The Millennial’s Guide to Important Financial Documents

It’s time to get your important papers organized once and for all!

If you haven’t yet figured out a system for organizing and filing all of your important documents, such as tax information, bank account paperwork, birth certificates, etc., now is the time! You just never know when disaster will strike and, when and if it does, you’ll want to know that your important papers are in a safe place.

It’s a great idea to use a waterproof, fireproof, locked box or safe to file your important documents. You should also have digital copies saved somewhere secure, if possible. But which papers are the most important ones to keep safe and secure? Check out the list below.

By Frozen Pennies

Tax Information
Tax return information from the last seven years. If you do your own with any electronic software like TurboTax, they will store your tax forms for you, but any W-2’s or 1099 forms need to be saved as well.

Also, any type of correspondence from the IRS should be kept in a file. If you owed the IRS money and had paid them, make sure you keep all receipts

If you have anything that is a deductible from work expenses or charitable donations, make sure you keep those in a safe place for seven years as well. If you are trying to go paperless, scan those receipts and keep them on the cloud or a hard drive.

Healthcare receipts are other important financial documents that must also be kept and safe.

If you have purchased stocks, you need to have a record of how much you bought them for so losses and gains can be calculated. However, the person you are paying to manage your investments will generally keep track of this for you. If you are designing your portfolio, this is something that you need to take responsibility.

Retirement accounts and 401K documents are important financial documents that should have a place in your system.

Insurance Policies
Copies of your homeowner’s policy or renter’s policy are nice to have on hand and easily accessed. Please also consider taking photos of your home and belongings to keep with that policy.

Life Insurance policies should also be kept safe.

Financial Accounts
Bank accounts, passwords, mortgage account information and any other loan documentation that you might have.

Other Documents
Birth Certificates, marriage, divorce papers, and social security cards are essential to keep safe.

Having auto registrations, titles, and insurance policies organized and on hand make to so much less stressful if you need them in a hurry.

Legal documents like health care proxy, power of attorney, legal will as well as copies of any that may pertain to you from family members. A letter of instruction for the family might be a nice addition to this file.

Read the full article here.

How key person insurance can Protect your Business from Key employee loss

A business requires methodical planning and systemic efforts by its manpower resources i.e. key employees to take it through stressing times and upheavals. The exit of valuable employees can cause severe loopholes in the business which may result in loss of momentum and revenue to the business. Thus, for a business to flourish, it is essential that it does not get bereft of its key employees. When a business unexpectedly losses an indispensable employee, a void is created, covering of which involves both time and money. To protect one’s business from the financial losses, which the departure of a key employee may bring to it, a business owner has only one umbrella to seek shelter under being termed as Key Person Insurance.

business protection insurance
Source: biz new orleans

Here is a good read on how to Protect Against Losing Key Employees

How to establish who a key employee is?

There are fewer business owners who actually consider the regular impacts of losing a key employee. It is more or less like considering the loss in case of a natural disaster. A key employee is a person whose sudden exit from the business may cause it to become numb.

How can the business be protected against the exit of a key employee?

To protect one’s business from the financial losses, which the departure of a key employee may bring to it, a business owner has umbrellas to seek shelter under, termed as ‘Key Person Insurance’ and ‘Key Person Disability Income.

key person cover
Source: yes financial

What is Key Person Insurance?

Key person insurance is a kind of life insurance policy which business owners invest in, on their key employee. The employee has nothing to do with it. Rather it is owned by the business and all premiums are paid by the business. In case of a key employee’s death or disablement, the advantage of the insurance policy is claimed by or extended to the business.

How can Key Person Insurance be utilized by the business?

In case of a key employee serving the business until he retires, the benefit of the insurance policy is transferred to him. In case the employee dies or has to leave the job owing to a sudden contingency, the business utilizes the amount received by the insurance to serve the business.

key person insurance policy
Source: weber messick

Several purposes for which the funds of the insurance are used may be to engage a new employee and train him accordingly, to cover the losses created by lack of sales, to redeem stocks and to provide the employee’s family death benefit.  Moreover, the insurance amount also helps to solidify the business finances during these unsettling times.

