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How to Select the Investments in Your

Employer’s Retirement Plan

Greetings!

It’s getting to be that time of year. If you haven’t already, you should soon receive your 2019 employee benefit options from your employer. These options typically include selecting a health insurance plan, dental, and vision coverage. Your employer may also provide for things such as life insurance, disability insurance, and/or a flexible spending account (FSA). Because you have to wait a full year before you can change your mind, it’s important to take care with your elections.

Life Insurance

Employers often provide some sort of basic insurance coverage. This could be $50,000 or some multiple of your salary. They may also provide optional coverage that comes at your expense.

Optional group life insurance is usually some sort of term insurance that provides a death benefit to your elected beneficiary while you’re employed. This coverage will likely come in amounts that are multiples of your salary. The coverage typically ends when you leave your employer or retire.

Because this is group insurance, the insurance company provides coverage at a blanket cost based on age, not health. Due to this, the insurance may come at a cost that is higher for healthy individuals and cheaper for smokers or people with health issues. You may also find that your premium goes up in bands (meaning that it increases as you reach ages such as 35, 40, 45, 50, etc).

Having some sort of life insurance is important for most people. After you determine the correct amount of coverage to purchase, you may want to weigh the costs of purchasing insurance on your own versus having coverage through your employer. Again, this is because the coverage may increase in cost every five years and that it may end after you leave your company’s employment.

Disability Insurance

Your employer may also offer disability insurance. If they do, you may find that they provide a short-term plan for you. That plan may cover you should you become sick or disabled for a period of time that exceeds your personal leave. The plan often starts to pay some percentage (likely 60% or so) of your salary for 90 to 180 days. Because your employer is paying for this coverage, it will be taxed to you as ordinary income.

Your employer may also offer the option of purchasing long-term disability insurance. This would provide coverage after the short-term period ends though age 65 at a rate of somewhere around 60% of your current pay. You may be provided with the option to pay for your premium pretax or after tax. If you elect to pay pretax, you will get a tax break on the premium payments but pay income taxes on any benefits you receive. If you elect to pay your premiums with after-tax dollars and you are paying the full amount (not employer subsidized), you will likely receive benefits free of income taxes. If you have the choice, consider if you’d rather get a tax break on the small premium or the much larger insurance benefit should you become disabled.

Disability coverage is important to have-especially if you are single or the primary bread winner in your family. Disability insurance offered through your employer is also often inexpensive. Because of this, I generally recommend that my clients opt for the maximum disability benefit that they can receive through their employer.

Flexible Spending Account (FSA)

FSA accounts are accounts where you can take pre-tax dollars from your pay and your employer puts them into a holding bucket. When you encounter a medical expense that is not covered by your insurance company, you can submit a claim to your employer and they will issue you a check.

The FSA should reimburse you for dental expenses, vision expenses, insurance deductibles and co-pays, as well as purchases for over-the-counter medications. You are only limited in reimbursements up to the amount that you contribute to the FSA for the year.

Just as is the case with your other benefits, you cannot change your FSA deduction after you elect it. If you decide to have $1,200 deducted from your pay for the year, your employer will take $100 per month from your pay and place that into the FSA. Later in the year, if you decide that the $100 a month is not enough or is too much, you cannot change your mind.

The other drawback to the FSA is that if you do not spend your full deduction for the year, you lose it. That means if you deducted $1,200 from your pay, but only used $500, the other $700 is lost. Again, make sure that you make the proper election because you cannot change the amount later and could lose a portion of your savings.

The good news is that the full amount you elect to deduct is available to you starting in January. For example, if you opt to deduct $1,200 for the year and you have a $1,200 or greater medical expense in February, you should be able to be reimbursed for the full amount right away.

Contact us to help assess your insurance needs and to help review your options. You want to make sure you have the coverage you need; but you also want to make sure you don’t have too much coverage, that you’re not paying too much for it, and that you have the right type of coverage for your situation. We’re happy to discuss your options with you and your benefits department.

The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.


PWM

partnership wealth management company for gay couples

Events & Sponsorships

Paws for a Cause

This year’s event was a great success! We raised over $7,400 for local animal groups-making it our second best event since 2010.

Follow Paws’ Facebook Page for regular updates.

Charm City Rooftop Day

Once again, we’re a sponsor for Charm City Rooftop Day. Held on Saturday, October 6th, this fun day helps support The Buddy Foundation and BARCS. Learn more about the event here.

Blue Water Bash

We’re also sponsoring the Blue Water Bash. This event helps support Blue Water Baltimore’s mission of restoring the quality of Baltimore’s rivers, streams, and Harbor. The Blue Water Bash will be on Saturday, October 13th right next door to our office at the Boathouse Canton. All attendees get a souvenir cup that will have our logo-which makes it this fall’s must have item. Learn more about the Bash and purchase tickets.

Maryland Home & Garden Show

Once again, we’re a sponsor for Charm City Rooftop Day. Held on Saturday, October 6th, this fun day helps support The Buddy Foundation and BARCS. Learn more about the event here.


Away from the Office

Monday, October 8th

Our office & the markets will be open for Columbus Day, but banks will not. As a result, we will not be able to process check requests or bank transfers on the 8th.

 

We are always accepting donations for the local animal shelters – toys, tennis balls, collars, leashes, food, cat litter, cardboard trays, office supplies, cleaning supplies, towels, mats, washcloths, etc. We will accept donations Monday-Friday between 9am & 5pm.

Family

Partnership Wealth Management family

Wow! What didn’t happen in September? Heidi and I celebrated our 17th wedding anniversary, we got to meet our newest niece (Sloane), Fenway turned 13, I celebrated the 13th anniversary of Partnership Wealth Management, and Elise had her last day at the daycare where she’s been going for the past three years. Oh, yeah, and we had our annual Paws fundraiser. Whew, what a month!

We started the month with a trip north to meet Sloane and celebrate with friends and family. While normally our time to celebrate our anniversary, we were excited to share the weekend with the newest addition to our family.

The next week, Fenway had his 13th birthday party. The kids all had birthday treats, but poor Fenway had to share his birthday with Paws. He still managed to have a little fun and he got some mother-son time the following day (he’s such a mamma’s boy).

That weekend marked the 13th anniversary of Partnership Wealth Management. It’s been a wonderful 13 years and would not have been possible without the best clients any advisor could want. Thank you!

Elise’s last day at daycare was bitter sweet. She’s going to miss her closest friends, but she’s very excited to start at a new school. I think the biggest selling point for her is that she gets to take a stuffed animal for nap time. Elise is also excited for more play time, to have new teachers, and to make new friends.

School doesn’t start for a couple more weeks, so until then, she’s on an extended vacation. Elise’s vacation plans include travelling with Heidi to visit with cousin Hayden and to see Grandma Kate.

I hope you enjoyed this month’s newsletter.

Best Wishes,

Woody Derricks, CFP®, ADPA®

President

CA Insurance License #0C40217


As a Registered Investment Advisor (RIA), Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them work towards their financial goals. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started.

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Partnership Wealth Management (PWM), is a registered investment advisor located in Maryland. PWM and its representatives are in compliance with the current filing requirements imposed upon registered investment advisors by those jurisdictions in which PWM maintains clients. PWM only transacts business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.