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Leverage Your Insurance – Get More for Less

Leverage Your Insurance – Get More for Less

Whenever we make a major purchase, we always look for the best return on our investment: whether it’s a computer, a car, a home, or an insurance policy. When it comes to our tangible assets, it’s easy to see when they need updating or maintenance. Unfortunately, less tangible assets like insurance policies and investments often get filed away and forgotten but it’s just as important to review and revisit these on a regular basis.  Here’s why.

A recent case came about from a  simple insurance review that uncovered an expensive contract that did not match the goals of the insured: too high a premium, not enough in the form of benefits.
As we talked with our client about his individual needs needs and goals, we were able to offer a solution that:
  • Lowered their insurance premium by $21,000 per year;
  • Added tax free income beginning at age 66 for a period of 20 years
  • Maintained a life insurance benefit

Leverage Options 5 - More for Less

Whether you’re looking at minimizing your tax bill, maximizing your retirement income, or options for long term care, we know we can find a solution that meets your specific needs. Give us a call at (617) 527-9736 or send us an email



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Picture8Remember the “good old days”  when after-dinner  discussion on Sunday revolved around sports, food, family, and finances? Food was all about the just-eaten meal, sports covered Mickey Mantle vs. Willie Mays, family was about that one annoying relative, and I distinctly remember finances being about smart men putting their money in Municipal Bonds.  As an adult I realize why. Because Municipal Bonds were safe and they were tax free, and setting up an option for tax free income was a smart thing to do in those days.

Somehow, that philosophy of establishing tax free income  became less popular as declining bond values were replaced with the lure of  unlimited upside growth  from the stock market. Slowly and for a variety of reasons, no one really talks about Municipal Bonds Picture9anymore and that moved the conversation away   from talking about tax free income and safety.

However, in an environment of high personal income and capital gains taxes, the importance of tax free income can never be overstated. The more tax free income you can derive, the lower you can drive your tax bracket, and  although wealth managers  convince people that they will be in a lower tax bracket when they retire, the
reality is  that we really will not be in a different tax bracket if we are expecting $150,000 or more of  retirement income. So the question I ask when working with a new  client is “How much money do you have in the tax free zone?”

The tax free zone is where assets grow and are distributed tax free. Municipal Bonds are in that zone, so are Roth IRAs as well as Life Insurance.  As a planner, I use life insurance almost exclusively when planning tax free growth and income. It is a far more flexible asset because it does not have the limits of a Roth IRA nor the low interest rate callability of a municipal bond.

Picture10What if we could target the cash value build up (as best as one can target when determining future values) so that the cash withdrawals from the tax free insurance can be withdrawn to pay future taxes on retirement income, which are usually high? What impact would that have?

Furthermore, if we believe that the stock market will keep growing, would it not be a  good idea to hedge our stock market investment from negative growth?

We found three extraordinary outcomes when we started putting people in the tax free zone:

 First, a well planned out insurance contract can end up paying the income tax on retirement income at a huge discount and withdrawal streams can last longer because of their tax free nature. When you do not pay taxes on income, you do not have to withdraw as much money from retirement accounts.

Second, by creating tax free income, we were able to keep incomes high and tax brackets lower. This was an extraordinary reality; taking the tax money you did not pay the government in the form of a tax deduction, start your tax free account creating future tax free income while lowering your tax bracket.

Third, we were able to hedge against loss.

Based on these results, Goldwater Financial created ” Planning in the Tax Free Zone” which takes a deep look at how our clients grow their money and what the tax outcome will be. We are creating tax deductions through pension contributions and using the tax savings to start alternative insurance programs that will create tax free income in the future. All of these tax reduction ideas are folded into the Tax Free Zone style of planning.  If this type of planning intrigues you, then contact us at  617-527-9736 to learn more.


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Have you ever wondered if it’s possible to limit withdrawals from your investment accounts and stay in the lowest tax bracket possible while still reaching a specific retirement income goal?  Well it is…. and this quick video shows you how!

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Untitled-24Are you truly aware of how you can pay your future taxes at a discount?  Are you ACTIVELY working with your advisers—be they CPAs or attorneys—to implement strategies that will ensure you do not pay unnecessary taxes or leave you vulnerable to unprotected risk?

Here are a few questions you should be asking:Picture1

  • Have you created a TAX FREE ZONE for savings and income?  (Note that your 401(k) or pension is NOT a tax free zone).
  • Do you know HOW MUCH INCOME you will need in retirement?
  • Do you know what your SOURCES OF INCOME will be in retirement?
  • Do you know what the TAX ON YOUR INCOME will be in retirement?
  • Will you be in a LOWER TAX BRACKET in retirement?
  • Are you in a position to pay future taxes at a discount and protect your assets in case of a severe health event?

