As the name implies, FIAs are fixed annuities linked to the performance of a stock market index (often the S&P 500). Because of this stock market exposure, they can sometimes bring conservative investors very nice returns – often, considerably better returns than CDs, bonds, or money market accounts. They really aren’t designed to outperform the stock markets; they are designed to outperform the fixed markets. Note Our US Government is continuing to print money. Ask yourself ultimately what is going to happen to us? Inflation ring a bell! What is going to happen to Fixed Income Investments that one owns? If yields turn around and go back up the value of your Fixed Income Investment goes down.

During the accumulation phase of an FIA, you have the opportunity to benefit from stock market gains while your principal is protected against stock market losses. The annuity contract usually guarantees you a minimum rate of interest on your purchase payments while the annuity is growing; the insurance company involved will credit you with either the minimum return stated in the contract or a return based on the performance of the linked index.

If you are skittish about stock market investment, you can potentially realize the benefits of stock market participation through this comparatively low-risk investment.

Each FIA has a particular participation rate. The participation rate signifies the percentage of the invested assets within the annuity keyed to the linked index.

Let’s say you have an FIA linked to the S&P 500 and the participation rate is 60%. That means 60% of your invested assets are exposed to the index. If the S&P 500 gains 10% across a year, this means your annuity gives you a 6% return for the year (before any fees and administrative charges). Compare that 6% potential return to so many CDs and money market accounts which generate a pittance of interest.

Some FIAs measure an index’s gain on an annual basis, others over the entire term of the annuity. Sometimes there are “ceilings” on just how high a return you can realize. From time to time, participation rates may be reset by the insurance company. Occasionally, a margin or “spread” determines the index-linked interest rate instead of a participation rate. In this case, if your annuity gains 10% and the spread is 2.5%, your credited gain is 7.5%.

Most FIAs give you all the features of a fixed annuity: your earnings are not taxed, and when the distribution phase of your annuity starts, you can receive periodic (usually monthly) income payments. (Sometimes you can take the entire value of your annuity as a lump sum at the end of the contract term. It is your withdrawals that are taxed.) There is often a guaranteed minimum death benefit payable to your beneficiary when you pass away.

If you need to put away more retirement savings NOW, the contribution limits on IRAs and 401(k)s can be frustrating. Would you rather have a retirement account you can only put $5,000 or $6,000 in annually, or an account to which you can contribute as much as you want? FIAs (and other types of annuities) have no contribution ceiling, and there are no IRS-imposed income limits above which you cannot contribute.

Many of these annuity contracts are 6-7 years or longer. If you need to withdraw your money from the annuity in the accumulation phase, there is usually a considerable penalty. Fixed indexed annuities do require a long-term outlook and a long-term commitment.

If you are planning to maintain or improve your quality of life in retirement or know someone who this may apply to, maybe you would like to see how fixed indexed annuities can potentially help you. If that’s the case then pick up the phone and let’s talk about these hybrid annuities today.

Mark S. Gardner may be reached at 214-762-2327

MarkGardner@RetireWellDallas.com

www.retirewelldallas.com

America is facing monumental record debt numbers. Our government continues to borrow and print money like there is no tomorrow. Are you alarmed by this? I am.

We are not resolving the debt crisis as the House and Senate are just letting our government borrow us into more and more debt. We have the Obama Care staring us in our eyes and soon we will likely to take up the following proposals, all of which would have lasting effects on how anyone will be saving for retirement.

The president’s 2014 budget would require employers in business for at least two years that have more than 10 employees to offer an automatic IRA option to employees.

How this will work will be contributions would be made to an IRA on a payroll-deduction basis. If an employer already offers a plan, it wouldn’t have to comply with this regulation, but if its current plan excludes certain segments of its employees from participating in the plan, the employer would have to begin to offer the automatic IRA to those excluded employees..

Do you remember when Exxon showed us the commercial with a Tiger and people would get a discount if they poured their own gas into their cars. Well the Oil Companies set us up for later putting our own gas into our tanks. They set us up to pour our own gasoline without a discount. Now do you think the government is setting us up too? Obama included this provision in the 2014 budget because he wanted to turn the tide on a rising retirement crisis in the United States. According to a Treasury report, the number of U.S. workers participating in an employer-sponsored retirement plan has remained stagnant for decades at no more than about half the total workforce. Will Social Security be around for us….for the next generation?

