Dunamis Insurance & Business Services

Is Health Care Reform Constitutional?

2012-01-18T10:37:00.000-08:00

The Health Care Reform Problem Simplified

Many Health Care Reform provisions and mandates are scheduled to kick in, in 2014. The most essential part of the reform legislation is called the "individual mandate" provision. This is the part of the reform that requires all Americans to either secure a health care plan or be a part of a health care plan. A United States Appellate Court ruled in August 2011 that the "individual mandate" provision is unconstitutional and because it is inseparably tied to Health Care Reform legislation, the entire law is unconstitutional. The question that will be decided at the Supreme Court level is whether requiring all Americans to secure Health Care Insurance is something that the government can regulate in a free society.

The Problem Outlined:

Healthy individuals normally don't buy coverage until they "need" it. Most of the time a person "needs" something when they believe they are going to use it. If healthy people are not required to purchase insurance, then only the unhealthy will be insured and the system will fail. The only way to avoid this pitfall is to require all people, healthy and unhealthy to purchase the coverage. In that event the risk pool is spread and premium dollars that will not have a claim against them are leveraged against premium dollars for which there is a claim and the risk pool is in essence balanced and coverage maintained. (That's layman's language is there ever was layman's language)

The Constitutional Question Is This:

Does the government have the right to require each individual to have a health care coverage as a right of citizenship and existence within the Unites States? Unlike auto insurance, which is only required for them who desire to drive, the health insurance mandate covers all citizens and even those from birth. Therefore, in this instance, one's right to be an American runs concurrently with a right and demand to maintain, have or secure health insurance coverage.

What Will Happen?

Currently arguments in favor of the "individual mandate" provisions and consequently the health care reform law itself, center around what is called the interstate commerce clause, claiming that government has a right to control and mandate interstate commerce as a matter of basically making the whole idea work. That is at least the position of the California Endowment fund in filing an Amicus brief to the US Supreme Court in effort to support a favorable decision

In addition, your favorite charity may also be in favor of the individual mandate provision of the health care reform law. Here are a few of them that have either filed briefs or joined in with those who have filed briefs with the US Supreme court on the issue:

American Cancer Society Cancer Action Network,
The American Diabetes Association,
The American Heart Association,
The National Senior Citizens Law Center
American Association of People with Disabilities,
The Arc of The United States,
Breast Cancer Action,
Families USA,
Friends of Cancer Research,
March of Dimes Foundation,
National Breast Cancer Coalition,
National Coalition for Cancer Survivorship,
National Health Law Program,
National Organization for Rare Diseases,
National Women's Health Network,
The Ovarian Cancer National Alliance,
Voices for America's Children

Read:

Amicus Brief Of The National Senior Citizens Law Center (NSCLC): HERE
Amicus Brief Of The California Endowment: HERE

Source: Philanthropy Today "Charities Ask Supreme Court To Uphold Health -Care Law"

Scammed & Conned, Don't Let This Happen To You!

2011-12-22T12:45:00.000-08:00

This was a recent story from The Huffington Post Black Voices 12/20/2011:

SACRAMENTO, Calif. -- A self-described Los Angeles entertainment entrepreneur is charged in a federal indictment unsealed Tuesday with bilking $7 million from a recent divorcee who is identified by law enforcement officials as the ex-wife of actor-comedian Eddie Murphy.

Troy David Stratos faces 14 charges of fraud, money laundering and obstructing justice. Stratos, 45, was arrested Tuesday and made his first appearance in Los Angeles federal court. His attorney, Walter Urban, did not return a telephone message.

The divorcee is identified in court papers as "N.M...the ex-wife of E.M." who filed for divorce in August 2005. Three law enforcement sources told The Associated Press that the victim is Eddie Murphy's ex-wife, Nicole Murphy, but the officials spoke on condition of anonymity because they were not authorized to release the identity of the alleged victim in the case.

Court officials would not confirm that the alleged victim is the actor-comedian's ex-wife.
Court records show Nicole Murphy sued Stratos and others last year in Los Angeles federal court and refiled the lawsuit in May in Florida state court. She filed for divorce from Eddie Murphy in August 2005.

The indictment charges that Stratos persuaded his victim to invest the proceeds of her divorce overseas, where they would earn a high rate of return. She put the proceeds into a revocable trust with Stratos in Fair Oaks, a Sacramento suburb, according to the federal indictment.

Prosecutors say Stratos never invested the money, but spent it on himself. He also opened a bank account in Florida, they say, and used portions of the money to pay the victim's expenses while leading her to believe he was paying her expenses out of his own pocket.

Nicole Murphy's federal lawsuit alleges she put $11 million into a trust with Stratos but he and the other defendants spent the money on themselves.

The wire and mail fraud charges carry a maximum penalty of 20 years in prison, while the money laundering and obstruction charges carry 10-year maximum sentences. Stratos claimed to be involved in the entertainment industry as a movie and video producer and director, as well as a talent promoter, prosecutors said.

Attorneys representing Nicole Murphy in her federal lawsuit declined comment. She divorced Eddie Murphy after a 12-year marriage. They had four daughters and one son. She previously owned a home in the wealthy Sacramento suburb of Granite Bay, though her federal lawsuit says she now lives in Calabasas outside Los Angeles.

Stratos told her he could sell her home to members of Middle Eastern royal families, but said she should lease luxury Rolls-Royce and BMW automobiles to make the property more attractive. The vehicles would then be sold as a package deal with the home, the indictment said. But Stratos lived in the home and used the leased vehicles, never arranging for them to be sold, according to the charges. He later persuaded the woman to refinance several of her homes, including homes in Granite Bay and Sacramento, to get more cash, the charges allege.

Thom Mrozek, a spokesman for the U.S. attorney in Los Angeles, said Stratos has agreed to be returned to Sacramento to face the charges, and he is jailed pending a bail hearing scheduled for Wednesday.

***********************************************

Dunamis says:

Cardinal Rule 1:
If it sounds too good to be true, look twice, and check it out, because it may be.

Oversee your own affairs and never write checks to individuals or questionable businesses. Establish a time frame up front and measurable standards that will allow you to monitor whether deals are going as planned. Avoid overseas or off-shore dealings and don't look for tax loopholes. There are bonafide strategies within existing tax law that will assist you. No need for fringe interpretations that may get you in deeper trouble.

We can help with solid strategies and solid and reputable companies, products and services. Give us a chance, call (877)677-6599 or email us at Dunamis1@netzero.com. The preservation of your financial future could depend on it.

The Rising Cost Of Long Term Care

2011-12-06T11:34:00.000-08:00

Check out these facts:

A private in a nursing home facility in Michigan costs on average $85,000 per year or $233 per day.*

A private room in a nursing home facility in Illinois costs on average $63,800 per year or $ 175 per day.*

A private room in a nursing home facility in California costs on average $91,200 per year or $ 249 per day.*

A private room in a nursing home facility in Florida costs on average $84,000 per year or $ 230 per day.*

Two-thirds of people over age 65 will need long-term care at home, in an assisted living facility or in a nursing home.