If you answered NO to one or more of these then now is the time to take a look at your portfolio to analyze whether your retirement savings and retirement assets are fully protected from taxes.

There are three ways that you can effectively create lower taxes on income in retirement:  you will either have to lower your income, create tax losses to offset your income, or create a tax free zone where all income is usually received tax free (I say usually because it is imperative that you follow the uncomplicated rules).  In the tax free zone, wealth transfer is usually tax free and health protection benefits are received tax free. The illustration below shows these options.








A TAX FREE ZONE is the most under-utilized position in most peoples’ portfolios. Contact Goldwater Financial Group TODAY at 617-527-9736 to determine how a tax free zone can be added to your existing portfolio.

*Disclaimer:  rules must be followed for these strategies to work effectively


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TAXES – Deduct, Leverage & Save

Infographic 8 - Taxes - Deduct, Leverage, Save

We believe an excellent way to viably tax deduct a buy sell agreement is through a profit sharing or defined benefit pension plan. On the surface, these plans appear complex, but when broken down are quite straightforward.

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Man with  TelescopePrivate Financing has long been a concept that estate planners have used regularly, but it has become even more popular recently. With low interest rates, transferring wealth can now be done with less capital, less cost, and less administration.

The mid-term Applicable Federal Rate (AFR) is the interest rate that applies to private financing transactions where the loan term is greater than three but no more than nine years. The rate has increased slightly from its 2012-2013 lows, but is still lower now than its historic averages1 – making now an attractive time to take advantage of wealth transfer arbitrage.

 Who might take advantage of this opportunity?

People with large estates may have a need for larger amounts of life insurance than what can be purchased with their annual exclusion gifts and they may object to the gift taxes associated with gifting the additional dollars to an Irrevocable Life Insurance Trust (ILIT)2.

Private Financing may be able to provide an alternative method for funding these annual premiums. This strategy may be considered for those who have exhausted their lifetime credit or those who want to use that lifetime credit to gift other assets.

Once an irrevocable life insurance trust is established, cash can be loaned on an annual basis or in a single sum to pay premiums. Because the loan is usually coming directly from the insured and going to his or her ILIT, collateral is not required as it would be with a commercial loan. Once the loan is made, the trust will invest the assets.

All income received over and above the required annual interest payment could be used to purchase life insurance inside the trust. This loan interest is based upon the current AFR, so the lower that rate is, the more attractive the private financing  concept becomes. This lump sum loan strategy may not work as well for individuals in their early 70s and older and will generally only be a fit for individuals with large amounts of cash at their disposal.

CoupleLet’s consider the example of a wealthy married couple who are both age 65 and healthy3.

They can set up an ILIT and seed it with a $500,000 gift4. The ILIT will then purchase a Survivorship Universal Life policy on their lives with a $5,306,479 face amount and $151,198 premium due annually for nine  years5. The ILIT borrows the premium from the Grantor for a total loan of $4.5 million. The ILIT’s annual interest payments are received income tax  free from the trust to the Grantor. With a nine year loan term, they can lock in mid-term AFR. For our example, we are assuming this to be 2%. After the term, the loan will be paid back in full.

Private Finance Chart

For appropriate individuals and families, the current environment may present an excellent opportunity to put needed insurance in place.

For more information Private Finance options, call us now at (617) 527-9736 or click here to contact us.



1 http://apps.irs.gov/app/picklist/list/federalRates.html.
2 Trusts should be drafted by an attorney familiar with such matters in order to take into account income and estate tax laws (including the generation skipping tax). Failure to do so could result in adverse treatment of trust proceeds.
3 Case studies are offered to show how we can provide insurance solutions in the advanced sales marketplace. Results may vary, and this example does not guarantee a similar result.
4 The interest earned inside the trust is assumed at 4.0%, a 40% estate tax rate is assumed, and 100% of the note is includible in the Grantor’s taxable estate.
5 Prudential SUL Protector, based on a 65 year old male at preferred non-tobacco and 65 year old female at preferred non-tobacco in the state of Alabama. Illustration run May 22, 2015.


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What Does the CPA Firm of the Future Look Like?

Man-JugglingIn the manufacturing and consumer world, product innovation is a given – the Apple iPad was introduced in 2010 – today we’re on the 4th Generation version, not to mention the iPad Mini and the iPad Air. Manufacturing and consumer business models have changed significantly and Henry Ford’s famous quote “any color so long as it’s black” doesn’t fly any more. Customers want options – and lots of them.

