Danbury, Ct., June 29. Corporate Compensation Plans Inc. (CCP) announced a new Retirement Security plan for physicians to continue contributions to their retirement plans when a career-ending disability occurs.
“When physicians become disabled,” said Philip Davis, president of CCP, “contributions to their retirement plans stop. As a result, they can suffer catastrophic losses in their retirement benefits at age 65 – the very time when payments to them from their disability insurance plans usually terminate.”
Tracy Shaw, Senior Vice President of CCP gave this example, “A 45-year-old physician who is contributing $49,000 a year to his 401k and profit sharing plans could expect to have $2,086,000 at age 65, assuming a 6.75% return. But if he has a stroke and can no longer practice, there would be nothing in his account because his retirement contributions would have stopped.”
“One solution,” she continued, “would be to buy additional disability insurance to cover this risk. However, most physicians are unable to buy more coverage because of the strict limits insurance companies place on the amount of disability insurance they will issue to physicians.”
CCP’s new disability plan solves this problem by enabling physicians to purchase up to an additional $1,000,000 in tax free benefits – regardless of the amount of disability insurance they already have. When they become disabled, these benefits will be paid to them to be invested so their retirement assets will grow just as if they were working.
Two additional advantages are that the plan will pay benefits if the disability prevents the physicians from practicing in their own specialty, and the insurance can be issued without medical examinations on a guaranteed issue basis.
The insurance is issued on a group basis and requires that at least 10 physicians participate, and they are either employees of a medical unit or members of a medical practice group.
A highly rated, multi-national insurance carrier underwrites the Plan.
About Corporate Compensation Plans
For more than 25 years Corporate Compensation plans has been providing innovative and tax-advantaged benefit plans to many of the nation’s largest employers. Equally important is its ability to support these programs with dynamic communication strategies and effective administrative systems.
Contact
Tracy Shaw – Senior Vice President
Phone 203 792 7300 –
tshaw@corpcompinc.com
Corporate Compensation Plans Inc.
457 Main Street – Danbury, CT 06811
www.corpcompinc.com
Monday, June 29, 2009
CCP Announces a New Program to Protect Employees’ Non-qualified Deferred Compensation Plans
Corporate Compensation Plans Inc. (CCP) announced today a new program to protect employees’ nonqualified deferred compensation plan benefits. Benefits from nonqualified plans can far exceed those in “qualified” retirement plans - such as 401k programs - because there are no limits on employee and employer contributions.
“As a result,” said Philip Davis, president of CCP, “It is not uncommon to see higher paid employees – and their companies - deferring hundreds of thousands of dollars of income into the these plans, making it critically important that they eliminate risks that can cause the loss of their investment accounts.”
CCP has identified the most serious of these risks to be a pre-retirement disability; the significant cost of extended health care, and the income and estate taxes that can drastically reduce nonqualified retirement plan survivorship benefits.
“The first risk to employees’ nonqualified plans,” said Tracy Shaw, Senior Vice President at CCP, “is a pre-retirement disability. When that occurs, contributions to the disabled employees’ nonqualified retirement plans stop with the potential for severe losses in their retirement savings and investments.” For example, a 50 year old employee, who is deferring $150,000 a year into his nonqualified retirement plan, can expect to have $3,800,000 at age 65, assuming a 6.5% investment return. Yet, if he is totally disabled, he will have nothing in his account at age 65 because his deferrals will have stopped.
The second risk to employees’ nonqualified plan assets is the cost of long term health care which can exceed a million dollars from conditions such as strokes, Alzheimer’s, or the results of a serious accident. Costs of this magnitude can decimate an employees’ retirement income and force the family to liquidate nonqualified plan assets to maintain their standard of living.
The third risk to nonqualified plan assets is they are subject to both income and estate taxes when the executives die. This means that over 65% of nonqualified plan survivorship benefits can be eaten up by taxes.
To insure against these risks CCP has designed an integrated insurance plan with three components.
The first is a special disability insurance plan that will continue contributions of up to $200,000 a year into employees’ nonqualified deferred compensation accounts when they become disabled. This means their retirement assets will grow just as if they had continued to work.
The second component is a long term care insurance plan that protects employees’ nonqualified plan assets and income against the high costs of long term health care. Premiums can be paid from corporate nonqualified plan contributions and the plan has a money back feature that refunds premiums if care is never needed.
The third component will convert income and estate taxable deferred compensation survivorship benefits into income tax free and estate tax exempt life insurance.
“Our new plan is particularly relevant today because many employees have suffered severe reductions in their nonqualified retirement accounts from the bear market and further losses could destroy their retirement security”, remarked Philip Davis, “and the really good news is that it can be implemented on a cost neutral basis to the company.”
About Corporate Compensation Plans
For more than 25 years Corporate Compensation Plans has provided innovative, tax-advantaged benefit plans –and the systems to administer them- to many of the nation’s largest companies and law firms. These plans are specifically designed to help employers in their ongoing efforts to attract and retain the top talent they need to effectively compete in today’s global economy.
Contacts
Corporate Compensation Plans
Tracy Shaw, +1-203-792-7300
Senior Vice President
tshaw@corpcompinc.com
www.corpcompinc.com
“As a result,” said Philip Davis, president of CCP, “It is not uncommon to see higher paid employees – and their companies - deferring hundreds of thousands of dollars of income into the these plans, making it critically important that they eliminate risks that can cause the loss of their investment accounts.”
CCP has identified the most serious of these risks to be a pre-retirement disability; the significant cost of extended health care, and the income and estate taxes that can drastically reduce nonqualified retirement plan survivorship benefits.