How are the costs for Key Person Insurance calculated?

The calculation of how much should the insurance policy be for involves multiple contingent factors. One such factor is the determination of the amount which can be easily afforded by the business. Another is the calculation of the financial loss which the business is likely to sustain in case of key employee’s sudden departure.

keyman insurance policy
Source: edzona

Read more on related content here: Valuable Protection for the Future Success of Your Business

Thus, to ensure that the continuity of the business is not disturbed, it is vital that business owners understand how important they themselves are for their business and their exit might affect it. It is also important that business owners evaluate the vulnerability a business may be put into when any other key employee is forced to leave the services owing to natural contingency.

Key employees are the most valuable assets of a business, and any loss which the business may suffer because of their untimely death or disability, needs to be protected against. Do you think your business needs professional Guidance when it comes to key person insurance? Contact our service professionals at Flagship Financial

Will There be Taxes on Retirement Income?

“Gone are the days when retirees in America were excluded from tax stress and received breaks in tax returns”, says Bob Carlson, editor of Retirement Watch, “now the government knows that money lies with the elderly and that is where they tap.”  Many of us are left wondering if they will have to pay taxes on retirement income and in this post we will discuss this topic. The Government requires funds to operate and for them, age is not a criterion for stepping back. They are well aware that the retired Americans are the wealthiest and thus have maneuvered systemic taxation policies accordingly. It is only the paycheck that exits with retirement but all other checks including pension, IRA distributions and social security benefits keep rolling in thus becoming eligible for taxation.

tax on pension
Source: PBS news hour

Depending on where the retirement income comes from and how much is it that a retiree receives, the retired citizens of the US keep paying taxes even after retirement. It more or less keeps working just as it does before retirement.

Types of Taxable Retirement Incomes

The retirement incomes on which the retiree is taxed have different rules to it but the six most common types of taxable retirement income are:

Withdrawing from retirement policies:

All withdrawals made from 401(k), 403(b), 457, SEP, SIMPLE, IRA (Individual Retirement Account) are taxable. But how much tax is paid depends on the income from the particular year after taking into account the deductions made by the retiree. If the deductions overshadow the income, then the tax paid is nil for the particular year.

income tax on pension
Source: self directed retirement plan llc

Another exception is the ROTH IRA, which falls under the non-taxable criterion.

Receiving Pension Income:

Generally, income from all pension schemes is taxable. How much the pension would be deducted as the tax is ascertained under a form 1099, at the beginning of the year.

Though pension received from military or under a disability account is exempted partially or completely from tax.

Income from Annuity:

If the income from the annuity is included in the IRA then the tax would have to be paid according to the rule mentioned in the IRA. If annuity withdrawals are from an immediate annuity or fixed or variable annuity then the taxable amount would be deduced accordingly.

Income from Investments:

Any income from dividends, interest or capital gain is taxable even after retirement. How much tax is to be paid is yet again determined on the income received.

tax on retirement savings
Source: mussett wealth management

Income from Social Security Benefits:

Income from social security is non-taxable if it is the only source of income after retirement. In case of social security benefit not being the only source of income, the retiree is supposed to pay taxes up to 85% of his social security benefit, depending on how high the monthly pension received by the retiree is.

Here is more information on Retirement income.

Income from sale of fixed asset i.e. Home:

If the home is more than 2 years old then you will only be required to pay taxes if the gains from the sale of your house are more than $ 250,000 if single and $500,000 if holding a marital status.

what tax will i pay on my pension
Source: retirement income specialists

Thus, retired US citizens have to pay taxes even on their retirement money and it is vital that they structure their retirement income in such a manner that when they reach retirement they are likely to pay fewer taxes.

American natives are taxed on their retirement income and thus they should with the help of a skilled tax advisory formulate plans so that the burden of tax on them, when the time comes, is less. Do you need professional assistance with planning your taxes on your retirement income? Call our service professionals at Flagship Financial