Singer Wealth Management


Are Qualified Retirement Plans a Bad Deal for Business Owners?

By Keith Singer | January 27, 2019 | 0 Comments
I recently met with two owners of a manufacturing business, who were each contributing approximately $30,000 into their company’s 401(k) plan. They indicated one of the main reasons for setting up their company’s retirement plan was to fund their own retirement on a tax favored basis. Although the owners were each saving almost $10,000 annually in taxes, federal pension laws required them to contribute about $30,000 per year on behalf of their employees to maximize their own contributions. Therefore, they were paying more to their employees than they were saving in taxes.


When the owners reach retirement age and start taking income, they will have no idea how much they are going to owe to the government; it will be dependent upon the prevailing tax rates at the time. Due to the 2017 tax law changes, these business owners, as well as many others, are now in a reduced bracket for at least the next several years.


401(k) plans and profit-sharing plans can be a nice employee benefit. However, for many business owners, non-qualified retirement plans may provide a bigger overall tax benefit than traditional qualified retirement plans such as a 401(k) or profit sharing plan. In fact, approximately 72 percent of Fortune 500 companies use non-qualified plans as a way to compensate their executives and highly paid employees*.


Non-qualified plans don’t provide a tax deduction on contributions, but they can be designed to grow tax-free and provide tax-free income. These plans have no contribution limits and no discrimination testing. This means business owners and other high income earners can create these plans just for themselves without having to fund them for any employees. Since tax rates are currently low and will likely rise in the future, it is probably wise to pay taxes now at low rates and have nontaxable income during retirement when rates may be much higher.


Protecting your Most Valuable Asset

By Keith Singer | January 20, 2019 | 0 Comments

For those who are working full time trying to accumulate wealth, their ability to work and make money is often their most valuable asset. For instance, someone who is 35 and earning $150,000 per year will typically earn almost $10 million dollars by the time they are age 65. This statistic assumes an annual 5 percent raise but it also assumes the worker remains healthy and able to work full time until retirement age.


This is a big assumption because 30 percent of workers will become disabled before age 65.* Most people mistakenly believe that accidents are the most common cause of disabilities. However, 95 percent of disabilities are caused by illness, not injuries. In fact, cancer is the second-leading cause of disabilities.**


One of the most universally accepted principles of financial planning is anyone who relies on their income to support themselves and/or their family, should insure that income through a disability income policy. Unfortunately, only about one-third of consumers, including small business owners, have disability policies to protect their earning potential.*


Those who work for large corporations may be covered by a group plan. However, if the employee switches jobs, they may no longer be covered by their new employer and even while they are covered by a group plan, the group benefit alone is typically not enough to replace a majority of their income.


The inability to work for even a year or two and the corresponding loss of income can have devastating financial consequences to a family. More than half of all personal bankruptcies and mortgage foreclosures are a result of a disability.


Variable Annuity policies can vary widely with many different features like own occupation and cost of living adjustments. A knowledgeable advisor can assist in designing the appropriate plan and can potentially get the insured policy discounts if they are aware of how to select the appropriate insurer and properly complete the application.



Should you do a partial Roth IRA conversion?

By Keith Singer | January 13, 2019 | 0 Comments

Almost everyone who I meet with has at least some money in an Individual Retirement Account. Conventional wisdom encourages people to save as much as they can into retirement accounts because contributions get a tax deduction and grow tax deferred. However, despite these great tax benefits, ordinary income tax is due on all funds when withdrawn from these accounts, yet we don’t know what tax rates will be at that time. The amount of tax due will be predicated on the prevailing marginal tax rates at the time of withdrawal and the overall income level of account owner.


The advantage of converting all or part of one’s IRA to a Roth IRA is twofold. First, the converter is eliminating all future tax liability at current rates that are relatively low. Second, Roth IRAs do not have required minimum distributions and, as such, are an excellent family wealth transfer tool.


The real question is who is the best candidate for a Roth conversion? The answer is very simple. If you believe tax rates are historically low (they are) and that rates will eventually rise in the future the next time Democrats take control of Congress and the executive branch, then it’s probably wise to start converting sooner rather than later. Moreover, if your IRA beneficiaries (your children) are in higher tax brackets than you are, Roth conversions will likely result in a substantial reduction in your family’s tax liability. In any case — whether you like it or not — the government is your family’s silent partner in your IRA. It’s up to you to proactively make the smartest possible choices to efficiently dissolve that partnership. Simply choosing to defer that tax for as long as possible is probably not the most optimal strategy.

Financial resolutions

By Keith Singer | January 6, 2019 | 0 Comments

At the beginning of each year, many people resolve to change their lives for the better. To those who are looking to improve their financial situation, please find some useful recommendations:


Increase your systematic savings: If you are still working and you are trying to achieve financial goals such as retirement, funding college expenses or perhaps obtaining a new home, the best way to accomplish those goals is through systematic savings. Consider increasing your current monthly savings. No one has ever complained to me that they wish they hadn’t saved so much money.


Write down your goals: Whether you are an expert or novice investor, you will be more successful if you write down your goals. It’s a great exercise to determine how long you will need to work before retirement and how much you will be able to spend each year without running out of money. We recommend that all retirees should have a written income plan to ensure that they won’t ever run out of money.


Become a more disciplined investor: In order to make appropriate investment decisions, you must understand and invest consistently with your risk tolerance. One way to better understand your risk tolerance is to complete a two-minute survey at Once you have quantified your risk tolerance, you should measure the risk of your portfolio by using a portfolio analysis software. Alternatively, have your portfolio analyzed by a Certified Financial Planner™ to make sure that you aren’t taking too much risk.


Use the tax code to your advantage: Each financial decision that you make may have significant tax consequences. Making the correct choices when it comes to determining which accounts to take income from, which income strategies will result in the most after-tax income, how to maximize retirement account contributions while working and how to efficiently withdraw funds from retirement accounts during retirement can drastically improve your family’s lifestyle. Resolve to educate yourself on the best tax strategies before making financial decisions.

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