“The first risk to employees’ nonqualified plans,” said Tracy Shaw, Senior Vice President at CCP, “is a pre-retirement disability. When that occurs, contributions to the disabled employees’ nonqualified retirement plans stop with the potential for severe losses in their retirement savings and investments.” For example, a 50 year old employee, who is deferring $150,000 a year into his nonqualified retirement plan, can expect to have $3,800,000 at age 65, assuming a 6.5% investment return. Yet, if he is totally disabled, he will have nothing in his account at age 65 because his deferrals will have stopped.
The second risk to employees’ nonqualified plan assets is the cost of long term health care which can exceed a million dollars from conditions such as strokes, Alzheimer’s, or the results of a serious accident. Costs of this magnitude can decimate an employees’ retirement income and force the family to liquidate nonqualified plan assets to maintain their standard of living.
The third risk to nonqualified plan assets is they are subject to both income and estate taxes when the executives die. This means that over 65% of nonqualified plan survivorship benefits can be eaten up by taxes.
To insure against these risks CCP has designed an integrated insurance plan with three components.
The first is a special disability insurance plan that will continue contributions of up to $200,000 a year into employees’ nonqualified deferred compensation accounts when they become disabled. This means their retirement assets will grow just as if they had continued to work.
The second component is a long term care insurance plan that protects employees’ nonqualified plan assets and income against the high costs of long term health care. Premiums can be paid from corporate nonqualified plan contributions and the plan has a money back feature that refunds premiums if care is never needed.
The third component will convert income and estate taxable deferred compensation survivorship benefits into income tax free and estate tax exempt life insurance.
“Our new plan is particularly relevant today because many employees have suffered severe reductions in their nonqualified retirement accounts from the bear market and further losses could destroy their retirement security”, remarked Philip Davis, “and the really good news is that it can be implemented on a cost neutral basis to the company.”
About Corporate Compensation Plans
For more than 25 years Corporate Compensation Plans has provided innovative, tax-advantaged benefit plans –and the systems to administer them- to many of the nation’s largest companies and law firms. These plans are specifically designed to help employers in their ongoing efforts to attract and retain the top talent they need to effectively compete in today’s global economy.
Contacts
Corporate Compensation Plans
Tracy Shaw, +1-203-792-7300
Senior Vice President
tshaw@corpcompinc.com
www.corpcompinc.com
Thursday, June 11, 2009
Who is the beneficiary of your 401k, profit sharing and pension plans?
Your answer would probably be, “Myself and my family”.
But, would it surprise you to learn that there is more than a 50% chance that you have named your physician, your hospital, and a cast of nurses, therapists and caregivers as co-beneficiaries of your retirement plans?
Here is why; almost all statistics say that over 50% of all Americans will need long term health care at some time during their lives(1). For some the costs will be inconsequential; for others they can run into the hundreds of thousands – even millions – of dollars because of conditions such as strokes, debilitating accidents or even Alzheimer’s.
Where will the money come from to for our care ?
To answer that question, imagine this: Jim Smith has accumulated $2,000,000 in his retirement plans and retires with an after tax income of $100,000 a year. Suddenly he has a stroke and needs a caregiver at home 10 hours a day, 365 days a year. The result:
But, would it surprise you to learn that there is more than a 50% chance that you have named your physician, your hospital, and a cast of nurses, therapists and caregivers as co-beneficiaries of your retirement plans?
Here is why; almost all statistics say that over 50% of all Americans will need long term health care at some time during their lives(1). For some the costs will be inconsequential; for others they can run into the hundreds of thousands – even millions – of dollars because of conditions such as strokes, debilitating accidents or even Alzheimer’s.
Where will the money come from to for our care ?
To answer that question, imagine this: Jim Smith has accumulated $2,000,000 in his retirement plans and retires with an after tax income of $100,000 a year. Suddenly he has a stroke and needs a caregiver at home 10 hours a day, 365 days a year. The result:
- Jim’s retirement income $ 100,000
- Jim’s health care costs(2) $ 73,000
- Net income for Jim’s family $ 27,000
Jim’s family is now between the proverbial rock and a hard place:
- They change their lifestyles and reduce their standard of living
- They start liquidating Jim’s retirement plan account – money he had earmarked for their future financial security
Of course this will never happen to us – but what if we are wrong?
The moral of the story: Without an effective Wealth Preservation Plan in place there is a good chance that you will give away some of your retirement assets to pay for the costs of extended health care.
(1) 70% of all Americans will need some type of long term health care during their lifetimes 10/2008 (www.longtermcare.gov/ltc).
(2) See 2008 MetLife Mature Market Surveys on the cost of long term health care.
Tuesday, June 2, 2009
WHY YOU DON’T NEED LONG TERM CARE INSURANCE
If you are considering buying long term care insurance to protect yourself against the cost of extended health care – don’t bother.
Someone will always take care of you if you need long term health care. Maybe it will be your spouse, or your daughter, or some relative who feels obligated to help out. Or, it could be professional caregivers if you feel inclined to liquidate your assets to pay for them.
And even if your family cannot, or will not, take care you and you run out of money - not to worry! The government will put you in a nursing home and pay for your care under a welfare plan for the indigent called Medicaid.
So you see, buying long term care insurance for your own benefit is a waste of money.
Buying it to protect your family from having to reduce their standard of living to pay your long term health care bills –or spending down the assets you planned to give to them - is a different story!
Including a COLA benefit to your Long Term Care Insurance Policy is a Waste of Money
Consider this: a 55-year old individual has $1,800 a year to spend on long term care insurance. Here are his 2 options:
In this example, why would anyone in his or her right mind buy option 1?
Equally important, why would any financial advisor or insurance professional recommend option 1?
Interested in learning more? Click here
In this example, why would anyone in his or her right mind buy option 1?
Equally important, why would any financial advisor or insurance professional recommend option 1?
Interested in learning more? Click here
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