Family Business Succession Planning

As an owner of a family business, are you concerned about what will happen when you step away from the business? Is there a plan in place, documented and funded, that will help preserve family harmony? Without a plan, the risk to your business’s survival is matched only by the risk to your family’s relationships. Learn how to increase your business’s chances for survival. Please take a few minutes to review this article and a video that tells one family’s story.

Read more and get the video here: http://conta.cc/1Cyft9X

retirement

#smallbusiness #AIPSNY

 

Feel welcome to contact us for a complimentary review of your personal/ business retirement situation. AIPS does not provide legal or tax advice, please consult your tax and legal advisors regarding your individual situation. AIPS provides services in the States of New York and New Jersey.

Posted by Troy Barrow, LUTCF – Troy is an independent Agent practicing professionally for over seven years and is the owner of Arlington Insurance Planning Services, licensed in the States of New York and New Jersey. You may contact Troy at 646 580-5189 or tbarrow@aipsny.com.

Retirement Guys: Life insurance strategies start with saving | Toledo Free Press

Read the article here: http://www.toledofreepress.com/2014/10/11/retirement-guys-life-insurance-strategies-start-with-saving/?utm_source=rss&utm_medium=rss&utm_campaign=retirement-guys-life-insurance-strategies-start-with-saving

– from The Toledo Free Press –

Posted by Troy Barrow, LUTCF – Troy is an independent Agent practicing professionally for six years and is the owner of Arlington Insurance Planning Services, licensed in the States of New York and New Jersey. You may contact Troy at 646 580-5189 or tbarrow@aipsny.com.

Feel welcome to contact us for a complimentary review of your personal situation. AIPS does not provide legal or tax advice, please consult your tax and legal advisors regarding your individual situation.

The Ultimate Backup Plan – Business Continuation

So you have a small business and you rely on today’s technology; laptop/desktop computers, tablets and mobile phones, you have an excessive amount of valuable data stored on these devices, most will agree that your information such as contacts, sales or reporting data to name a few types of core data that if lost would be devastating, especially if Murphy’s law is implied.

So what do we do? That’s right, we back up our data, and protect what is important to our business’s continued operations and success. To do so is not only smart, it is necessary. Now what I’d like you to do is to think of what is even more important to your business than your data… that’s right, of course it’s you, or any person who is key to the business itself, the person or people who make the business work and of course who make it gain profitability. If you spend your business’s resources protecting against the loss of valuable data, it may make sense to you to protect the business against the loss of valuable employees, the people (or person if you’re a sole proprietor) who make the data and the business valuable.

Protect Against the Loss of Human Assets

The business that insures its buildings, machinery, and automobiles from every possible hazard can hardly be expected to exercise less care in protecting itself against the loss of its most vital asset: management skill. One of the best protections against this loss is adequate key employee life and disability insurance.

Wouldn’t you agree that the talent, knowledge, experience, and business contacts of a select group of employees determines the success of a business. These key people provide leadership and contribute significantly to the profitability of a business. They are difficult to replace.

The importance of key employees cannot be over-emphasized. What generates the profits of a business? The machines? The inventory? The real estate? The data? No! People make a business profitable.

What Would the Loss of a Key Employee Mean to You?

Would sales suffer? How would your banker view the loss? Would your line of credit be cancelled? Do you have a succession plan? Is a source of money available to recruit, hire, and train a replacement?

In essence – can your business survive the loss of a key employee?

The answer could be yes, provided there is enough cash on hand. Cash! That’s what a business usually needs to recover from the disability or death of a key employee. A disabled owner or partner generally represents a dual liability to the company. First, the company must usually continue the disabled person’s income during the disability period and, secondly, the remaining owners must take up the slack caused by the absence of the disabled person or hire a temporary replacement. Now, the question becomes… Where will the cash come from?

Sources of Cash

Working Capital/Surplus/ProfitsCash is critical to the operation of any business. Although it may be possible to cover a significant financial loss using cash flow, this approach may jeopardize the survival of the business.

Sinking FundThe use of a sinking fund may be the answer, provided there is enough time to accumulate the amount required and the funds have been consistently set aside. 

LoansThe use of borrowed funds may be inappropriate for two reasons. First, will the money be available after the loss of a key employee? Your local banker may not approve the loan request. Second, if the loan is approved, the business obligates itself to repay the loan plus interest. This could be a tremendous burden, as the potential loss of profits could make repayment difficult.

Disability Insurance
– A Disability Buy-Out Insurance plan will fund an agreement designed to provide the company owners with the money they need to purchase a disabled owner’s interest in the company at a mutually agreeable price and at the correct time. A disability buy-out insurance plan is specifically designed to pay an amount equal to the pre-arranged buy-out amount agreed to by the owners of the entity.