40 % of people currently receiving long term care services are between the ages of 18 and 64.

The foundation of any successful financial plan is insurance. Insurance allows and individual to spread or defer certain risks associated with predictable future events. One such often overlooked type of insurance that is vital to an individual's and family's personal and financial health is Long Term Care Insurance.

Long Term Care Insurance allows an individual to manage their senior or long term catastrophic health care risks risks and costs associated with those risks by sharing the potential burden with an insurance company. Because people are living longer, the burden that one has to secure adequate long term care has never been greater. If it is your goal and aim to maintain your standard of living, be in the environment that is suitable to your tastes or that meet your needs as well as retain what you have accumulated in life to make that available to future generations, then you should consider the benefits of securing a personal long term care insurance policy to meet the needs. Consider this for example:

Federally sponsored plans such as medicare, parts A and B and privately purchased plans, such as medicare supplements, provide benefits which are temporary in nature and do not offer full time, ongoing, long term health care benefits.

Most state assistance programs (Medicaid) want a person to go through "spend-down" before they will provide the dollars necessary to pay for the total cost of care and then only facily (nursing home) care is covered full time.

Most "spend-down" regulations leave a person with minimal assets and may demand the sale of additional cars, non-primary residences and the liquidation over time of retirement assets such as 401(k)'s, CD's, or IRA's.

Costs Associated With Long Term Health Care

There are generally 2 primary methods to address long term care needs. Home care and facility care. Assisted living facilities seek to be an alternative or a median between the two, allowing a person to be in a facility having benefits similar to that of a nursing home, while maintaining the freedom and flexibility of traditional home care.

The costs associated with each arrangement vary state by state and by region of the country as noted above. In fact Genworth Financial has a per state/per type cost of care resource HERE. Costs associated with care don't appear to be going down, especially since there are more people than ever facing or at retirement age and people are generally living longer. The 2010 Met Life annual survey on the cost of Long Term Care it was found that nursing home and assisted living rates rose significantly from 2009 to 2010 and Private room nursing home rates rose 4.6 percent to $83,585 a year or $229 a day, while assisted living facility costs climbed 5.2 percent on average to $39,516 a year or $3,293 a month.

In essence, taking care of one's long term health could be one of the most costly propositions in a persons life. Are you adequately prepared?

At Dunamis we offer many of the nations most highly rated and financially secure insurers to address your individual Long Term Care needs. Many companies offer abbreviated payment periods, spousal policy pay waivers, spousal discounts, inflation protection and flexible waiting and elimination periods to help you meet your financial goals and targets. There has never been a better time to plan for your future.

Email us at Dunamis1@netzero.com or call us at (877)677-6599 or (309)688-6599. Your financial future could depend on you taking action today. Make the call.

Resources:

* Median costs found at

Genworth Financial

Elder Answers: The Average Cost Of A Nursing Home

Disability Insurance. An Often Overlooked Essential

2011-12-01T20:09:00.000-08:00

If you were disabled, how long could you maintain your standard of living? Should you be expected to give up the way you live now or the things that you have become accustomed to? How will you continue to save for retirement or children's education? A solid disability insurance policy could take the guesswork out of future plans.

Disability. Here Are The Facts:

According to the Social Security Administration, Fact Sheet March 18, 2011, 1 in 4 Americans 20 years of age will become disabled before they retire.

According to the US Census Bureau, over 50% of the 36 million Americans currently disabled are ages 16-84.

In December 2010 there were over 2.5 million disabled workers in their 20's, 30's and 40's receiving SSDI benefits.

According to the 2010 Gen Re Disability Fact Book, the average long term disability claim is 31.2 months.

What Are Some Of The Causes Of Disability?

According to CDA's 2011 Long-Term Disability Claims Review, the following are the leading causes of new disability claims in 2010:

Musculoskeletal/connective tissue disorders caused 27.5% of new claims.

Cancer was the 2nd leading cause of new disability claims at 14.6%

Injuries and Poisoning caused 10.3% of new claims

Cardiovascular/circulatory disorders caused 9.1% of new claims

Mental disorders caused 9.1% of new claims.

Cancer claims were lower as a percentage of new disability claims in 2010, although cancer remains the second leading cause of new disability claims and the fourth leading cause of ongoing claims. The most common causes of existing disability claims in 2010 included: diseases of the musculoskeletal system and connective tissue (30.1% of all existing claims), diseases of the nervous system and sense organs (13.4%), diseases of the circulatory system (12.7%) and cancer (8.4%). Approximately 95% of disabilities are caused by illnesses rather than accidents.

Are You Prepared For A Potential Disability?

64% of wage earners believe they have a 2% or less chance of being disabled for 3 months or more during their working career. The actual odds for a worker entering the workforce today are about 30%.
Most working Americans estimate that their own chances of experiencing a long term disability are substantially lower than the average worker’s.
60% of adult Americans have NO savings earmarked for emergencies.
71% of Americans would find it very difficult or somewhat difficult to meet their current financial obligations if their next paycheck were delayed for one week.
65% of working Americans say they could not cover normal living expenses even for a year if their employment income was lost; 38% could not pay their bills for more than 3 months.

Most employer plans offer limited benefit periods. Example, some plans last 6 months or 1 year. having a supplemental or a personal disability plan will kick in at the time that it is needed most with valuable and potentially tax free dollars.

Some Disability Insurance Terms To Know:
Maximum Monthly Benefit ~ This is the total amount of money that a disability policy will pay you every month for the duration of disability.

Benefit Period ~ This is the length of time that benefits will last when you are presumed to be totally disabled. The longer the benefit period the more the cost.

Waiting Period ~ This is the length of time that one has to wait before benefits begin under the policy. The longer the waiting period, the lower the cost of coverage.

Own Occupation ~ The definition of disability is the most important part of any disability contract. The own occupation clause, defines how long that disability benefits will be paid to a person who cannot perform the meaningful and substantial tasks of their current occupation.

Any Occupation ~ Unlike the "own occupation" clause, the "any occupation" clause determines how long benefits will be paid to a person who cannot perform the substantial and material duties of any occupation for which the person is trained.

Return Of Premium ~ For persons who are covered and may not use their benefits, they may be a cash back feature that will kick in after a certain period of continuous coverage. The benefits received under this benefit is usually tax free and payable in a limp sum by contract agreement or guarantee.

Residual Benefits ~ This benefits kicks in when a person is able to work but unable to return to full time duties resulting in a certain or specified percentage loss of income.

Inflation Protection ~ There are various inflation protection options on disability insurance. Some are called Guaranteed Purchase options which will allow the client the right to buy additional coverage up and to certain limits over time in the policy. Other inflation protection options are tied to an increase in the CPI or some other calculation.