The administration has seen that automatic enrollment efforts can be very effective in raising the number of people participating in workplace retirement plans and believes that by forcing small companies to offer automatic enrollment in an IRA, the number of people saving for retirement will rise. But I say so will the cost to the employer. Question folks—If the employer can be held at fault if two workers earning the same amount but one invests in bonds and the other in a balanced portfolio and one out performs by a wide margin. Is the employer being set up for a law suit?

Under the proposal, employers could help their workers save without having to make contributions to the plan or having to comply with the Employee Retirement Income Security Act. All they would have to do is make their payroll systems available to transmit employee contributions to an employee’s IRA.

Employers with fewer than 100 employees that offer an automatic IRA could claim a temporary credit for expenses associated with the arrangement of up to $500 for the first year and $250 for the second year. They also could be entitled to an additional credit of $25 per enrolled employee, up to a maximum of $250 for six years.

If employers adopted a new qualified retirement, SEP or SIMPLE plan, they would receive a tax credit for their startup costs that would be doubled from the current maximum of $500 per year for three years to a maximum of $1,000 per year for three years.

The Obama budget would eliminate the stretch IRA that allows beneficiaries to stretch the proceeds from an inherited retirement account over their lifetime. This means a non-spouse beneficiaries of retirement plans and IRAs would have to take full distribution of their inheritance within five years of the account holder’s death. Why is this important to know…you the tax payer cannot hold onto the inherited funds till you are 59 ½ or latest 70 years old to begin distributions. The government will get their tax share faster. Now thank our government for 2008 and beyond bailouts. Funny thing no one asked me if I needed to be bailed out or if I approved of them bailing out Merrill Lynch or General Motors.

The only exceptions would be disabled or chronically ill individuals, someone who is not more than 10 years younger than the participant, or an IRA owner or a child who has not reached the age of majority. Those individuals would be allowed to take distributions from the deceased person’s retirement plans over the life or life expectancy of the beneficiary beginning in the year following the death of the participant.

If the beneficiary was a child at the time of the participant’s death, they would have to take a full distribution within five years of coming of age.

If beneficiaries are forced to take distribution of large sums of money early, they will be taxed at a higher rate than they would be if they could leave the funds in the participant’s account and take money out gradually.

The president’s proposed cap on retirement savings has garnered the most attention this year. The cap would raise about $9 billion for the federal government over the next 10 years by prohibiting taxpayers from taking advantage of the pre-tax deferral in their 401(k) or defined contribution pension plans after they cross a $3.4 million threshold. According to the Employee Benefit Research Institute, only a small percentage of IRA and 401(k) investors would be affected by the cap. In 2011, only 0.06 percent of total IRA account holders had $3 million or more in their accounts, and only 0.0041 percent of 401(k) accounts had that much money in them at the end of 2012.

The $3.4 million cap would allow an account holder to generate an annuity of $205,000 a year.

Small-business owners would be the biggest losers in this proposal, according to Judy Miller, director of retirement policy at the American Society of Pension Professionals & Actuaries.

Why you ask? That’s because company-sponsored retirement plans are the only way small-business owners can generate tax-deferred savings.

Workers might be hurt, too, even those with nowhere near $3.4 million in their accounts.

Brian Graff, executive director and CEO of ASPPA, said he is concerned that “without any incentive to keep the plan, many small-business owners will now either shut down the plan or reduce contributions for workers. This means that small-business employees will now lose out not only on the opportunity to save at work but also on contributions the owner would have made on the employee’s behalf to pass nondiscrimination rules.”

The president also proposed changing the way inflation is measured to shrink cost-of-living adjustments for retirees receiving Social Security benefits. The use of a chained consumer price index for Social Security and other programs, like Supplemental Security Income and veterans pensions, would reduce government deficits by $230 billion over 10 years. A chained CPI is a lower measure of inflation, which would reduce Social Security and other benefits by $130 billion. AARP asserts that these cuts would have a catastrophic impact on older Americans who are the least able to absorb cuts to their benefits because they rely on Social Security for their income and have higher out-of-pocket medical expenses. They also have a higher poverty rate than younger Americans

Let me leave you with this thought…for some of you the pain of high inflation in the 1980’s was devastating. We are facing what I believe is an inflationary cycle. We are printing money and nothing to back it up. How long can we keep interest rates down? How long can China buy our Treasuries? What will the stock market do when inflation rears up its ugly head? Do you know what happens when we have high interest rates and how it effects the stock market?

