Could You Create Your Own Pension Plan?

Could You Create Your Own Pension Plan?

SBOs are taking a new look at old-school defined benefit plans.

2013 new end of july 4th 1574

Contrary to popular belief, classic pension plans have not disappeared. Corporations have mostly jettisoned them, but highly profitable small businesses are giving them a second look. Why are small business owners deciding to adopt old-school, employer-funded retirement plans?

The tax breaks attached to a defined benefit plan may be substantial. In fact, if these plans are funded with insurance contracts or guaranteed insurance products, plan contributions made by the owner become tax-deductible for the business.1

There is no cap on how much you can save. IRAs, 401(k)s, and SEPs all have annual contribution limits. Traditional employer-funded pension plans do not. Business owners have the potential to accumulate millions for the future through such a vehicle.

For the record, the IRS does limit the yearly retirement income that a participant in a defined benefit plan may receive. In 2017, the pension benefit resulting from such a plan may not exceed a) $215,000 or b) 100% of the participant’s average compensation across his or her three highest-paid consecutive years of service.2

If you are earning well into six figures and you are 45 or older, you may have entered the “sweet spot” when it comes to defined benefit plans. You will presumably be in your peak earning years, and yet you may need to accelerate retirement savings. A defined benefit plan offers you the possibility to do just that.

What are the downsides? Cost and complexity. Actuaries have to be involved (and paid) when you have one of these plans; you need an actuary to perform regular and annual calculations and valuations to see that the plan is being properly funded. In addition, the pension benefits need to be insured through the federal government’s Pension Benefit Guaranty Corporation (PBGC), and in exchange for that service, the business must pay the PBGC annual premiums.2,3

An actuary must determine the annual employer contribution amount needed to fund the plan (typically adjusted yearly in light of investment performance) and the actuarial formula used to make contributions per worker. The business must fund the plan annually, regardless of how well it is doing.4

What businesses are bad candidates for defined benefit plans? If you have a small firm with ten or more employees, or if most of your employees are older or high-salaried, these plans may be a poor choice. That is because the employer contributions could be very expensive, even if you opt for vesting.1,3,4

What businesses are good candidates? Accounting, consulting, and medical practices are often good fits for these plans; seeing how many baby boomers have elected to continue working as consultants, you may see interest rising in them during the coming years.1,3,4

GREG OLIVER USA 0970709[70979[7979[79[070709000
1 - [12/20/16]
2 – [10/28/16]
3 – [3/31/16]
4 – [10/16]



Your deadline is April 18, 2017

Your deadline is April 18, 2017.1


2016 may be over, but you can still make your 2016 IRA contribution! Your deadline is April 18, 2017.1

You can put up to $5,500 into your IRA for the year 2016. If you were 50 or older in 2016, the limit is $6,500. Those limits are for total IRA contributions – so if you have multiple IRAs, that is the maximum you may contribute to all of them for 2016.2

Make sure you make your 2016 contribution by the deadline! Call, text, or email us – we can help you arrange it with one convenient appointment.

Yours truly,


1 – [12/8/16]
2 – [12/22/16]

Is Women’s Wealth Growing Faster Than Men’s Wealth?

Is Women’s Wealth Growing Faster Than Men’s Wealth?

One study says yes. Two major factors may be influencing the trend.


Picture the women of the world growing wealthier. It’s happening right now. Research from the Boston Consulting Group affirms this development. BCG, a leading business strategy advisor, says that as the world grew 5.2% wealthier between 2015 and 2016, women’s wealth grew 6.6%. In total, women own about $39.6 trillion in assets worldwide, and possess a 5% greater share of global wealth in 2016 than they did in 2011.1

What are some of the reasons behind this shift? One reason is that more women are becoming successful business owners. Census Bureau data from 2012 (the most recently available year, at this writing) shows women owning 36% of U.S. businesses, a 30% leap from the levels of 2007. As the ranks of middle market companies rose 4% from 2008-2014, the number of women-owned or women-led middle market firms soared by 32%.2

This has all taken place even though female entrepreneurs typically start a business with 50% less money than their male peers, according to research from the National Women’s Business Council. Perhaps most impressive has been the growth of businesses owned by Latina and African-American women. American Express OPEN found that from 1997-2015, the number of U.S. firms owned by Latinas increased by 224%. Simultaneously, the number of businesses owned by black women rose by 322%. African-American women started up companies at six times the national average during those 18 years.2,3