Social Insurance Benefit ~ This benefit coordinates with Social Security or other social insurance benefits. On a temporary basis, this will allow one to receive a higher than normal monthly benefit, but will decrease as social insurance is received.

What Would You Do Without Your Next Paycheck?

We can insurance individuals in most occupations and most incomes. Dunamis represents many of the nations top and most financially secure disability insurance companies. Please call us at (877)677-6599or (309)688-6599 email us at Dunamis1@netzero.com for a free, confidential, no obligation consultation regarding your disability needs.

stats:

Council For Disability Insurance Awareness

New:

Special Attorney's Professional Disability Plan by The Standard

Extended Services & Hours Black Friday

2011-11-20T18:27:00.000-08:00

Black Friday, November 25th, 2011 Dunamis Insurance & Business Services phone lines will be open 6:00 AM CST to 10:00 PM offering insurance, and related financial services.

Black Friday is a time when major retailers are said to meet their annual budgets and annual sales projection numbers. At Dunamis our focus is on helping YOU and your family or business obtain the best possible benefits at the lowest possible price. In addition you will be helping us meet our annual sales targets also. We are looking to close a $300,000 annual premium gap and every client is valuable to that year end goal. Your participation and purchase will help us upgrade technology necessary to serve our clients better and also expand the scope of our services as well as extend employment opportunities in 2012.

Friday We Will Be Able To Perform The Following:

Help customers and prospective customers evaluate current financial needs
Offer tentative rate quotes for life, health, disability insurance and long term care insurance
Provide preliminary rate evaluations for individuals with special or challenging health situations and needs
Evaluate, quote and apply for health insurance and certain life insurance online directly with chosen provider
Secure student health insurance
Secure international health and travel insurance for individuals who will be traveling outside of the US for the next 12 months.
Gather pertinent information for group health insurance and benefit plans
Qualify individuals for 401(k) and TSA rollovers to self-directed IRA's
Initiate CD/ 1035 Transfers
Set up a schedule to address new business start up needs
Gathering information and making recommendations for estate planning

For individuals with special health needs or concerns please have the following information ready for a prompt and accurate evaluation:

List of current medications (please note and changes within the last 12 months and the reason for changes)
Current Height & Weight
Most recent A1C reading for diabetics
Current blood pressure reading for individuals with high blood pressure

For individual doing a 401(k), TSA or other retirement plan rollover please have the following information available:

Amount of account proposed to transfer
Current plan provider
Current mix of cash and stock assets
Requirement or need , if any, of annual withdrawals from account

For an accurate estate or business evaluation please have the following info available:

Property listing and values by state or asset type
Business interest valuation & any stepped up basis estimates
Listings of debts or liens against assets

All one will have to do is call us at (309)688-6599 or toll free at (877)677-6599. To receive a call back Friday at the desired time, email us at Dunamis1@netzero.com with your request for an evaluation or for a quote.

Own A Mid-Sized Business? Lock In Group Health Insurance Renewal Rates

2011-10-27T15:07:00.000-07:00

FRUSTRATED??? Most business owners express that financial unpredictability is one of the primary prohibitors of business growth, and ultimately the expansion of employment opportunities. Unexpected costs are not only frustrating, but they can stop business growth dead in its tracks. Health care can be one of the most unpredictable expenditures that small and mid-sized business owners can experience.

Relief From The Unpredictability Of Health Care Costs

Blue Cross Blue Shield of Illinois has announced a rate increase cap for qualifying mid-sized businesses obtaining new coverage between Jan. 1st 2012 and July 1st, 2012. The rate increase limit will be 9% given a demographic adjustment as specified below.

Here is a portion of their announcement as follows:

New groups with 51-100 insured employees sold with Jan. 1, 2012 – July 1, 2012 effective dates can take advantage of this offer if they meet the eligibility requirements below, which include completing individual medical applications.
Group Eligibility Criteria
Groups must have 51-100 enrolled employees selecting products within the BluePrint^SM product portfolio.

The group will need to include our BlueChoice Select^® and/or BlueAdvantage^SM HMO network in the benefit offering to their employees. There will not be minimum enrollment requirements in these networks.
The Illinois Small Group Standard Health Application including Section F (Health Statement) and Section G (Additional Information) must be completed by each participant applying for coverage

For new, mid-sized groups there has never been a better time to lock in the cost of health care over the next two years (rates are guaranteed one year at a time) This could mean business expansion, the acquisition of new employees, the expansion of other employee benefit programs or the ability to establish a business debt repayment plan with more certainty than ever before.

If you own or manage employee benefits for a mid-sized business, the opportunity has never been better.

The Good News Is...

Dunamis represents Blue Cross Blue Shield Of Illinois! Our firm is able to help you determine the plan that best suits your employee needs and help install it. Don't wait any longer, time is of the essence and you don't want to miss this opportunity.

Just call (877)677-6599 or email Dunamis1@netzero.com for a quote or confidential consultation regarding your business needs.

Note: *Please note that demographic adjustments between +/-3.0 percent will be included in the cap. However, if the demographic adjustment is outside this range, the non-demographic adjustments will be capped at 9.0 percent and the full demographic adjustment will not be included in the cap.

Allianz CEO Speaks Regarding Retirement

2011-07-22T13:07:00.000-07:00

Gary Bhojwani, Chief Executive Officer of Allianz Life Insurance Co. of North America, spoke to Pimm Fox on Bloomberg TV, regarding retirement savings, accumulations and the concern of retiring BabyBoomers:

Video Will Not Download, Please Click HERE For The Video. Thank You!

Allianz is a consistent leader in the sale of Fixed Indexed and Bonus Annuities in America today. They offer a diverse and robust portfolio of products and are among insurance industry financial giants. We are proud to represent Allianz for the nearly 15 years that we have been in business.

To find out more about this company and its products and services, or for a free Suitability Review to determine if you qualify for a fixed indexed annuity or additional services, please call Dunamis at (877)677-6599 or email me directly at Dunamis1@netzero.com

Health Care Reform. Some Employers Plan To Drop Coverage In 2014

2011-06-16T13:19:00.000-07:00

In 2014 much of the Heath Care Reform Legislation kicks in. All citizens will be required to obtain coverage under whatever options that will be available. The good news is that 2014 is the year when insurance companies will not be able to deny coverage for a preexisting conditions. The bad news is that noone really knows what options will be available and it looks more and more like employer provided healthcare as an employee benefit may be a thing of the past.

This was the news after a recent survey released by McKinsey Research. It seems that many employers would rather pay any penalties associated with not providing mandatory benefits, ($2,000 per worker for groups under 50 employees) rather than be forced into providing a health insurance premium is more than likely one the greatest expenditures or potential expenditures on the books of most small to mid-sized corporations.