I have answers to all these questions. If you are concerned about the future and what to do. Let’s talk.

Mark S. Gardner may be reached at 214-762-2327

MarkGardner@RetireWellDallas.com

www.retirewelldallas.com

If you are age 65 and eligible to receive Social Security benefits (or married to someone eligible to receive them), then you are also automatically eligible for Medicare Part A (free hospital insurance) and Medicare Part B (medical insurance for which you pay premiums), a.k.a. “original Medicare”.

If this is the case, then you’ll get a red-white-and-blue Medicare card in the mail 3 months before your 65th birthday.

You can apply to receive Medicare benefits even if you haven’t retired. If you’re coming up on 65 and you don’t yet receive Social Security benefits, SSDI or benefits from the Railroad Retirement Board, visit your local Social Security Administration office or dial (800) 772-1213 or go to www.ssa.gov to determine your eligibility.

If you are eligible, you have the choice of accepting or rejecting Part B coverage. If you want Medicare Part A and Medicare Part B, then you should sign your Medicare card and keep it in your wallet. If you don’t want Part B, you put an “X” in the refusal box on the back of the Medicare card form, and send the form to the address shown right below where your signature goes. About four weeks later, you will get a new Medicare card indicating that you only have Part A coverage.

When you are enrolled in Medicare Part A & Part B (sometimes called “original Medicare”), you can join a Medicare Advantage plan (Part C). Anyone enrolled in Part A, B or C becomes eligible for prescription drug coverage (Part D).

If you are 65 or older and aren’t eligible for Medicare Part A, you can still sign up for Part B as long as you are a U.S. citizen or a legal resident of this country for five years or longer.

If you choose not to enroll in Part B during your initial enrollment period, you have another annual chance to sign up for it during a “general enrollment period” from January 1 through March 31, with Part B coverage commencing July 1.

If you already have medical insurance through a group health plan at your workplace or your spouse’s workplace, you can either enroll in Part B while you are still covered by that plan or enroll in Part B within eight months of leaving your job or losing your health coverage, whichever happens first.

Medicare has enrollment periods that allow you to do this.

• The initial enrollment period is seven months long. It starts three months before the month in which you turn 65 and ends three months after that month. You can enroll in any type of Medicare coverage within this seven-month window – Part A, Part B, Part C (Medicare Advantage Plan), and Part D (prescription drug coverage). If you don’t sign up for Part D coverage during the initial enrollment period, you may have to pay a penalty to add it later.
• Once enrolled in Medicare, you can only make changes in coverage during certain periods of time. For example, the annual enrollment period for Part D is October 15-December 7, with Part D coverage starting January 1. (You can also drop Part D coverage, leave one Part C plan for another, or switch from a Part C plan to original Medicare or vice versa in this period.)
• There is also an annual open enrollment period from January 1-February 14. During this one, you can switch out of a Part C plan and go back to original Medicare with Part A & B coverage starting on the first day of the month following that switch. If you do this, you have until February 14 to also join a Part D plan if you want to add drug coverage to complement Parts A and B. Part D coverage kicks in at the start of the month after the Part D plan receives your enrollment form.

Individuals with end-stage kidney failure who need dialysis or a transplant may qualify for Medicare regardless of age. Upon diagnosis, they can contact the SSA. Medicare coverage usually takes effect three months after a patient begins dialysis. People with Lou Gehrig’s Disease (ALS) are automatically enrolled in Medicare as soon as they begin receiving SSDI payments. Americans who are under 65 and disabled also qualify for Medicare.

Your first stop should be the Social Security Administration – (800) 772-1213 or www.socialsecurity.gov. You can also visit www.medicare.gov and www.cms.hhs.gov

Mark S. Gardner may be reached at 214-762-2327

MarkGardner@RetireWellDallas.com

www.retirewelldallas.com

Medicare Open Enrollment has arrived.

