked and should be mounted on bolted hasps. This will help prevent exchange. If there are serial numbers, scratch them off with a file so burglars cannot have duplicate keys made.

Lock the windows. Many people overlook the windows, but they should always be locked. Use secure locks and burglar-resistant glass if possible.

Use solid doors. Make sure all doors are made of solid materials. They should be secured with heavy crossbars and lining made of metal. Door jams should be solid, and any hinges that are exposed must be pinned to keep them from being removed.

Keep good visibility. Make sure the windows are clean and not obstructed. If there are any expensive items, keep them away from windows when the business is closed.

Optimize the lights. There should be optimum visibility inside and outside of the business. It is best to install vandal-proof protection over the lights. Ensure the whole perimeter of the property is well lit. If there are cameras, this is especially important as most do not have the best display quality at night.

Keep the cash register safe. This should be kept in plain sight. If it is visible from outside, make sure it is empty when leaving, and leave it open so would-be burglars know it is empty.

Use an alarm system. Have it installed by a professional monitoring company. Update and check the system regularly, and be sure to note its presence with signs on the property.

401(k)s for the Small Business Owner

Businesses have to compete for talent. Even in down economies, the best employees always have options. One of the things employers must do to keep their best workers is offer them a good, robust retirement plan. That’s where the 401(k) comes in:

The 401(k) is a defined contribution pension plan that allows both employee and employer contributions. By offering a 401(k) plan to employees, you as the employer can provide a powerful retirement benefit at a fraction of the cost of funding a traditional defined benefit plan. Beyond a few basic administrative and setup costs, your only ongoing costs as an employer generally consist of whatever matching contributions you choose to make.

For tax year 2014, qualified employees may contribute up to $17,500. Those aged 50 and older can make additional “catch-up” contributions of $5,500. These limits are much larger than those available for IRAs and traditional IRAs, therefore allowing participants to set aside more money on a tax-advantaged basis than they otherwise could manage on their own. *

The Tax Advantage

Contributions to 401(k) plans are made pre-tax via salary deferral. Balances grow tax-deferred. There are no income taxes due on interest or dividends, and no capital gains taxes due on growth. Money is only taxed upon withdrawal. If the participant makes withdrawals prior to age 59½ the IRS generally charges a 10 percent excise tax. The employer must also withhold 20 percent of the amount withdrawn against taxes.

*Note: In some circumstances, the allowable contributions of highly-compensated employees may be lower – especially if management does not get adequate participation among rank and file employees. Congress designed the 401(k) to benefit all employees – not to be a private preserve for management. It is therefore in the best interests of management to encourage broad participation in the plan. The more workers participate, the more highly-compensated management and owners can set aside within their own 401(k) accounts.

Sole Proprietorships and Couples

If you are the sole employee of your corporation or LLC, or you own and operate your company with your spouse, you may consider the Solo 401(k). These are specially designed to be realistic, workable and efficient solutions for ultra-small businesses with few or no employees other than the owner. Sometimes called the “Individual 401(k), or “One-Participant 401(k)s.”

Like other 401(k) plans, these plans allow business owners to set aside up to $17,500 of their own salary via salary deferral as employees.

Additionally, the employer can contribute an additional 25 percent of compensation as defined by the plan.

Self-Employed Individuals

It is also possible for self-employed individuals to create a 401(k) plan to cover themselves as well. In this case, however, you must also calculate the effect of self-employment tax on your allowable contributions.

For self-employed individuals, your compensation for the purposes of calculating maximum allowable contributions is your net self-employment earnings after subtracting your contributions for yourself and one-half of your self-employment tax for the year.

For more information on 401(k) plans for small businesses, including Solo 401(k)s, see IRS Publication 560 – Retirement Plans for Small Business

IRS Announces More Generous Retirement Contribution Limits for 2015

These days, it’s pretty rare that taxpayers get a break. But they’re getting one for tax year 2015: The Internal Revenue Service announced a series of higher allowable contribution limits and relaxed income rules that will allow many taxpayers to set aside more money for retirement – on a tax-advantaged basis.

Employer-Sponsored Plans

The IRS is raising elective contribution limits for employee participants in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan. Specifically, allowable employee contributions, via salary deferral, will increase from $17,500 to $18,000 as of 2015. Additionally, allowable ‘catch-up’ contribution limits for those plan participants ages 50 and older are also increased from $5,500 to $6,000.

Additionally, total contributions – including the employer match, to a defined contribution plan, such as the SEP IRA, are increasing to $53,000 in 2015, up from $52,000 this year, or 20 percent of compensation (for self-employed individuals) or 25 percent of compensation (for employees), whichever is less. (The difference is due to the effect of the self-employment tax on taxable income.)

The total dollar amount that can be considered when calculating allowable employer-sponsored defined contribution retirement plans is also increasing next year, from $260,000 to $265,000.


Contribution limits for IRAs will remain unchanged for 2015. However, the IRS is increasing the thresholds beyond which IRA contributions become non-deductible, as follows:

For those who participate in an employer’s plan

Deductions for IRA contributions for individuals and couples will be phased out after AGI (adjusted gross income) reaches $61,000, and gradually phases out until AGI reaches $71,000. That is a $1,000 increase from last year. For couples filing a joint return, the threshold rises by $2,000; allowable contributions phase out between $98,000 to $118,000 AGI. At higher levels, you cannot deduct your contributions. However, you can still contribute to an IRA on a non-deductible basis.

Consult your tax advisor for specific advice on how this may affect you.

For those not covered by a workplace plan 

For singles, Deductions are phased out when the couple’s AGI reaches $183,000 to $193,000, also an increase of $2,000 over 2014.