The survey recounts:

Overall, 30 percent of employers will definitely or probably stop offering ESI(Employer Sponsored Insurance) in the years after 2014.
Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.
At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries.
Contrary to what many employers assume, more than 85 percent of employees would remain at their jobs even if their employer stopped offering ESI, although about 60 percent would expect increased compensation.

Not only does the requirement to acquire health insurance add a dimension to the moral landscape of employee benefits, making health insurance a fundamental "right" no matter the condition of health or welfare, McKinsey also pointed out another very important part of the reform law:

"Starting in 2014, people who are not offered affordable health insurance coverage by their employers will receive income-indexed premium and out-of-pocket cost-sharing subsidies. The highest subsidies will be offered to the lowest-income workers. That reduces the social-equity advantage of employer-sponsored insurance, by enabling these workers to obtain coverage they could not afford on today’s individual market. It also significantly increases the availability of substitutes for employer coverage. As a result, whether to offer ESI after 2014 becomes mostly a business decision. Employers will have to balance the need to remain attractive to talented workers with the net economics of providing benefits—taking into consideration all the penalties and tax advantages of offering or not offering any given level of coverage."

The structure of the new law may lead to employer bonus compensation centered around health care costs. This could become a recruiting tool if no ESI is offered. A potential employee could simply choose a firm or company from which he/she could either get the best benefit package or best bonus in lieu of benefits.

Individuals with incomes less than 400% of Federal Poverty levels (approx. $89,000 in 2011) will receive subsides to purchase insurance through state sponsored insurance exchanges, and lower income workers will be in line to receive addition help to purchase plans. In fact the lower the income, the more subsidy that will be available. Therefore, a person with extremely low income may be able to receive insurance that he/she could never purchase as either an employee benefit or on their own.

In addition there will not be a way to make the health benefits of the more highly compensated employees more attractive than entry level workers and employees. In short, many things that have normally and traditionally been thought of as sound employee benefit planning, should be up for review because everything has changed.

With all the changes, why be without a competent and professional adviser? We have the solution you need to your individual health insurance and employee benefits health insurance situation.

Give us a try. Call us now at (877)677-6599 or email Dunamis1@netzero.com for a quote.

Additional information regarding Health Care Reform legislation and upcoming changes can be found both HERE and HERE.

5 Reasons Why An Annuity Is Suitable For A Retirement Plan

2011-06-15T00:00:00.000-07:00

Retirement Funds...Where Are They?

According to the Investment Company Institute at the end of 3rd quarter 2009 retirement savings accumulations were in the following instruments by percentage and type:

Mutual Funds ~ 46%
Other Securities ~ 36%
Banks & Thrifts ~ 10%
Insurance Company Annuities ~ 8%

The Dilemma

Within the field of retirement planning one can find a vast array of techniques and advice. One such caveat rehearsed from many financial advisers prior to the current economic crisis was to NOT use an annuity for retirement accumulations or contributions.

Why? Simply because an annuity wasn't as attractive as it pertained to annual rates of return due to rigid fixed annual interest rates, and secondly, since an IRA and qualified funds were already tax favored, the critic would assert that there was really no need to provide the redundancy of placing funds in an account that offered tax deferred growth by nature.

Today, many financial gurus rehearse the same sentiments. Financial radio hosts Dave Ramsey and Bob Brinker for example sound all but "baffled" when individuals ask them about certain annuities or about transferring a portion of their retirement accounts into annuities. Often the focus of their analysis hinges upon what the annuity salesperson will earn in the transaction rather than how the client will benefit. However, it is the benefits to the client, just that conversation, which must be had in order to discover the true value of annuities within retirement plans.

How Things Change

Billions of dollars have been lost through directly invested stock and mutual funds and other securities in the most recent financial recession. This has flat out challenged investor confidence and hampered retirement income for millions of Americans who were dependent upon their retirement accounts to provide them with some sort of stability.

With the advent of Fixed Index Annuities (FIA's) in 1995, annuities have never looked so good as an option for retirement accumulations. FIA's give clients the benefits of market associated returns by linking the growth calculations and interest credits to well known indexes such as S&P 500, the Dow Index, Nasdaq 100, Russell 2000 or other indexes. Once a crediting strategy and method is determined, the growth within those indexes are subject to certain maximums (called caps) and certain minimums. The advantage of FIA's is that interest earnings are not subject to market reversals as there is no direct investment within the stock market.

Since their inception, fixed index annuity sales have vastly increased. Fixed Index Annuity sales were $480 million in 1995. However, at the end of 2009 total sales topped over $30.1 billion, the highest sales year ever! Currently, there are in excess of 247 fixed index annuities available from over 44 different insurers (Source: AnnuitySpecs.com). These index annuities differ with varying Participation Rates, Caps, Margins, minimum guarantees, available indices and crediting methods/Index Account options.

Modern index annuities offer much of the upside potential of market increases and minimize many of the risks normally associated with interest earnings in the marketplace.

5 Reasons An Annuity Should Be A Part Of Your Retirement Plan

1- Safety

Although annuities are not FDIC insured, they are backed by the insurance companies that have been rated for financial strength and claims paying abilities. Since insurance companies normally invest conservatively due to the nature of their business, many of them have managed to weather the financial crisis and provide the benefits promised to their customers under annuity contracts.

2- Cost

What the radio hosts normally don't discuss is that compared to other investment opportunities, annuities is normally lower over time than the flashy Wall Street alternatives. Frequently there are hidden costs which do not all all funds to be used to determine interest rates. Annuities normally have no up front fees and normally allow 100% of invested funds to be used for interest earnings calculations. In addition, unlike many investment accounts and securities which pay commissions from the accumulated funds themselves, the insurance normally pays agent commissions directly which doesn't effect the clients funds and contributions.

3- Required Minimum Distribution (RMD)

Within qualified retirement accounts, the government requires certain withdrawals or payments from the account based on account value determined as of Dec. 31st of the year prior to turing age 70 1/2. The percentage required increases annually but begins normally around 3.65% of the account value. This is called the Required Minimum Distribution or (RMD). In a down market, this can severely hamper an individual's retirement income. When a down market is associated with fees and loads normally charged by the accounts themselves for management and distribution, this can be a double impact negative. Annuities are generally not hampered or hindered with either of these problems and that leads to #4:

4- Reliable Income Planning

Annuities generally offer retirement income that cannot be outlived. That is to say that once an distribution arrangement or payment has begun, it will normally exist for as long as the client lives or be made payable to a beneficiary for a period certain arrangement. In other words the payments are both predictable and reliable enough for a person to plan their life with a reasonable bit of certainty.

5- Growth

Since the financial crisis Wall Street has spent a great deal of money advertising the benefits of fixed annuities as a stable and solid addition to retirement portfolios. With the addition of FIA's as a solid provider of fixed annuities, the marketplace has never been better. In all not only do FIA's offer growth potential, they also back that growth with certain guarantees that most securities do not.

