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E-News ~ 4th Qtr 2004 |
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From the office of Tim Olson, CEBS, CMFC HSA Update - Health Savings Accounts (HSAs) are starting to take off! Most of our employers implementing these programs are offering a high deductible health plan (HDHP) in addition to a traditional lower deductible plan. The cost for the HDHP is typically at least 15% lower, and/or the employer contributes to an HSA account. We are seeing 25% or more opting for the HDHP in both self funded and fully insured health insurance programs. At renewal time, we anticipate the programs being cost neutral to the employer when overall experience is looked at for both plans. The starting point is doing a feasibility study to determine the difference in cost for the options based on the objectives of the plans. From there we develop the pricing strategy and incentives for employees. Will employees become better consumers and make their health care decisions more carefully? We believe so, and employees will be more knowledgeable about the true cost of health care. Please feel free to contact The Olson Group with all your questions regarding Health Savings Accounts. Retirement Plan Year End Reminders Employer Contributions Not Yet Earned by Employees If you have a "last day" or "hours worked" requirement for employer contributions, and contributions were made to employees who have not met your plan requirements, you will want to report them so that the contributions can be taken out by the end of the year. This is for both active and terminated participants. How to do this:
Participant Status: If there are participants that have terminated, retired, are deceased, or disabled and have not yet been reported; you will want to do this by the end of the year. Suspense Accounts You may want to use your suspense accounts as credits to reduce the Employer portion of the contribution and use them up by year-end. Census The year-end also brings about the census. The census is due the end of January, 2005, in time for your retirement plan record keeper to guarantee that the testing (if applicable) will be completed before the IRS deadline for refunds. New Mandatory Cash Out/Rollover Rules Basic Facts The Department of Labor (DOL) has issued a proposed regulation in connection with the automatic rollover requirement that was added to the Internal Revenue Code by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Many retirement plans require small vested amounts (generally $5,000 or less) to be distributed without the participant’s consent following the participant’s termination of employment. EGTRRA amended Code §401(a)(31) to require retirement plans to automatically roll mandatory distributions greater than $1,000 into IRAs, unless the participant elects to receive the distribution in cash or to roll the distribution to an investment vehicle of his or her choice. What This Means To You As A Plan Sponsor Most retirement plan record keepers currently provide plan sponsors with assistance in paying out terminated participant accounts with balances of less than $5,000. This "mandatory cash out" process begins when a plan sponsor completes and signs a participant status sheet that contains a "mandatory cash out" election column and an authorization statement. After final regulations are issued and become effective, you will only be able to pay out terminated participant accounts with balances of less than $1,000. If a participant had a balance between $1,001-$5,000, their monies would have to be automatically rolled into an IRA. Plan sponsors may want to review their most recent quarterly report and begin the mandatory cash out process for all terminated participants with a balance under $5,000, who has not otherwise directed payment to a new employer or their own selected IRA. This process should be started now before final regulations are issued. Minimum Required Distributions (MRD) Reminder Current tax law requires minimum distributions from qualified plans by December 31 for certain participants who have attained age 70-1/2. Specific requirements are defined by your plan. Important MRD facts to remember are:
Understanding Long-Term Care Insurance Who needs long-term care insurance? Whether you should buy a long-term care policy depends on your age, health status, overall retirement objectives and income. Many people with significant assets begin to look at long-term care at age 55 to protect those assets. While it is difficult to predict who will need long-term care, one study projects that 43% of people age 65 or older will enter a nursing home at some time during their life. The risk of needing nursing home or other care increases with age. What exactly does long-term care cover? If you become ill, long-term care insurance can pay for nursing home, home health care, adult daycare, assisted living and senior housing expenses, all of which can quickly deplete your own savings and dramatically impact your investment goals. While expenses vary widely across the country, the average cost of one year in a nursing home is $56,000, and it can exceed $100,000. These expenses can have a significant impact on your long-term financial security. Don’t government programs pay for long-term care? Many people assume that government programs will pay for their long-term care. In fact, 46% of all nursing home expenses and 62% of home care expenses are paid out-of-pocket by individuals and their families, meaning that long-term care can quickly drain a lifetime of savings. Increasingly, people find themselves tapping their retirement nest eggs to pay the bill for long-term care (either for themselves, a spouse or an elderly relative). Medicare pays for less than 20% of long-term care expenses. Medicaid will pay only if you meet federal poverty guidelines. Long-term care insurance can help ensure you will receive quality care in a quality setting, without relying on family and friends. Many people purchase a long-term care policy because they don’t want to burden their family with long-term care bills. American Funds - Quick Reference Guide American Funds Service Company - Regional Office: PO Box 659522, San Antonio, TX 78265-9522 American FundsLine - 24 hour automated phone service: 1-800-325-3590 Provides account information and allows transactions To access your account online: americanfunds.com - Select "Account Login" for account information and to make transactions To speak to a Shareholder Services Representative: 1-800-421-0180 Monday - Friday, 8 a.m. to 8 p.m., Eastern time
Securities offered through
