Tag: finance

ONE BIG BEAUTIFUL BILL AND How To Use Some Of The Strategies That Have Come Out Of The Bill.  

by YOUR BUSINESS WORTH, posted in Uncategorized

Thomas J. Perrone, CLU, CIC

Ed Pratesi, the Managing Director of Valuation & Transition Strategies, LLC. I help business owners and their advisors achieve a stress-free process to learn the value of their business, how to increase its value, and the development & execution of a transition strategy or strategies. 

Enhanced expense deduction capability – be careful how you execute – too much of a good thing can leave you cash poor and a tax liability 

QSBS – liberalizing the rules allows C 
corporation business owners to potentially shield 100% of their capital gains on sale. 

– This present gifting scenarios to sort of spread the wealth – couple the prospect of valuation discounts and you have a winner 

With the gift tax exemption rises to $15M 

under the Bill – family wealth planning with SLAT’s and other vehicles are enhanced with valuation discounts. Eepratesi@gmail.com  

JOHN SALEMI. John Salemi: OFFICE MANAGING PARTNER, UHY FARMINGTON CT; has thirty years of professional experience, with a specialization in tax issues and management consulting. John can draw upon his practical financial background in addressing the many managerial problems confronting business owners in today’s complex economic and regulatory environment.Jsalemi@uhy-us.com  

R&D Credits /Depreciation changes /Interest deductions – Section 163(j) 

TOM PERRONE Founder and President of New England Consulting Group of Guilford, Inc.  Estate and Business planning, and Executive Compensation. tperrone@necgginc.com  

•Grantor Trust 

•Non-Grantor Trust (SALT) 

•Decanting OF Trusts for IDIT – SWIPE PROPERTY 

•Cash Flow and Executive Benefits 

listen to the podcast…

https://podcasts.apple.com/us/podcast/building-and-protecting-your-business-worth/id1539791693?i=1000736782334

QUESTIONS TO tperrone@necgginc.com

Case Study: Rapid Sales Growth and Ownership

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, Funding your Buy and Sell, Key People_Or Group, Strategies of growing business, Valuation, Working On Your Business

Case Example Using Term Insurance

By Thomas J. Perrone, CLU, CIC

This was a situation where the company needed protection but wasn’t ready to purchase permanent insurance, even though the situation called for it.  However, the term insurance gave them what they wanted at the time and gave them the needed protection. 

Scenario: 

 A thriving business, comprising three partners—a relationship builder, an idea generator, and a product engineer—experienced remarkable sales growth within a few years. However, a potential challenge arose regarding ownership transfer upon a partner’s death, as all partners shared familial ties. 


To mitigate this concern, a comprehensive stock redemption program was devised and funded through a term insurance policy with a premium exceeding $60,000. This strategic approach enabled the business to navigate ownership transfer complexities and ensure the continuity of its operations.

Through the years, parts of the term insurance has been converted, and the company is paying about $125,000 in insurance premium to fund their liabilities and commitment.  

The case was developed through a relationship i had with one of the owners, through an introduction.  

Lesson:  

Even though this was a start up and a young company, if I has assumed it did not have the cash flow, I would have lost out on all the great potential.  Don’t assume anything, but let your client tell you what they want and why. 

THE WHY: 

There was a past history of the one of the current partners where their family member was part of a company where the partner died.  No planning was done, so the deceased partners family became the new partners.  This was not pretty, and the business ended up in chaos.  Obviously, a motivating factor for the current owner to have a good Buy and Sell Agreement where it was funded 

If you are an advisor who is working with business owners or wants to develop a business market segment in your practice, we should talk. We offer great opportunities working with our organization and deep backup.  

Thomas J. Perrone, CLU, CIC

tperrone@necgginc.com

Strategies for Making Your Taxable Retirement Plan – Tax-Free

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, Estate Planning, Executive Benefits, Key People_Or Group, retirement, Tax Efficient, Tax Free Income

By Thomas J. Perrone, CLU, CIC 

Retirement plans such as 401(k), IRA, 403(b), Cash Balance, Profit Sharing, and other qualified plans are popular choices for securing one’s future. While these plans focus on accumulation and stock market returns, which can be quite exciting, there are significant drawbacks associated with them.