All things considered annuities are a reasonable option and alternative to direct market invested securities and should be a welcome addition to modern retirement planning portfolios.

Top 4 Indexed Annuity Sellers

1st Quarter 2011

*Allianz Life, Minneapolis, MN.
American Equity Life, IA

*Aviva Life, Indianapolis, IN
*North American Company, IA

*ING, IA

* = Dunamis proudly represents 4 out of the top 5 index annuity sellers.

Resources:

Stats Courtesy Of ~ Annuityspecs.com

Dunamis Advisors: Retirement Planning

Article used in compiling this post ~ "The Perfect Combination, Annuities are ideal for IRA Growth and Distribution", by David Royer Insurancenewsnet Magazine July 2010 pg. 26

Retirement Planning...Take Stability & Income Over Flash

2011-05-31T14:45:00.000-07:00

According to a recent article featured on CNBC business blog written by Wendy Waugaman, CEO & President, American Equity Investment Life Holding Company, Americans have lost over $2 TRILLION in retirement planning and investment savings over the last 3 and a half years. From a recent survey this loss of funds has caused an estimated 42% of Babyboomers to delay or suspend their retirement plans.

The good news is that on average, people are living longer and enjoying a better quality of life. The bad news is that many company sponsored defined contribution plans such as 401(k)'s or 403(b)'s have lost their value due to market risk exposure and are underfunded as a result. This means that those instruments will not be able to provide the long term income options necessary to secure the required income during post-retirement years. This presents the dangerous cocktail of long life with dwindling income.

Personal savings and investments directed toward many of the same types of investment vehicles as company sponsored plans, have either fared no better and in some cases done worse. The general public cannot afford to continue to risk hard earned and valuable retirement income accumulations to potential market swings which may or may not materialize during the required income years. This is why a post retirement strategy has never been more important. A diverse array of planning strategies are essential as there is no "one size fits all" approach to retirement planning.

Dunamis certainly has a strategy and approach to retirement planning and preservation of retirement income and funds. Two products that should be considered a solid part of the modern retirement planning portfolio are Fixed Indexed Annuities (FIA) and Charitable Gift Annuities (CGA). Since we've already discussed the benefits of the FIA's in our previous article, we'll discuss some of the benefits of the CGA here.

What is a CGA?

A charitable gift annuity (CGA) is a contract (not a "trust"), under which a charity, in return for a transfer of cash, marketable securities or other assets, agrees to pay a fixed amount of money to one or two individuals, for their lifetime.

A person who receives payments is called an "annuitant" or "beneficiary". The payments are fixed and unchanged for the term of the contract. A portion of the payments are considered to be a partial tax-free return of the donor's gift, which are spread in equal payments over the life expectancy of the annuitant(s).

A CGA can be either, immediate (where income is paid out in a short period after the annuity has been funded) , deferred (where income is paid out a certain future date), or flexible (where income start date is not fixed, but chosen by the donor at any point in the future) in the methods of payout.

Various states have varying regulation governing CGA's. All of the organization's assets must be available to back the CGA promise to pay. Reinsurance can also be obtained by the charity to cover obligations.

Benefits of a CGA:

There are multiple benefits to a CGA.

1- Immediate income tax deduction for a portion of the gift. Since CGA contributions are considered to be present interest gifts to a charity, deposits qualify for a corresponding income tax deduction.

2- Lower taxable monthly income. Much of this is established by the IRS rules found in Section IRC §72. Depending upon age, a person could not be subject to income tax on as much as 50 to 60% of monthly income payments.

3- Asset protection. Assets transferred to charity by CGA are exempt for a person's estate and therefore are protected from individual creditors, judgments, liens etc. When combined with a Wealth Replacement Trust, the value of all assets could be realized 100% tax free and bypass probate.

4- Reduction or even elimination of Capital gains taxation. Highly appreciated assets are the ideal asset for a CGA. (Please consult a tax advisor for the regulations regarding this)

5- Lowered estate taxation. Because the CGA is a gift of an asset to a qualified charity, there is not only a corresponding tax deduction, but a charitable contribution that removes contributed assets from a persons estate right away. (Please see a tax advisor for limitations and restrictions)

6- Lifetime Income: Because the CGA is an annuity, and annuities are designed to pay over either the lifetime of a single individual or two individuals in other words the object is to provide income that cannot be outlived. [These payments are backed by the assets of the charity. There is a pitfall. If the charity isn't financially sound there could be a problem. The Wall Street Journal has documented such]

7- Satisfaction of giving to a charitable cause. The CGA allows donors to give to organizations that impact causes that a person believes in. When combined with other strategies, one can give to a charity and receive certain economic benefits in return.

Conclusion:

A CGA is not the end all be all of planning and it must be for the right person, the right situation and the right asset type. Wilth all the benefits of a CGA, there is no reason that a CGA cannot be a part of the right retirement plan. The only way to determine if a CGA is right for you is through a thorough asset and suitability analysis.

Call us at (877)677-6599 or email Dunamis1@netzero.com for additional information and for a complete analysis of your situation.

Resources:

American Council On Gift Annuities

Planned Giving Design Center

One of the Best Online Calculators for this is Albright College CGA

(Contact US after seeing how this is done or for any questions)

Dunamis

2010-12-01T17:10:00.000-08:00

Dunamis Insurance & Business Services

This company was developed to provide customers the best and most innovative insurance solutions, products and services. Our planning services are client centered and rooted in the following three primary objectives:

1- Safety, Growth, Financial Security & Wealth Preservation

2- Innovative Products, Top Tier Solutions & Services

3- Client Satisfaction & Premium Customer Service

Who Are Our Clients?

Our Clients are individuals and businesses from all over the state of Illinois and other states as allowable and necessary.

Our Client assets range from very minimal to multiple millions of net worth.

Our Clients businesses range from startup, homebased businesses to well established businesses employing multiple hundreds.

Our Clients are Black, White, Indian, Latino, Asian, Middle-Eastern, and are from various religious socio-economic backgrounds.

Our Clients have seen the value in our approach to serving their needs. We DO NOT talk down to our clients or make them feel as if they have no knowledge about their needs.(If you’ve spoken to other advisors lately you may know what we mean)

What Makes Us Different?

The Dunamis Difference is made known by our proven ability and desire to do an adequate and thorough job for our clients by placing client needs at the pinnacle of all planning and recommendations.

We DO NOT offer products of the month or day.

We offer a diverse array of companies which allows us to recommend only the services that the client will benefit from.

We believe in establishing long term relationships with our clients. We believe that client development is the key to doing an excellent job for our clients.

We have no sales quotas therefore we are not pressured into making a client do business with us within a certain time range or period of time.

We are dedicated to ongoing education, which allows us to recommend only the most current, comprehensive and well thought out strategies.

We are familiar with the needs of client life-stages. Therefore we provide practical and excellent solutions for each unique need.