Sunset Financial Services, Inc. 3520 Broadway Kansas City, MO 64111 (816) 753-7000 (OSJ) Member NASD/SIPC Sunset Financial is not affiliated with The Olson Group. Our Quality Partner Watko Benefit Group 10851 Mastin Street Suite 960 Overland Park, KS 66210 PHONE: (913) 323-3234 FAX: (913) 323-3250 EMAIL: gwatkins@watkobenefit.com |
The $800,000 Mistake by Marjory Abrams / BOTTOMLINE Federal and other regulations make it difficult to tap into a 401(k) unless an employee has a major financial need - perhaps buying a primary resident or paying college tuition. Such regulations prevent people from squandering savings. Unfortunately, many people disregard these warnings when they change jobs. In fact, 57% of those leaving a job take their 401(k) funds in cash, according to a survey by Hewitt Associates, a leading benefits consulting firm. This is a major mistake . . . Income taxes must be paid on the full amount - plus a 10% penalty if the employee is under age 59-1/2. Example: If you are under 59-1/2 and in the 35% tax bracket, a $200,000 withdrawal nets to only $110,000. The money will no longer grow tax-deferred. At an 8% return and compounded annually, the $200,000 would have grown tax-deferred over the next 20 years, to a total of $932,191 - more than $800,000 sacrificed. In most situations, the better choice is to transfer the money into an individual retirement account (IRA). Because almost all financial institutions offer IRAs, there are far more investment choices than you would find in a 401(k) plan - and the money still grows tax-deferred. IRAs also give you more flexibility in naming beneficiaries, and if you retire early, taking distributions. 20% of the 401(k) will be withheld for taxes. That means you only have 80% left to complete any rollover. You won’t get back the withheld amount until you file your tax return the following year. The money must be reinvested in a retirement account within 60 days. If you miss the deadline, the IRS treats it like any other withdrawal - requiring you to pay income tax on it as well as the 10% penalty if you are under age 59-1/2. A 401(k) is preferable to an IRA only if you plan to borrow from the account (you cannot borrow from IRAs) . . . or if you are likely to be sued or go bankrupt (IRA assets are not always protected from creditors). Also, 401(k)s may have lower investment expenses. Retirement accounts are an investor’s most precious asset. Treat them wisely during your working life - and they will treat you well in the coming years. AUL Changes Name To OneAmerica On September 1, 2004, OneAmerica was created as a single, common entity to hold together all companies currently in the enterprise, including American United Life Insurance Company. The change to OneAmerica will not affect how AUL Retirement Services conducts business. Your contacts, addresses and telephone numbers will all remain the same. OneAmerica will continue to provide you with the service and personal attention you have come to expect. Ways To Save With Flexible Spending Accounts In addition to co-payments and deductibles for medical care and prescriptions, FSAs pay for over-the-counter (OTC) medicines, including aspirin, antacids, cold remedies and allergy medicines. They can cover acupuncture, bandages, birth-control pills, chiropractic services, medically necessary cosmetic surgery, such as breast reconstruction after a mastectomy or surgery to correct a congenital defect, contact lenses, dental treatments, eye exams, eye glasses, incontinence products, in-vitro fertilization, private-duty nursing, therapy sessions, vasectomies, and doctor-prescribed weight-loss programs. FSAs may not be used to pay for cosmetic surgery, gym memberships for general health, insurance premiums, toothpaste, toothbrushes, tooth-whitening procedures or vitamins. November Checklist End-of-year tax planning: Estimate your 2005 income to see whether deductions should be accelerated or income deferred. Investments: Offset capital gains with losses. Employee benefits checkup: Review 2004 medical expenses to help plan how much to set aside for 2005. Fund your retirement account to the maximum allowed. Additional contributions can be made if you are age 50 or older. Prepare for winter driving: Make sure your brakes, tires and heater/defroster are in top condition. Check antifreeze and washer fluid levels.
Congratulations!
Sandy Bauer of Jefferson Community Hospital on winning two Husker football tickets from The Olson Group drawing at the SHRM Conference on September 2.
And
Mary Atkinson of Nye Square for winning the $50.00 cash prize from The Olson Group at the NHCA Convention on September 22. If you need assistance with any of your benefit questions or problems, please call our toll free number 1-(866) 289-1046. If a carrier does not respond to your inquiries, please call us. We are here to make things easier for you.
Courage
Doesn’t always roar. Sometimes courage is the quiet voice at the end of the day saying, "I will try again tomorrow."
How To Be Somebody
"Creed for Optimists" "Be so strong that nothing can disturb your peace of mind. Talk health, happiness, and prosperity to every person you meet. Make all your friends feel there is something special in them. Look at the sunny side of everything. Think only of the best, work only for the best, and expect only the best. Be as enthusiastic about the success of others as you are about your own. Forget the mistakes of the past and press on to the greater achievement of the future. Give everyone a smile. Spend so much time improving yourself that you have no time left to criticize others. Be too big for worry and too noble for anger." Christian D. Larsen
"What lies behind us and what lies ahead of us are tiny matters compared to what lives within us."
Oliver Wendell Holmes
The Essence of Today
"I expect to pass through this world but once. Any good I can do, or any kindness that I can show, let me do now, for I shall not pass this way again."
"The greatest discovery of my generation is that a human being can alter his life by altering his attitude."
William James
"To handle yourself, use your head; to handle others, use your heart."
Donald Laird Customer Service Contacts AFLAC 1-800-462-3522 www.aflac.com Allstate (AHL) 1-800-521-3535 www.ahlcorp.com American Funds 1-800-421-0180 www.americanfunds.com Ameritas 1-800-487-5553 www.ameritasgroup.com AUL 1-800-249-6269 www.eretirement.aul.com Enrollment Fax: 1-317-285-1728 Blue Cross Blue Shield 1-888-232-0942 www.bcbsne.com Principal 1-800-547-7754 www.principal.com Regional Care, Inc. 1-800-795-7772 www.regionalcare.com UNUM Provident 1-800-255-6148 www.unumprovident.com |
The Olson Group
20214 Veterans Drive, Suite 200PO Box 543
Elkhorn, NE 68022
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PHONE: (402) 289-1046 |
TOLL FREE: 1-866-289-1046 |
FAX: (402) 289-1012 |
EMAIL: tolson@theolsongroup.net |
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