newsletter
Disability and Long Term Care Insurance and
ROTH IRA Conversions
April 2008
As always, the Spring KMS Client Quarterly
is full of some interesting
and timely information. From the
baby boomer bulge being over-hyped to detailed information on the stimulus
package that will help you determine the amount of your check (if you’re
eligible at all). There are two
articles that are worth some additional mention, the one on disability and long
term care insurance and the one on Roth IRA conversions.
With long term care insurance we often find that those who
can afford the premiums don’t really need the protection and those who desperately
need the coverage can’t afford the premiums. Like with all insurance you just have to
weigh the cost versus the various risks.
We are always happy to run quotes so you can make an informed decision.
Similarly, disability insurance can have costly premiums
that often deter people from obtaining the coverage they need. The other big hurdle with disability
insurance is the underwriting process.
Disability insurance has some of the most stringent underwriting of any
type of insurance. People often
confuse a worker’s compensation program from their employer as meaning
they have disability coverage.
Worker’s compensation only comes into play with on-the-job
injuries. There is also the
misconception that Social Security Disability Insurance will provide the
coverage they need, but it is often difficult and time consuming to obtain and
the benefit tends to be very small.
If you cannot afford to retire then you probably cannot afford to be
disabled. If you own a business and
the business relies on you then the business cannot afford for you to be
disabled. There are many types of
disability insurance and the premiums are always lower the younger and
healthier you are. We can help you
look at your current coverage (or lack there of), determine any gaps in your
coverage and compare quotes.
The Roth IRA conversion strategy is something that has been
written about a lot over the last year.
As mentioned in the article, the strategy doesn’t make sense for
everyone, especially those with large deductible IRA balances. There is a second strategy that
we’ll mention, but again similar issues apply. For those of you who are
not eligible to make Roth IRA contributions and you are already maximizing your
deductible contributions and would like to make a Roth IRA contribution, here
is a strategy that you can consider for 2010 and beyond. Each year a non-deductible IRA
contribution could be made and then those dollars could be converted the
following year to a Roth IRA. At
conversion, tax would be due on any gain.
This idea will not make sense for everyone and therefore the pros and
cons should be discussed with us and your accountant. It is likely that Congress will modify
the law to combat this loophole.
Finally, something not discussed in the Client Quarterly,
but of interest to those of us who live in
All of these subjects have very complex issues associated
with them and need to be addressed based on an individual’s circumstances
and needs in order to make appropriate recommendations. Please call us if you would like to
examine any of the issues we’ve addressed.
P.S. Don’t forget that your 2007 IRA contributions must be
postmarked by April 15th. That means if we are processing the
contribution for you then we need to get it at least a few days before April 15th.
Securities
through KMS Financial Services Inc.
520.884.7550
jpw@financial-architects.com brienne@financial-architects.com
3971 E. Paradise Falls,