Does Your Small Business Qualify For The 2010 Health Care Tax Credit?

2010-12-01T16:35:00.000-08:00

With many disadvantages for small business, there is one that could help the bottom line both on 2010 taxes and beyond. Read on:

IR-2010-117, Dec. 2, 2010

WASHINGTON — The Internal Revenue Service today released final guidance for small employers eligible to claim the new small business health care tax credit for the 2010 tax year. Today’s release includes a one-page form and instructions small employers will use to claim the credit for the 2010 tax year.

New Form 8941, Credit for Small Employer Health Insurance Premiums, and newly revised Form 990-T are now available on IRS.gov. The IRS also posted on its website the instructions to Form 8941 and Notice 2010-82 , both of which are designed to help small employers correctly figure and claim the credit.

Included in the Affordable Care Act enacted in March, the small business health care tax credit is designed to encourage both small businesses and small tax-exempt organizations to offer health insurance coverage to their employees for the first time or maintain coverage they already have.

The new guidance addresses small business questions about which firms qualify for the credit by clarifying that a broad range of employers meet the eligibility requirements, including religious institutions that provide coverage through denominational organizations, small employers that cover their workers through insured multi-employer health and welfare plans, and employers that subsidize their employees’ health care costs through a broad range of contribution arrangements.

In general, the credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees. It is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

Small businesses can claim the credit for 2010 through 2013 and for any two years after that. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will increase to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible tax-exempt organizations.

The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 or more FTEs or that pay average wages of $50,000 or more per year. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, employers that use part-time workers may qualify even if they employ more than 25 individuals.

Eligible small businesses will first use Form 8941 to figure the credit and then include the amount of the credit as part of the general business credit on its income tax return.

Tax-exempt organizations will first use Form 8941 to figure their refundable credit, and then claim the credit on Line 44f of Form 990-T. Though primarily filed by those organizations liable for the tax on unrelated business income, Form 990-T will also be used by any eligible tax-exempt organization to claim the credit, regardless of whether they are subject to this tax.

More information about the credit, including a step-by-step guide to claiming the credit and answers to frequently asked questions, is available on the Affordable Care Act page on IRS.gov.

Social Security & Your Retirement

2010-12-01T16:30:00.000-08:00

Special Welcome To All The Individuals Who Received The Social Security Information Mailer. The response Has Been Overwhelming. Please Allow Us To Prepare A Personalized Social Security Tax Management Proposal For You. I am Trying To Call All Respondents, However For Immediate Attention, You May Contact Me At (309)688-6599 or email at Dunamis1@netzero.com For An Appointment.

In The Meantime Here Is Some Helpful Information To Consider

Have you considered the effect of your post retirement income on your Social Security benefits?

When considering early benefits, individuals should address whether they will continue to work and earn an income. Those who collect Social Security benefits before their Full Retirement Age (FRA= the age at which one qualifies for their full and maximum monthly benefit without reduction) are subject to an earnings test: for every $2 in wages a person earns above a specified limit, his or her Social Security benefits are reduced by $1.00.

In 2010, this limit was $14,160 up until the year of one’s FRA. During the FRA year, the limit increased to $37,680. For every $3 earned over this limit, Social Security benefits were reduced by $1. These limits are subject to COLA adjustments every year.

For the month in which a worker reaches FRA and thereafter, no earnings limit is applied; those who are past their full retirement age can earn any amount with no effect on their benefits.

The Social Security earnings limit does not apply to the following income:

•pensions and retirement pay (including Social Security benefits)

•401(k) and IRA withdrawals

•dividends and interest from investments

•capital gains

•rental income (unless the worker is in the real estate business)

•workers’ compensation

•unemployment compensation

•employee contributions to a Section 125 cafeteria plan

•sick pay paid more than six months after the month last worked

How much on average can one expect to receive from Social Security?

According to the Social Security Administration, the following were the estimated average monthly Social Security benefits as of early 2009:

Retired worker: $1,155
Retired couple, both receiving benefit: $1,876
Widowed mother with two children: $2,379
Aged widow or widower: $1,112
Disabled worker, spouse, and one or more children: $1,786
Disabled worker: $1,064

According to a May 2007, National Academy of Social Insurance study it is estimated that by 2030, Social Security benefits for the average earner retiring at FRA will replace only 29% of his or her prior earnings. In 2009, the maximum annual benefit payable to an individual who began receiving benefits at his or her full retirement age was $27,876.

Are your social security benefits taxable?

To determining whether Social Security benefits are taxable involves a two-tiered threshold limit and is based on one’s tax filing status: single or married filing jointly.

•Singles—If the total of the person’s modified adjusted gross income (AGI) plus one-half of his or her Social Security benefits is less than $25,000, benefits are not taxable.

•Married couples—If the total of the couple’s modified adjusted gross income plus one-half of their Social Security benefits is less than $32,000, benefits are not taxable.

If the total of the retiree’s modified adjusted gross income plus one-half of his or her benefits is greater than the applicable limit, some portion of the benefits may be subject to income tax.

Under the rules that apply to Social Security taxation, modified adjusted gross income aka provisional income means:

•wages

•interest and dividend income

•taxable pensions

•other investment income

•wages from part-time or full-time work

•tax-exempt interest income

•excludable interest income from U.S. savings bonds

•excludable foreign-earned income

These last three items (tax-exempt interest income, excludable interest income from U.S. savings bonds, and excludable foreign-earned income) are normally excluded from calculating taxable income. However, for purposes of the Social Security benefit tax, they are included.

How much of your Social Security Benefits are taxable?

This is often confused with the previous question. To determine the amount of Social Security benefits that are taxable depends on the extent to which the individual’s modified AGI plus half of his or her benefits exceed specified threshold limits:

•Fifty percent (50%) of Social Security benefits are taxed to the extent that income plus one-half of an individual’s benefits exceed $25,000 for single filers and $32,000 for joint filers.

•Eighty-five percent (85%) of Social Security benefits are taxable to the extent that income plus one-half of an individual’s benefits exceed $34,000 for single filers and $44,000 for married filers.

For example, assume Carl and Lydia are a retired married couple. Last year, their income totaled $49,000:

•$12,000 from Lydia’s part-time job

•$12,000 in interest and dividends

•$20,000 from Carl’s pension

•$5,000 in tax-exempt interest from municipal bonds

In addition, they also received $20,000 in Social Security benefits, bringing their total income to $69,000.

In determining their Social Security benefit tax, the full $49,000 in income is considered as their modified adjusted gross income. The modified AGI ($49,000) plus one-half of their Social Security benefits ($10,000) equals $59,000. This level puts them above the upper threshold, so 85 percent of their Social Security benefit—$17,000—is subject to income tax.

The Annuity & Life Insurance To The Rescue:

The above information can be disturbing and finding these things out has been distressing to many individuals. As you know by looking at this site, annuities & Life Insurance can solve many problems. Well, this type of strategy can solve problems for the person in the right (or wrong) social security taxation situation also.