The open enrollment period for 2014 runs from October 15-December 7, 2013. This is not only a period where you may enroll for the program, but also switch providers for your comprehensive health and drug coverage.

Some key dates to remember

This fall and winter, there are three periods in which Medicare beneficiaries can either enroll or disenroll in forms of coverage:

Now through December 7: Open enrollment period

This is when you can elect to leave Original Medicare (Parts A and B) for a Medicare Advantage Plan (Part C) and change your prescription drug coverage (Part D). You can also elect to get out of a Part C plan and go back to Parts A and B during this period.

December 8: Annual enrollment period begins for 5-star plans

As you probably know, Part C and Part D plans are assigned ratings. Beginning December 8, 2013 and ending November 30, 2014, a window opens for you to enroll in a 5-star Part C or Part D plan. You can do this once per 365 days. How do you find the 5-star plans? Visit www.medicare.gov/find-a-plan.

January 1-February 14: Disenrollment period

If you join a Part C plan in late 2013 and want to reverse that decision, you can disenroll from that Medicare Advantage plan in this window of time and go back to Original Medicare with a stand-alone Prescription Drug Plan (Part D).

Some key dates to remember

No. Medicare isn’t part of that. If you have Medicare, you are already insured in the eyes of the federal government. You don’t have to make any changes to your Medicare coverage because of the implementation of the exchanges, and your Medicare benefits won’t change as a result of them, whether you have Original Medicare or a Medicare Advantage plan through an HMO or PPO.

In case you are wondering, you can’t buy Part D prescription drug coverage or Medigap insurance through the new online health insurance exchanges.

What should you look for in a Part C or Part D plan?

Be sure to take a look at a few key factors.

• While premiums matter, overall plan expenses ultimately matter most; scrutinize the copays, the co-insurance and the yearly deductibles as well. Attractively low premiums might not tell you the whole story about the value of a Medicare Advantage plan.
• How inclusive is the plan network? Assuming the plan has one, does it include the hospitals you would choose and the physicians that now treat you?
• Regarding Part D, how wide-ranging is the prescription drug coverage? Look at the list of approved drugs (the formulary). If the drugs you want or need aren’t listed, you are probably going to have to open your wallet to pay for them. The frustrating thing about formularies is how they change; drugs on this year’s list may not always be on next year’s list.
• Every fall, Medicare plans mail out Annual Notice of Change (ANOC) letters to their plan members. Use this notice to determine if your current plan is still right for you and your medical care needs. If you didn’t receive such a letter in September, contact your plan.

How expensive will Part D coverage be next year?

According to CBS MoneyWatch, monthly premiums for a stand-alone Medicare Prescription Drug Plan (PDP) under Medicare Part D are projected at $31 for 2014.

The initial deductible for standard Part D prescription drug coverage will be $310 next year. After your total prescription drug costs surpass $310, you’ll pay 25% of your total drug costs between $310-2,970. You’ll find yourself in the “doughnut hole” between $2,970-4,550 (wherein you pay 100% of any drug costs under the standard plan). Should your total prescription drug costs exceed $4,550 in 2014, you’ll be eligible for catastrophic coverage, leaving you on the hook for just 5% of drug costs above that level.

Mark S. Gardner may be reached at 214-762-2327

MarkGardner@RetireWellDallas.com

www.retirewelldallas.com

Women often become guardians of family wealth.

Many women outlive their spouses, and have the opportunity to have the “final say” (from an estate planning standpoint) about the wealth they have built or inherited. Legacy planning is essential for single women and couples, too, as one or two successful careers may leave a woman or a couple with a significant estate.

So how do you take steps to convey the bulk of your wealth to the next generation, or to your favorite causes or charities after you are gone? It all starts with a conversation today – a conversation with a legacy planning professional.

Analyze the risks to your net worth & strategize to alleviate them.

You have years to go, perhaps many years, before you pass away. In those years or decades, you must manage portfolio risk, taxation, medical or long term care costs, and perhaps “predators and creditors” as well. What tax and risk management strategies can be put into place with an eye toward enhancing your net worth? Can you reduce the size of your taxable estate along the way?

How might trusts come into play?