Although retirement plans offer the appeal of disciplined savings and the potential for growth over time, they also come with inherent risks that are often overlooked. These plans, designed to assist participants, can sometimes result in financial shortfalls or unforeseen tax liabilities. The unpredictability of market performance and regulatory constraints may cause participants to question the adequacy and reliability of such strategies. Addressing these concerns proactively is essential for ensuring a smoother retirement journey and providing stronger security for loved ones.

Life insurance can help mitigate these downsides. However, there are several critical discussions that are seldom addressed when dealing with qualified retirement plans:

  • Future taxation: 100% of the funds are taxed upon withdrawal.
  • Death, disability, or termination of the plan: These events can significantly affect the ultimate outcomes for the family. For instance, if the participant dies five years into the plan, the family may not receive the anticipated benefits.
  • Sufficiency: Will the plan provide 60-75% of your final earnings?
  • Contribution limits: Participants may struggle to contribute enough to create the principal needed to achieve the desired percentage, particularly highly compensated employees.

These issues can be addressed effectively by incorporating life insurance into the retirement strategy.

The accompanying video explores some of the most pressing questions regarding retirement plans.

Learn about the JFK ERA benefit plan used for high earners, a plan that will create tax-free benefits with very few restrictions. This is a plan every Business Owner should know about.

Get your FREE REPORT– CLICK THE LINK BELOW

https://www.allclients.com/Form3.aspx?Key=277641709EAD8CD47ED41034FB533AB4

Thomas J. Perrone, CLU, CIC

tperrone@necgginc.com

The Disadvantages of Starting Your Investment for Retirement Later

by YOUR BUSINESS WORTH, posted in Uncategorized

By Thomas J. Perrone, CLU, CIC

Understanding the Implications of Delay

A person in a suit and tie sitting in a chair AI-generated content may be incorrect.

Introduction

Investing for retirement is a crucial aspect of financial planning.  However, many individuals delay this important decision, often due to various life circumstances, lack of knowledge, or financial constraints. While it might seem manageable at first, starting your investment for retirement later can have several significant disadvantages. This document aims to elucidate these drawbacks and highlight the importance of early retirement planning.

Reduced Compounding Benefits

One of the most substantial disadvantages of delaying retirement investments is the loss of compounding benefits. Compounding is the process where the earnings on your investments generate their own earnings over time. The earlier you start investing, the more time you allow your money to grow exponentially. For instance, if you start investing $5,000 annually at the age of 25 with an average return of 7%, by the age of 65, you could have approximately $1.2 million. However, if you start the same investment at 35, you would only have around $540,000 by the same age. The ten-year delay results in a significant reduction in your retirement fund due to the missed compounding opportunities.

Higher Contribution Requirements

To compensate for lost time, individuals starting their retirement investments later must contribute significantly more money to achieve the same retirement goal as those who started earlier. This increased financial burden can strain your current budget and limit your ability to enjoy financial flexibility. For example, a person starting at 25 may need to invest $200 per month to reach a $1 million target by retirement, while someone starting at 45 might need to invest over $1,000 per month to reach the same goal. The higher contribution requirements can be daunting and challenging to maintain.

Increased Market Risk Exposure

Investors who begin saving for retirement later in life often need to take on higher-risk investments to catch up on their retirement savings. Higher-risk investments, such as stocks or certain mutual funds, can offer greater returns but also come with increased volatility. If the market experiences a downturn, those nearing retirement age may not have sufficient time to recover their losses. This heightened market risk exposure can jeopardize your retirement security and force you to adjust your retirement plans.

Shorter Investment Horizon

The investment horizon refers to the length of time an individual has to invest before needing to access their funds. Starting your retirement investments later reduces your investment horizon, limiting your ability to maximize returns. A shorter investment horizon often necessitates a more conservative investment strategy, which may not yield as high returns as a longer-term strategy. Consequently, your retirement fund may fall short of your expectations and needs, requiring additional measures such as working longer or adjusting your lifestyle.

Increased Reliance on External Support

Delaying retirement investments can lead to increased reliance on external support systems, such as social security benefits, pensions, or family assistance. These support systems may not always be reliable or sufficient to cover your retirement expenses. Additionally, relying on family for financial support can create a burden and strain relationships. By starting your investments earlier, you ensure greater financial independence and reduce the need for external aid during retirement.