People can reduce tax on their Social Security benefits. They can do this by shifting assets that would otherwise produce taxable earnings into a qualified, tax-deferred investment, such as a deferred annuity, a nonqualified deferred annuity or even certain forms of life insurance which could permanently address the post retirement taxation situation. Most people don't balk at changing bank accounts if there's a benefit. One should consider the proven benefits that life insurance and annuities have to offer. The primary benefit is that annuity and life insurance cash value accumulations are not included in modified adjusted gross income.

Consequently, to the extent that a person can afford to relinquish current income, diverting the funds into an annuity or life insurance could substantially reduce or eliminate the Social Security benefit tax. If, for example, Carl and Lydia were to reinvest the assets that are producing the interest and dividends into an annuity, they would lower their modified AGI by $12,000 and reduce the amount of the Social Security benefits subject to tax by one-half.

This is only one solution and it may not be for everyone. That's why all situations must be examined independently of the other. We are specialists in designing a plan that is both suitable and coordinated with the overall plans of individuals and families and assessing the situation and recommending the right strategy.

If you didn't receive a mailer, please call us anyway to get an assessment and receive the free information. We're offering strategies tailored to suit and suited to meet the need.

Dunamis Offers Powerful Solutions!

Life Insurance. Not Just For Dying

2010-12-01T16:28:00.000-08:00

One of the primary objections that I hear in my line of business is:

"Life insurance! I don't need anymore of that. I'm

already life insurance poor!"

What this type of sentiment illustrates is that most people think of life insurance in terms of dying and who can get excited about that? Fact is that people will willingly contribute as much as they can toward a good thing or for something which is perceived to offer a good present and future value. The problem is that living benefits normally associated with life insurance aren't discussed enough amongst financial professionals and or with the public.

Let's imagine that I outlined a financial product to you like this:

Your money will be guaranteed by a top insurer rated for financial strength by a top independent rating agencies
You'll never have to pay taxes on the growth or accumulation of your account no matter how much it grows
You'll never be subject to 1099 int taxation
You'll never be subject to capital gains taxation
You'll never suffer a loss of principle or interest no matter what the market does
You can have access to your money when you want it
By the way, if you should die, your heirs will receive more than quadruple what you put in and what they receive will be all tax free
All of the aforementioned statements can be placed in a legally binding contract

You would probably say, what bank or investment company is this, or where can I make my contributions, or how much money do I need to place to open my account? Even if you say, "What's the catch?" you would be anything but "poor".

Then when I say all of that and more is available within life insurance, you'll say..."I don't need any more life insurance!" Why? because basically you've been told, taught and hammered with the thoughts that life insurance is what happens when you die!

I hate to tell ya, but you've been bamboozled!

Life insurance offers all of the features I mentioned above and then some and if it's funded properly, you won't have to wait until death to receive the benefits. What most people don't realize is that life insurance has features, benefits and creates values that exceed any financial instrument ever created. Where else can you receive tax favored treatment, while you live, and a hedge against inflation by purchasing future tax-free dollars for your family at a significant discount all in one product or account? That's exactly what happens when you purchase life insurance.

The Best Kept Secret

Life Insurance & Living Values:

Discouraged by the former and defunct A.L. Williams Corp. (Now Primerica), and a list of other modern (not so modern financial planners) Cash value life insurance has never been of such a value to those who hold it. The cash value accounts in these policies has rescued millions through the country's recent financial recession. If it had not been for those values millions would be worse off than what they are now. Those cash accumulations have helped to pay mortgages, supplement retirement income, pay for medications, pay for children's and grand-children's educational expenditures, provided supplemental retirement income and managed to do all of this without tax or complicated IRS regulations.

Even Walt Disney, when he couldn't get a loan, was able to use his cash value life insurance as collateral, live a life bringing joy to millions, and far beyond his death he is hailed for his insightfulness and contributions to humanity. How did his dream begin? With cash value life insurance.

Cash Values

The cash account of life insurance is called a "cash value" account. This can also be called an excess premium account. Costs up and above mortality (costs associated with predictable death) and the cost of doing business (company profit) are funneled into this account. Term insurance offers no such account. In exchange for this account, term insurance offers a significantly less current premium cost.

Similar to a bank account this value grows at a certain rate of interest as long as it sits. Unlike a bank account or a bank offered money market account, under certain interest sensitive arrangements, one could tie the growth and accumulation of this cash value account to a major index such as the S & P 500, DOW or NASDAQ. So there is growth and dynamic potential for growth with all the guarantees associated with traditional savings.

Tax Haven

One of the most exciting features of cash value life insurance is the tax treatment of the account itself. Accumulations are not only tax deferred, but they are also tax free when taken properly. Life insurance offers what is called a loan feature. This feature allows the insurance company to provide you, the customer, a guaranteed loan against the value of the account at any time without any reason or qualifications and no credit check.

Now, I know, you say..."Who wants a loan?" and I'd agree IF you had to pay it back...Guess what? A little feature of that cash value account loan is that you'll never have to pay it back during your life time and your beneficiaries can walk away and more than likely still receive a nice little lump sum of tax free cash when you pass away...This means that you can use your money now, not pay taxes on it or the accumulations of it, and your heirs will yet receive the part that went unused, all tax free. What can be better???

Now can your bank account do that??? What the bank will do and has successfully done, is loan your deposit out, charge 8% and give you 1% as a thank you for allowing them to use your deposit. No wonder they can give complete strangers $50 to open an account. At either rate if you have a loan outstanding at death, your estate will have to pay it back and no-body is giving your heirs a tax free settlement UNLESS it's an insurance company.

Another question, can your brokerage account do that? Under most scenarios, no matter how diversified they say your portfolio is, without apology, you could loose all accumulations and interest in a day! Then by the time you get finished paying capital gains and 1099 int, are you really better off?

Versatility

Have you ever said, "It's my money, why can't I use it for what I want to use it for?" Only to find out that there are restrictions on use...Look save money for retirement and you can't get it 'till a certain age and can't use it for things you need until then without giving up a significant portion of it...In fact during your working years you may as well write off 50% of anything drawn from a retirement fund in taxes. You need $2,000 from the money you saved? Be prepared to pay the gov't $1,000. You're smart, save money for college in a 529 Plan, only to find out that you can't use it for certain real expenses, at least without paying a hefty penalty to someone, and if college isn't the kids bag, you're stuck with another payment or penalty for saving money...What in the world is that all about???

The cash value of a life insurance policy can be used for whatever purpose whenever it's needed without restriction. Additionally there is no early withdrawal penalty, over withdrawal fee or any additional problems associated with getting your money.