Beyond the business world, there is a second major reason for the increased net worth of women. They are acquiring or inheriting significant wealth from parents, spouses, or relatives, some of whom are millionaire baby boomers or members of thriving business-class households in emerging economies.1

In reference to the latter phenomenon, the net worth of women who live in Asia-Pacific nations other than Japan has risen by an average of 13% a year since 2011. Globally, assets under management owned by female investors grew 8% per year in that time.1

The BCG white paper projects that women may grow even wealthier by 2020. It forecasts that by then, women will control $72.1 trillion of assets around the globe, thanks to their collective wealth increasing by about 7% a year.1

1 - [6/7/16]
2 – [1/6/16]
3 – [3/4/16]

Is the Fiduciary Standard a Plus for Investors?

Is the Fiduciary Standard a Plus for Investors?

2007 Stress out ladt look at computer 2007 pic


Will it make a difference in the quality of the advice they receive?


Next year, the Department of Labor is scheduled to introduce new rules regarding retirement planning. Under these rules, any financial services industry professional who makes investment recommendations to workplace retirement plan participants or IRA owners in exchange for compensation will be considered a fiduciary.1

What does that mean? It means that this person has an ethical and legal duty to provide advice that is in your best interest.1

Many investment and retirement planning professionals have reacted to the DoL’s move with “We already do that.” After all, the suitability standard – something very close to a fiduciary standard – has been in place in the financial services industry for decades, and numerous financial services professionals already serve their clients as fiduciaries.

Detractors think the new rules amount to overkill, and they argue that an-across-the-board fiduciary standard will not make a difference in the quality of retirement planning or investment advice that retirement savers receive. The legal implications of the new rules may send retirement planning fees higher, and another effect might be that fewer retirement savers have access to these services.2

So, what positive difference could a fiduciary standard make? It could lessen the potential for conflicts of interest creeping into an advisor-client relationship.

The suitability standard emerged in the brokerage industry decades ago. It guides a financial services professional to recommend only investments that are “suitable” for a particular client, given his or her age, income, goals, and net worth.

The DoL sees a shortcoming in the suitability standard. Suppose there are multiple “suitable” investments that a retirement planner could recommended to a retirement saver (a common occurrence). Under the suitability standard, what is to prevent a retirement planner from suggesting and recommending the investment that could result in the most compensation for him or her, over the others? What if the alternate investment options are never mentioned? If this sort of thing happens, is the investment recommendation being made truly one in the client’s best interest?

In theory, the installation of a wide-ranging fiduciary standard takes the potential for conflicts of interest out of retirement planning. It also encourages even more retirement planners to charge fees for services, rather than earning some or even all of their incomes from commissions.

This encouragement will likely sit well with most investors, who naturally want less potential for conflict of interest. It is also sitting well with many retirement planners. While exemptions to the rules can be made and while the rules will not apply to existing investment assets, the implementation of a broad fiduciary standard for retirement planning is good news and reduces potential dissonance in the relationship between the retirement planner and the retirement saver.1

1 - [4/8/16]
2 – [4/7/16]

What to Do Financially When a Spouse Dies

What to Do Financially When a Spouse Dies
Steps to see that financial matters remain in good order.


When a spouse passes away, the emotion and magnitude of the loss can send our lives reeling. This profound change can also affect our finances. All at once, we have a to-do list before us, and the responsibility of it can make us feel pressured. With that in mind, this article is intended as a kind of checklist – a list of some of the key financial matters to address following the death of a spouse.

The first steps. These actions should come first. Some of these steps do require locating some documentation. Hopefully, your spouse kept these documents where you can easily find them – either at home, in a safe deposit box, or in an online vault.

*Contact family members, friends, and your spouse’s employer to tell them of your spouse’s passing. (As a courtesy, your spouse’s employer should put you in touch with the person overseeing its employee benefits plan or human resources department.)

*If your spouse owned a business, check to see what plans are in place for its short-term continuation. Will a partner or key employee take the reins for the time being (or for the long term) as a result of a defined succession plan?

*Arrange payment for funeral expenses.