Life InsuranceInsurance can provide cash at the moment it is needed, after the loss of a key employee. The life insurance benefits are generally received income tax-free to the business. The proceeds can then be used to help replace lost profits, repay loans, maintain credit standings, and recruit and train a replacement. In the event that there is no pre-mature death, any life insurance cash value can be accessed* to help increase surplus or other business needs.

Note: This is a basic explanation. You should always consult with your tax advisor regarding your particular situation.

* Cash values borrowed through policy loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest.

 

Feel welcome to contact us for a complimentary review of your personal/ business retirement situation. AIPS does not provide legal or tax advice, please consult your tax and legal advisors regarding your individual situation.

Posted by Troy Barrow, LUTCF – Troy is an independent Agent practicing professionally for over seven years and is the owner of Arlington Insurance Planning Services, licensed in the States of New York and New Jersey. You may contact Troy at 646 580-5189 or tbarrow@aipsny.com.

 

 

 

 

 

 

 

 

 

Capitalize on your Opportunities to Save with a Deductible Traditional IRA

IRA

In today’s economic environment, finding efficient ways to save for retirement is becoming increasingly important. Making the most of your hard-earned income was made easier with the passage of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). With increased eligibility limits and higher contribution limits, these IRAs now offer more taxpayers financial advantages that can help them maximize their retirement savings, and meet more immediate needs, such as the costs of higher education.

A traditional IRA now offers eligible taxpayers the front-end advantage of tax-deductible contributions up to $5,5001 in 2013. With a traditional IRA, contributions and earnings are not taxed until they are withdrawn, and earnings accumulate tax-deferred. Because of this deferral feature, funds may accumulate more quickly than they would in a taxable account. Keep in mind, though, that withdrawals prior to age 59 1⁄2 are generally subject to a 10% penalty tax in addition to income taxes.

Did You Know About the Increased Eligibility for a Traditional IRA?
Higher income limits allow more taxpayers to qualify for tax-deductible contributions to a traditional IRA. In 2013, partial or full tax-deductibility for contributions will be available for taxpayers with adjusted gross incomes of up to $127,000 (single filers) or $188,000 (joint filers). If neither spouse is covered by an employer-sponsored plan, contributions are fully deductible regardless of income level.

Also, if the adjusted gross income of joint filers is less than $188,000, a non-working spouse can contribute and deduct (fully or partially) $5,500, or $6,500 if age 50 or older1 in 2013 annually to a traditional IRA — even if their spouse is covered by an employer’s retirement plan.

New Withdrawal Opportunities
Normally, at age 59 1⁄2, you can begin to withdraw funds from a traditional IRA, penalty-free. IRAs allow more penalty-free withdrawals before age 59 1⁄2 to help with more immediate expenses — such as the purchase of a first home ($10,000 lifetime maximum), or qualified education expenses. With this opportunity, taxpayers can use all or some of their IRA funds even before retirement. (Note: Withdrawals from deductible IRAs are taxed as ordinary income, and, if made before age 59 ½, are subject to a 10% penalty tax, unless an exception applies. Also, required minimum distributions must begin by April 1st of the year following the year you reach age 70 1⁄2.)

Is a Traditional IRA Right for You?
Depending on your specific financial circumstances and goals, a traditional deductible IRA could be a good vehicle for your retirement funding. A contribution to a deductible IRA provides an immediate tax benefit and tax-deferred growth, as well. The benefits of tax-deferred growth can make a tremendous difference in retirement accumulation. Also, if you expect your taxable income to decrease at retirement when you begin withdrawing funds, a traditional IRA may be the right choice for you, since you can deduct contributions at high tax rates and possibly take them and earnings out at lower tax rates.

To learn more about traditional IRAs and other retirement funding options that can help you fulfill your retirement goals, contact Troy Barrow, LUTCF, Financial Representative at (646) 580-5189.

1 The $5,500 amount ($6,500 for ages 50 and older) is effective through 2013, and will remain the same in 2014. Typically for years beginning after 2008, the maximum annual contribution is indexed for inflation.

Feel welcome to contact us for a complimentary review of your personal situation. AIPS does not provide legal or tax advice, please consult your tax and legal advisors regarding your individual situation.

Posted by Troy Barrow, LUTCF – Troy is an independent Agent practicing professionally for six years and is the owner of Arlington Insurance Planning Services, licensed in the States of New York and New Jersey. You may contact Troy at 646 580-5189 or tbarrow@aipsny.com.