Buy Term and Invest The Difference

This little "theory" has been a long staple of many advisers. However the reality is a fictitious one and one that creates the same trouble that we are discussing and trying to distance ourselves from. Not only do most of those investments not have guarantees, but if they are successful, they are also subject to 1099 int. earnings taxation and capital gains tax. Then let's assume that you use and IRA or some other qualified account to do such. What have you done? Nothing more than lock your money up in the years that you might need it most, and merely deferred all that tax until a later age. Could anything happen along the way where you might need your money? Then you're taxed at an age when your income will be fixed and you really need taxation to be lower.

How about a ROTH IRA? Good idea but similar unpredictability of return and loss of principle and certainly no extra tax free benefit paid to your family and no loan features to help out in case of emergencies, and the same restrictions imposed on it as on taxable accounts IF you need your money.

All of this is in part why this "theory" called the "theory of decreasing responsibility" is ineffective. How many of us actually have less responsibilities, goals and dreams than we did 20 years ago? What may look good on paper isn't practical or representative of real life circumstance.

Conclusion:

These mistakes are all mistakes that many people have been advised to do. So the blame is not with the public or individual who finds themselves in this situation, it lies flat at the feet of the professional adviser.

With all of that said, insurance planning should not be done with a "cookie cutter" mentality. Different stages in life and differing needs require different planning and tools to help accomplish the task. This is why you are encouraged to give me a call to discuss your financial situation and needs. We represent many of the best and lowest priced term insurance companies in the country as well as some of the most innovative companies that present whole life products in the form of Equity Indexed Universal Life (EIUL).

Whatever the need, spend about 20 minutes with us and it will certainly be worth your wile.

Call us now at (309)688-6599 or toll free at (877)677-6599 or email at Dunamis1@netzero.com. Don't place your financial future on hold any longer.

The Newly Created Surtax Of IRC Section 1411

2010-12-01T15:30:00.000-08:00

Established within the 2,000 plus page Health Care Reform Legislation, IRC S 1411 creates a 3.8% annual surtax on wealthy individuals and certain trusts and estates on net investment income beginning in 2013 (a wealthy individual is defined as an individual with Adjusted Gross Income (AGI) exceeding $200,000 annually and joint filers with AGI exceeding $250,000 annually and AGI exceeding 125,000 annually for married filing separately) According to a July 2010 article by Insurancenewsnet Magazine this 3.8% surtax is an additional tax above ordinary income tax and capital gains taxation.

The key to understanding what's being taxed lies within knowing what comprises "net investment income" (NEI). NEI includes many types of passive income such as income from interest, dividends, annuities, royalties, rents, (other than rental income derived in the ordinary course of a trade or business), and interest income earned by certain Charitable Lead Trusts and sales of non business property.

Exemptions From The Implication Of This New Regulation Include The Following:

1- Distributions from qualified plans

2- Income from tax exempt municipal bonds

3- Increases in life insurance cash values and (in most cases) death benefits from life insurance

4- Charitable Remainder Trusts

How The Tax Is Computed For Individuals:

The tax is calculated by the lesser of the NEI or the amount by which the taxpayer's AGI exceeds the threshold limits set forth in the health care bill.

Example: A married couple filing jointly with an AGI of $300,000, with $100,000 of that income attributable to investment income. Remember that the married filing jointly threshold is $250,000. therefore the couple will pay 3.8% on the $50,000 because $50,000 is the lesser amount by which the couples NEI exceeds the threshold limitation.

How The Tax Is Computed For Trusts & Estates:

The 3.8% tax is imposed imposed in trusts and estates on undistributed NEI by which AGI exceeds the top income tax bracket.

What Is The Top Income Tax Bracket For Trusts And Estates?

For 2010 the top bracket begins at $11,200 which means that trusts and estates earning more than $11,200 are taxed at a rate of 35% (plus $2,895.50). In 2011 the highest bracket will revert back to pre-2001 rates of 39.1% bringing a total tax rate to 42.9% (39.1% + 3.8%)

Example: A trust earns $ 200,000 in 2013 and does not distribute this income it will pay $84,113.20 in federal income tax. ($76,938.80 ordinary income tax + $7,174.40 excise tax)

Congress has until 2013 to act and modify or adjust these numbers but this is what they are at the present moment.

An Escape Route Through Life Insurance

As noted, life insurance cash values and death benefits are not normally subject to the excise tax rules and regulations. Outside of a Modified Endowment Contract (MEC) as defined under IRC Section 7702, life insurance should remain tax free under almost all circumstances.

Life insurance is not an investment in a technical sense but could and should be considered as a diversification within trust and estate arrangements as it's values are not subject to the 3.8% excise tax. Therefore life insurance, and cash value life insurance specifically, should be a part of a well diversified portfolio and trust and estate arrangements.

The Timing Of Death Saves Heirs $600 Million

2010-12-01T02:30:00.000-08:00

According to the Wall Street Journal former NY Yankees Owner George Steinbrenner potentially saved his family over $600 Million in governmental confiscatory fees called estate taxes. Here is the article:

"Forbes recently estimated the Yankees owner’s net worth at $1.1 billion, largely from the YES network. The New York Yankees, which he acquired in 1973 for $10 million, are now worth $1.6 billion but are 95% leveraged due to debt from the new Yankee Stadium, according to Forbes.

Because Steinbrenner died in a year when there is no federal estate tax, he potentially saved his heirs a 55% estate tax on his assets — or a tax bill of about $600 million. The 55% tax takes effect on January 1, 2011. If Steinbrenner had died in 2009 when the estate tax rate was 45%, his estate tax bill might have been nearer $500 million. Because the wealthy often do elaborate planning, putting assets into trusts taxed separately from the estate or into foundations that are tax-exempt, it is unclear how large his estate will be. Estate taxes may also be postponed on assets left to a spouse in years when there is an estate tax.

Steinbrenner is survived by his wife, Joan, two sons, and two daughters, plus two sisters and several grandchildren.

There is no estate tax this year due to changes made by Congress in 2001. Those changes eased the estate tax over several years and culminated with its repeal this year, followed by a return to high tax levels in 2011. Experts say few ever expected the tax’s repeal, and its 2011 reinstatement, would actually take effect. Instead they believed lawmakers would smooth out the tax rates at some point between 2002 and the end of 2009.

Congress never got around to it, and the tax lapsed this year. Many still hope lawmakers will fix this year’s law, which actually raises taxes on heirs of the merely affluent (with assets between $1.3 and $4 million). But they still haven’t acted and have little time to do so.

Because of the huge chasm separating 2010’s zero tax rate from 2011’s 55% rate, some fear that Congress has provided the wealthy with an incentive for dying–or their relatives with an incentive for making sure they die–before the clock strikes midnight on Dec. 31.
This year’s lapse potentially provides huge windfalls for the very wealthy, like Steinbrenner. Other billionaires who have died this year include Houston energy magnate Dan Daniels and real estate developer Walter Shorenstein.

Goldman, Sachs is Steinbrenner’s banker."
~ Laura Saunders