If you want to shrink your taxable estate, a well-crafted trust may provide a way to do it. There are many, many different kinds of trusts. A basic revocable living trust helps a family avoid probate, but it doesn’t do anything to reduce estate taxes. Other trusts do offer grantors and beneficiaries opportunities for substantial estate and/or income tax savings.

For example, you can bequeath an amount of money up to the limit of the current estate tax exemption to a bypass trust; at your death, the remainder of your estate can therefore transfer to your spouse tax-free, or optionally your spouse can enjoy income from the trust while living with your heirs receiving the remaining principal tax-free at his or her death. Blended families sometimes choose to use a qualified terminable interest property trust (QTIP) plus a bypass trust to direct income derived from assets within an estate to a surviving spouse and then the bulk of the estate to their children and stepchildren. Grandparents sometimes use generation-skipping trusts (GSTs) to forward big chunks of money tax-free to grandchildren.

Women business owners have employed irrevocable life insurance trusts (ILITs) to shrewdly remove their life insurance from their taxable estates. In an ILIT, the trust becomes the owner of the life insurance policy. When the business owner passes away, the beneficiaries receive tax-free policy proceeds, which can be used to sustain the family business and pay estate costs.
A qualified personal residence trust (QPRT) will permit you to gift your primary residence or vacation home to your children while you retain control of it for the term of the trust (typically 10 years). If your home seems poised to rise in value, the QPRT may lead to major estate and gift tax savings – it helps you transfer the home out of your taxable estate, thereby reducing its size. The hitch is that to validate the QPRT, you have to outlive the term of trust. Assuming you do, you can either a) move out of your house at that point or b) keep living in it while paying your heirs fair market rent as a tenant.

How well can your legacy plan sustain your values?

Can you design it to teach your adult children and grandchildren lessons in character, responsibility, ethics and social service? Philanthropically, what do you want to accomplish? If you want to direct wealth to charities or other non-profits, you will need to pick one or more vehicles with the help of a legacy planner – options may include a family foundation, a charitable remainder trust (CRT), a tax-deductible charitable gift of appreciated securities with a resulting income stream, or donor-advised funds. A conversation with a tax professional can inform you of the kinds of assets you do and don’t want to gift from a taxation perspective.

As you craft your legacy plan, can you do it at reasonable cost?

There is truth in the old maxim “you get what you pay for”, but at the same time, you want to work with a legacy planner whose fees aren’t exorbitant. Even the fees for creating a simple living trust can vary widely. You definitely want the help of experienced professionals here; given that each legacy plan is on some level an agreement with the federal tax code, legacy planning is not a do-it-yourself project.

When you think of it that way, it becomes easier to conceive and implement with the input of your spouse, your children and your grandchildren. Along the way, valuable money lessons can be taught and responsibilities shouldered.

Mark S. Gardner may be reached at 214-762-2327

MarkGardner@RetireWellDallas.com

www.retirewelldallas.com

What happened?

In short, Congress did not pass any of their appropriations bills. These bills provide money to various to federal agencies. Federal law requires agencies without these funding laws in place to close.

<h2class=”sub_heading”>How long will this last?As with other shutdowns, this is largely up to the two major parties and their abilities to reach whatever deal is necessary to get the bills passed. If we look to history, the two most recent government shutdowns happened in the Clinton administration. One only lasted five days. The other lasted three weeks.

What’s closed, what’s opened?

Not every public service is shut down entirely, as not every agency requires appropriations to function. Social Security and Medicare are not affected, active duty military continue to function, as does the Department of Defense, as do intelligence, law enforcement, and our embassies overseas. Some are only partially closed; U.S. Courts will be open for 10 days, for instance.

CNN has a frequently updated list of shutdowns at:

https://www.cnn.com/interactive/2013/09/politics/government-shutdown-impact/index.html?iid=article_sidebar

How is this different from the debt crisis?

They are different situations, but one can affect the other. The debt crisis relates to the separate matter of establishing how much money the U.S. Government can borrow in order to fund its various agencies and programs. However, Treasury Secretary Jack Lew says that the crunch is coming soon – no later than October 17.

With the shutdown a fluid situation, it’s difficult to say when this will be resolved. Whether you are a government employee or an ordinary citizen, it’s only natural to be concerned. It may be a good time to contact a financial professional and inquire if and how the shutdown may affect you.