Psychological and Emotional Stress

The realization of insufficient retirement savings can lead to significant psychological and emotional stress. As retirement approaches, the pressure to save more and the fear of financial insecurity can take a toll on your mental health. This stress can affect your overall well-being and quality of life, both before and during retirement. Early investment planning allows you to build a more secure and confident financial future, reducing the anxiety associated with retirement planning.

Missed Opportunities for Tax Advantages

A screenshot of a graph AI-generated content may be incorrect.

Many retirement investment accounts, such as 401(k)s and IRAs, offer tax advantages that can enhance your savings. By starting your investments later, you miss out on years of potential tax-deferred or tax-free growth. Additionally, contributions to these accounts may reduce your taxable income, providing immediate financial benefits. Early investment in tax-advantaged accounts can significantly boost your retirement savings and provide long-term tax benefits.

Conclusion

The decision to delay retirement investments can have far-reaching consequences that affect your financial security, lifestyle, and overall well-being. Reduced compounding benefits, higher contribution requirements, increased market risk exposure, and a shorter investment horizon are just a few of the disadvantages of starting your retirement investments later. To ensure a comfortable and secure retirement, it is essential to begin planning and investing as early as possible. By doing so, you can take full advantage of compounding, minimize financial strain, and build a robust retirement fund that supports your desired lifestyle.

In summary, the earlier you start investing for retirement, the better positioned you will be to enjoy a financially stable and fulfilling retirement. Take proactive steps today to secure your future and avoid the pitfalls of delayed retirement planning.

LEARN ABOUT THE JFK Era-Tax Free Benefits for business owners- Free Report download!

Click Link – Read online or download the report! https://www.allclients.com/Form2.aspx?Key=A09F56E25777A6F33CDD0B02AB1FE0CC

Benefit Planning Executive Bonus Arrangement1 

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, Executive Benefits, Funding your Buy and Sell, Income from your business, Life Insurance Types, retirement, Tax Efficient

An executive bonus arrangement is a method of compensating selected key employees in  which the employer pays the premiums of a life insurance policy covering the employee’s life. 

How the Plan Works 

●Life insurance policy: The employee purchases, and is the owner of, a life insurance 

policy on his or her own life. The employee retains – at all times – the right to name 

the policy beneficiary and to receive the death benefit. 

●Employer not a beneficiary: The employer cannot be the beneficiary, either directly or 

indirectly, of the insurance policy. 

●Written agreement: A written agreement provides for payment of a “bonus” in 

exchange for the employee’s agreement to continue working for the employer. The 

employer may also wish to pay a “double bonus” to help cover the employee’s 

additional income tax liability. 

●Premium Payments: The employer may make the premium payments directly to the 

life insurance company, or the payments may be included in the employee’s paycheck, 

with the employee paying the premiums. 

●Tax treatment – employee: The employee includes in current income – and pays tax 

on – the net premium paid by the employer. 

●Tax treatment – employer: Subject to the “unreasonable compensation” rules, and as 

long as the employer has no interest in the policy, the additional compensation is 

deductible to the employer as an ordinary and necessary business expense. 

Benefit to Employer  Benefit to Executive 
Can reward selected key executives with varying coverage amounts. The executive owns the policy. If he or she changes Employers, the policy is not lost.  
Simple to implement, with little or no administration  Accumulated cash values can be used in emergencies, at retirement, or for personal costs investments.2  
Premium costs are tax deductible. Death benefit is generally received income-tax free.  
Can be stopped without IRS approval or restrictions. Proceeds may be used for estate settlement costs.  

1 The discussion here concerns federal income tax law. State or local income tax law may vary. 

2 A policy loan or withdrawal will generally reduce cash value and death benefits. If a policy lapses, or is surrendered with a 

loan outstanding, the loan will be treated as taxable income in the current year, to the extent of gain in the policy. Policies  considered to be Modified Endowment Contracts (MECs) are subject to special rules. 

For a free report on Business Retirement Plans for Small Business Owners, click and submit. The report will be downloaded immediately. Learn how to use your cash flow to create tax-free wealth! 

Click Here!