Roth IRA Income Limits Increasing

Income limits on Roth IRA contributions are going up in 2015, to the $116,000 to $131,000 range (for single taxpayers and heads of households, and to the $183,000-193,000 range for married couples. Both are increases of $2,000 over the previous year. If your income falls below these ranges, you can contribute up to $5,500 ($6,500 for those over 50). After that, your allowable contribution gradually falls as your AGI increases. Your allowable contribution reaches zero when it gets to the top of these ranges.

Retirement Savings Credit

The government is also loosening restrictions on qualifying for the Retirement Savings Credit – an incentive designed to encourage lower-income individuals to save money for their retirement security.

Here are the new AGI limits to qualify:

  • Married couples (filing jointly) $61,000
  • Heads of household: $45,750
  • Single taxpayers (and married couples filing separately): 30,500.

The changes come about as a result of the annual cost of living review that affects a wide variety of federal benefits, such as military base pay and Social Security benefits.

Creating a Solid Business Succession Plan

Business owners who are nearing retirement must think about forming a succession plan. Choosing a successor is not an easy process. There are many different factors to think about, and some owners may find that it is best to simply sell the entire business. However, choosing a good successor can be even more profitable, so it is worth considering.

Choosing A Successor Maintaining a good cash flow and keeping a stable balance sheet are two main goals all business owners have. Both can be an ongoing battle. Choosing a successor who is capable of keeping an optimal cash flow can be challenging. In some cases, business owners may simply be able to appoint a family member. However, those who do not have family members, or those who do not have family members interested in keeping a business, have the biggest challenges. It is best to devise a list of candidates. Identify each individual’s strengths and weaknesses. Another factor to consider is how important the business may be to the successor. Many family members feel that a business upholds the family name, so they may be less likely to sell it. However, a successor outside of the family may not feel the same way.

Determining The Business’ Worth Certified public accountants can perform an appraisal on a business or a share of a business. This puts a realistic dollar value on its worth. If a company’s value depends on public stock, the value of the owner’s interest is calculated using the current stock market values. As soon as a value is established, life insurance should be purchased by the business owner or all partners. If one partner dies, that individual’s life insurance benefit can be used to buy out his or her share of the business. It can also be equally divided among the surviving partners. These arrangements may be known as entity-purchase agreements or cross-purchase agreements. The term used is determined by the specific situation’s details.

Ways To Transfer A Business Cross-purchase agreements allow each partner to own a policy for every other business partner. Each partner is both a beneficiary and an owner for the same policy. By paying the benefit to all partners in equal sums, there are no quarrels over unfair percentages. However, there are limits for this type of agreement’s practicality. If there are more than 10 partners in a business, it does not make sense for each partner to have a policy for all of the others. In addition to this, there may be significant differences in underwriting requirements and terms for each partner’s policy. For example, if one partner is 30 years old and one is 60 years of age, their policies and costs would be different. In situations such as this, entity-purchase agreements are often used. Entity-purchase agreements are not as complicated. The business itself is the beneficiary, and there are separate policies for each partner. With this type of agreement, the partners’ equity is underwritten, and the business consumes all of the costs. If a partner dies, the benefit is paid solely to the business itself.

Having a business succession plan is a good idea. Creating one may seem like a hassle, but it is time well spent. Devising a succession plan ensures that an agreeable price is set for each partner’s share of the business. It also reduces the need for valuation after death because of pre-agreed prices. A succession plan can also help with prompt settlement of a deceased partner’s estate. Benefits are available immediately after death, and there are no time restraints or liquidity issues to deal with. This eliminates the possibility of having to sell the business or facing external takeover due to financial issues. These plans require solid preparation. It is important to seek the advice of a competent adviser. For more information about creating succession plans, contact ACBI.

Understanding Common Myths and Facts about Disabilities

There is a common myth that says disability insurance is not as important for women than men because they are less likely to become disabled. However, the truth is that the disability rate for women is growing faster than it is for men. In 2011, the percentage of female workers receiving SSDI benefits was over 55 percent more than the amount of people receiving them one decade earlier. The percentage of male workers who were receiving these benefits increased by only about 45 percent during that time frame. Researchers say that over 70 percent of households in the United States rely on two incomes, so it is imperative that both women and men obtain disability insurance if they have not already.

Another common myth is that people suffering from permanent disabilities can simply enroll in SSDI. At the time researchers conducted their survey, about 65 percent of SSDI applicants were initially denied following their applications for benefits. At the end of 2011, the average SSDI benefit payment was just over $1,000. For men, the average payment was a little over $1,200 monthly, and the average for women was just under $975 each month. For families who are faced with losing one income or the sole income, disability insurance can be the difference between not being able to pay for daily expenses and living comfortably.

One myth says that a person’s chances of becoming disabled are about one in 100. However, the truth is that about 30 percent of working Americans will become disabled before retirement. Employees often think the odds are small, but the reality of such a harsh income interruption could be devastating to them and their families. Another common myth is that most disabilities are related to work or happen on the job. Researchers say that about 90 percent of disabilities stem from accidents or illnesses that are not work related. This also means these disabilities are not covered by workers’ compensation. People tend to think that most disabilities happen due to accidents, but illnesses are the leading cause of disabilities in America.

People usually believe that most disabilities happen due to one-time sudden events that are catastrophic. Chronic illnesses are the most common cause of disability. Researchers say that less than 10 percent of all disabilities are the result of sudden accidents. Back problems, muscle pain, joint pain and bone disorders account for the majority of disability causes. Many people think that they can use vacation time or sick time to cover their absences in the event of a temporary disability. However, researchers say that benefits usually run out within a few weeks and also run out when people need money the most. In most cases, a disability will last three months or longer. To learn more about the effects disabilities have on finances and how to be properly insured against major losses, contact ACBI.