Mark S. Gardner may be reached at 214-762-2327

MarkGardner@RetireWellDallas.com

www.retirewelldallas.com

In March 2010, President Obama signed comprehensive health reform, The
Patient Protection and Affordable Care Act (ACA), into law. The law
makes preventive care, including family planning and related services
more assessable and affordable for many Americans. While some provisions
of the law have already taken a fact, many more provisions will be
implemented in the coming years.

Important Dates

•       03/23/2010 —- PPACA Signed into Law
•       01/01 2013 —- State and Regional Exchange Certification
•       10/01/2013 —- Open Enrollment begins, will remain open until March 31, 2014
•       01/01/2015 —- Exchanges financially sufficient
•       01/01/2017 —- Tentative date for large groups

Big Picture- Affordable Care Act rolls out in phases that began in 2010 and continue through 2019

Provisions

• Standards for Minimum health benefit plan offerings
• State based Health Benefits Exchanges
• Mandates for Employers and Him individuals to provide/purchase coverage
• Premium Credit or cost share subsidies to qualified individuals
• Taxes and Fees
• Requirements that insurance companies spend a certain percentage of premium dollars on patient care
• Certain preventive care services covered without cost-sharing (out-of-pocket expenses)
• Insurance market reforms
• Expanded appeal rights for consumer

Changes to Medicare reimbursements

• Grandfathered Plans, any plan in effect on or before March 23, 2010
• not required to implement a number of health reform laws including:
• Rating restrictions associated adjusted community ratings
• Capping deductibles and/or implementing out-of-pocket limits
• Providing essential health benefits (small group only)
• Providing coverage for clinical trials

Public Exchanges

• Each State must have an exchange (State or Federally run)
• A place where individuals are employees who cannot afford employers plans’ can purchase insurance coverage
• 3 Models
  • State Run facilitator – Carriers compete in an Open market. Any
    carrier meeting minimum
    requirements can participate
  • State Run Active Purchaser- state (s) solicits bids from carriers
    and determines which plans to offer;
    state (s) directly negotiates with carriers
  • Federally Run model- U.S. Department of Health and Human Services (HHS) runs the exchange for the state who do not create one

Exchange Plans

• Bronze plans will have the lowest monthly premium, but costs shares will be more when health care services are needed
• Platinum plans will have highest monthly premium but costs shares will be low

Essential Health Benefits Required:

• Ambulatory patient services
• Emergency Services
• Hospitalization
• Maternal and Newborn
• Mental Health Services
• Prescription drugs
• Rehab services
• Labs
• Preventive and Chronic Disease Management
• Pediatric Services, including oral and vision care

Tier Levels:

• Platinum- 90% coverage
• Gold- 80% coverage
• Silver- 70% coverage
• Bronze- 60% coverage

 
Individual Mandate-Buy a plan through either: Employer, Individual Market or traditional market or Go uninsured and pay penalty

• 2014 – Greater of $95 or 1% of annual income
• 2015 – Greater of $325 or 2% of annual income
• 2016 – Greater of $695 or 2.5% of annual income
• 2017 and beyond – Annual adjustments

Affordable Care Act doesn’t require employers to contribute to monthly premium or offer dependent coverage.

Companies can: Offer health insurance that meets the minimum coverage definition and affordable

Offer some level of coverage but does not meet minimum requirements and pay penalty

Stop offering coverage that employees purchase through exchange, and pay employer penalty

• Note – ACA doesn’t require employers to contribute to monthly premium or offer dependent coverage
• Mandate
  • Minimum coverage is not offered to full-time employees and one
    employee gets subsidize coverage equal $2000/employee after first 30 FTE
    (Full-time equivalent)
  • Minimum coverage is offered to full-time employee but it is not
    affordable an employee gets subsidized coverage +$3000/employee
    receiving subsidize coverage

Feel free to call me,
Mark S. Gardner at
214 – 762 – 2327.

The Affordable Care Act soon will be rolled out and like most Americans and Companies we all will have many questions. There’s no foolish question. As we all will be learning on the go. Feel free to call me, Mark S. Gardner at 214 – 762 – 2327. If I’m on another call don’t hesitate to leave your name and number and the reason you’re calling. Either I or one of my associates will contact you to see how we can help you. Stay tuned there is more to come with Obama Care.