*Gather/request as many records as you can find to document your spouse’s life and passing – birth and death certificates, a marriage certificate or divorce decree (if applicable), military service records, investment, insurance and tax records, and employee benefit information (if applicable).

The next steps. Subsequently, it is time to talk with the legal, tax, insurance, and financial professionals you trust.

*Consult your attorney. Assuming your spouse left a will and did not die intestate (i.e., without one), that will should be looked at as a prelude to the distribution of any assets and the settlement of the estate. His or her written wishes should be reviewed.

*Locate your spouse’s insurance policy and talk to the affiliated insurance agent. Notify that agent of your spouse’s passing; he or she will work with you to a) get the claims process going, b) help you reevaluate your own insurance needs, and c) review and, perhaps, alter beneficiary designations.

*Notify your spouse’s financial advisor and, by extension, the financial custodians (i.e., the banks or investment firms) through which your spouse opened his or her IRAs, money market funds, mutual funds, brokerage accounts, or qualified retirement plan. They must be notified, so that these funds may be properly distributed according to the beneficiary forms for these accounts. Please note that the beneficiary forms commonly take precedence over bequests made in a will. (This is why it is important to periodically review beneficiary designations for these accounts.) If there is no beneficiary form on file with the account custodian, the assets will be distributed according to the custodian’s default policy, which often directs assets either to a surviving spouse or the deceased spouse’s estate.1,2

Survivor/spousal benefits. These important benefits may help you to maintain your standard of living after a loss.

*Contact your local Social Security office regarding Social Security spousal and survivor benefits. Also, go online and visit

*If your spouse worked in a civil service job or was in the armed forces, contact the state or federal government branch or armed services branch about how to file for survivor benefits.

Your spouse’s estate. To settle an estate, several orderly steps should be taken.

*You and/or your attorney need to contact the executor, trustee(s), guardians, and heirs relevant to the estate, and access the appropriate estate planning documents.

*Your attorney can also let you know about the possibility of probate. A revocable living trust (or other estate planning mechanisms) may allow you to avoid this process. Joint tenancy and community property laws in many states also help.3

*The executor for the estate should obtain an Employer Identification Number (EIN) from the IRS. Visit:,,id=102767,00.html

*Any banks, credit unions, and financial firms that your spouse had a financial relationship with, should be notified of his or her death.

*Your spouse’s creditors will also need to be informed. Any debts will need to be addressed, and separate credit may need to be established for you.

Your own taxes & investments. How does all this affect your own financial life?

*Review the beneficiary designations on the IRAs, workplace retirement plans, and insurance policies that are in your name. With the death of a spouse, beneficiary designations will likely have to be revised.

*Consider your state and federal tax filing status. A change in status may significantly alter your tax picture.

*Speaking of taxes, there may be tax implications surrounding any charitable gifts you and your spouse recently arranged or planned to make. (If a deceased spouse leaves property to a surviving spouse or a tax-exempt charity, that property is exempt from federal estate tax. Any property gifted by your late spouse prior to his or her death is not subject to probate.)3,4

*Presuming you jointly owned some assets, it is time to retitle them. In addition to real estate, you may have jointly owned bank accounts, investments, and vehicles.

Things to think about when you are ready to move forward. With the passage of time, you may give thought to the short-term and long-term financial and lifestyle consequences of your spouse’s passing.

*Some widowed spouses ponder selling a home or moving to be closer to adult children in such circumstances, but this is not always the clearest moment to make such decisions.

*Your own retirement planning needs. Certainly, you had an idea of what your retirement would be like together; to what degree does this life event change that idea? Will potential sources of retirement income need to be replaced?

*If you have minor children to take care of, will you be able to sustain the family lifestyle on a single income? How do your income sources compare to your fixed and variable expenses?

*Do you need to address college funding in a new way?

*If your spouse owned a business or professional practice, to what extent do you want (or need) to be involved in it in the future?

This article is intended as a checklist – a list of the important financial considerations to address in the event of a tragedy. If you find yourself referring to this article now, or you decide to keep it in a drawer or on your computer for some unforeseen time in the future, please know that I am here to help you and assist you as you seek answers to your questions as well as a measure of financial equilibrium. Simply call or email me.

GREG OLIVER 513 860 7934

1 – [1/14/16]
2 – [5/14/16]
3 – [10/12/16]
4 – [10/12/16]