In the professional world, however, we tend to forget that innovation in the services  we provide should also be considered critical if we wish to remain competitive and relevant, and just as every retail consumer wants options, so do our clients – and especially our best clients.

So what does that mean for a CPA professional?

If CPAs want to survive, thrive and remain relevant they must address the increasingly complex needs faced by their best clients and act as a catalyst, problem solver, and trusted adviser rather than a referral source to other professional problem solvers, like the pension go-to guy! The CPA firm of the future should no longer aspire to be just the first step in the problem solving process, but rather, become the complete process; essentially the “go-to guy” for any problem your best clients need solving. How can CPAs do this? By building a vibrant back office of problem solvers.

Why are you different?

Tax and audit work is increasingly becoming a commodity offering, with price being the distinguishing factor – and in a commodity situation, the lowest price usually wins. So the CPA firm of the 21st century needs to distinguish itself by offering greater value and this is done in two ways; first, by building deeper relationships with their their best clients. Second, by building a vibrant back office of renown problem solvers. The innovative CPA firm needs to offer not only a full array of essential best client services but equally important, the firm needs to adopt a different type of client acceptance policy. Having standards on who becomes your client is one of the most important differentiating points of the firm of the future.

Building deeper relationships is key.

Simply put, the new CPA firm moves from being a referral source to becoming a trusted advisor who can deal with every facet of best client services.  Relationships between the client and the firm become a long term trusted partnership. In other words, the CPA must move up the value ladder: no longer providing a commodity product, but becoming a trusted adviser and partner. The diagrams below illustrate the subtle differences in approach.





This approach was echoed by Lyle Benson, CPA and Board Member of the AICPA Financial Planning Committee in an interview with Dan Wolfe of Accounting Today. In the interview he states:

  1.  Tax returns are now a commodity. CPAs need to offer much more value to their best clients if you do not want to lose them.
  2. CPAs need to redefine their relationships with their best clients.

 Imagine for a moment

Imagine being the center of the planning team without having to find referral sources because your back office team members are some of the best planners in the country. On the 19th hole when your best clients are mingling, they are now talking about you as a valuable resource, not some referral source specialist.

The question becomes, do you want to remain a CPA firm of today with the risk of declining into commodity irrelevancy or do you wish to break with your traditional role become a vibrant CPA firm of tomorrow?



About the Author:  Barry Goldwater is Principal at Goldwater Financial Group. He works with CPAs to help them offer easy-to-implement, tax planning and wealth management solutions to their best clients. He can be reached at barry@frg-creative.com or at  617-527-9736.

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If You Don’t Know Where You’re Going, You’ll Never Get There….

BubbleWhenever I consult with my clients on their retirement plans, I ask what I believe to be the two most important questions:

1. How much income would you like during your retirement?

2.What do you see as the biggest threat to realizing that income?

Sadly, too few people today ask themselves these questions.  We automatically put money into pre-determined 401(k) plans or IRAs or invest in stocks and bonds because someone told us that was what we were supposed to do, but without truly establishing final goals or expectations. As leaders and managers in the work place, if we ever tried to implement a program without establishing goals and expectations, anticipating potential pitfalls, and  ensuring that our goals were met, we can pretty much expect to kiss that next promotion goodbye.


Of all potential clients that I have met with in the last few months only one clearly stated that they would like to maintain their current salary during retirement.  No others had ever thought about asking that question. Yet how can you save towards a retirement goal when you do not know how to articulate what your goals are and what could possibly stand in the way of reaching those goals? How can you save for your retirement goals when you are not aware of the impact of taxes and inflation? How can you maximize your retirement income when you do not know how to use existing tax deductions from your 401(K) contribution to further your retirement goals?

Are we as planners doing a good job teaching our clients about retirement planning if savers cannot articulate what they are saving for? I posit to you that a critical function of a good retirement planner is the ability to educate his/her clients, and the public, on how to not just save and accumulate, but also to have tax awareness and to know how to effectively use the tax deductions derived from their contributions to a retirement plan.

Proper retirement planning is not only how much you can accumulate in savings but also being aware of taxes and how to mitigate them through a variety of options available.  When you can identify your tax deductions and understand how money not paid in taxes on earned income can be used to offset future taxes, you are effectively paying your taxes at a discount. This is how we attack the tax!

In other words, when you use your tax deduction to invest in your future, you give purpose to your tax deduction, which means you will use it towards a goal. All of a sudden, your retirement planning has gone from a monthly donation to a 401(k) plan without the knowledge of whether you would meet your retirement goals, to a thought out, goal-oriented strategy. You now attack the tax at the contribution point and the distribution stage and lay a foundation for higher income due to lower taxes.