taxes

Life, Death and Taxes

By Lisa Koerner, Insurance Advisor

If you are looking for some creative ways to avoid paying taxes, don’t overlook the benefits of life insurance. There are several different types of life insurance policies that serve different objectives, the greatest is a tax-free death benefit for your beneficiaries. Also, the death benefit does not go through probate, so only your beneficiaries can receive the money. There are a few things to look for when searching for the right life insurance.

When choosing life insurance programs, term life policies are typically the most popular. Term policies offer a larger death benefit for a smaller premium, however, the rates are only locked in for a certain number of years and don’t provide any cash return if you outlive the term or cancel the policy.

The advantage of a permanent policy is that it can build cash value in the policy that you can access tax-free while you are living and still provide a tax-free death benefit for your beneficiaries.

Universal life plans offer more flexibility but are also driven by interest rates. When setting up this policy, it is very important to work with your agent to make sure it is properly funded in the beginning to avoid the need to put more money into it later on.

Whole life policies can also be a good option for cash value growth, but there are things to look for here as well. If you choose a policy that has dividend options, you can set up the policy to allow you to access the dividends tax-free in the future without worrying about having a loan on the policy that could affect how the policy pays out. The biggest thing to be aware of with cash value policies is that if you take out more money than what you put in, the gains would be considered taxable income.

To learn more, reach out to Lisa Koerner or the WisMed Assure team at insurance@wismedassure.org, complete this quick online form or call 608.442.3810 for help with your insurance needs.

Note: This article is for informational purposes only and should not be considered as insurance advice related to your specific policy or situation. Please consult with a qualified insurance advisor or professional before making any policy decisions. Full disclaimer and contact information.

Disability and Life Insurance Taxation

By Chris Noffke, GBDS, CSFS, Vice President of Employee Benefits

Chris Noffke

Taxation of benefits is a unique and important topic. Many groups I work with want to make sure their employees are not taxed for an employer paid life insurance benefit and other clients want to ensure that if an employee becomes disabled, they do not have to pay taxes on their already reduced income. Making sure these benefits are set up correctly, both by the insurance carriers and in your payroll service, is vital to tax-free benefits for employees.

Life insurance

Life insurance is the easier of the benefits to establish correctly. If an employer provides up to a $50,000 benefit to each employee, then this benefit and premiums paid for it can be excluded from an insured employee’s taxable wages. If you offer coverage to employees for a benefit over $50,000 and it is employer paid, you are required to tax premiums for the amount above $50,000.  

Disability insurance

A bigger discussion happens regarding disability insurances (both Long-term and Short-term). When an employee or owner/partner is out of work due to a disability, they will receive only a fraction of their pre-disability earnings, the average benefit being 60% of pre-disability earnings. If an employer is paying 100% of the disability premiums, the employer can decide to offer these benefits as a “gross-up” to employees. A gross-up is structuring the premiums paid by the employer to be a taxable benefit on the employee payroll. The benefits received by the disabled employee (disability income) will then be tax deferred. The rule is direct, if employees are paying payroll taxes on the premiums that the employer is paying, the benefit will be tax free – however – it is very important that the payroll taxes begin prior to the benefits being received.

When premiums are split between the employer and employee, we need to make sure there are a few rules followed. If a benefit has a premium contribution of 50% paid by the employer and 50% paid by the employee, the setup will determine if the benefit is partially or fully taxable. If in this situation the employee pays their premiums pre-tax and there is no gross-up for the amount the employer pays, this full benefit will be taxable income. Another example is if the employer pays 50% of the benefit (not grossed-up) and the employee is paying for 50% of the benefit with post-tax dollars, then when the employee receives this disability income benefit, 50% of the benefit will be taxable. So, to make the full benefit tax deferred, you need to have the employer premiums paid be grossed-up and the employee portion needs to be paid with post-tax deductions.

This can get a bit confusing, and I would love to talk if you have any questions. Please email me at chris.noffke@wismedassure.org or call 608.442.3734.

Note: This article is for informational purposes only and should not be considered as insurance advice related to your specific policy or situation. Please consult with a qualified insurance advisor or professional before making any policy decisions. Full disclaimer and contact information.

Don’t Let Taxes Take a Bite Out of Your Finances: Common Errors to Avoid

By Mark Ziety, CFP®, AIF®, Financial Advisor, WisMed Financial

Investing is a smart way to grow your wealth, and keeping more of it from taxes is even smarter. Let’s explore some common tax mistakes investors make and how to avoid them:

  • Right Investment, Wrong Account: Investment growth, dividends and interest can be taxed as ordinary income, short or long-term capital gains or tax-free. Similarly, investment accounts are treated as tax deferred, taxable or tax-free. Holding tax efficient and inefficient investments in the right accounts can improve net returns.
  • Short-Term Gains Trap: Selling an investment held less than a year triggers short-term capital gains taxes, typically at your ordinary income tax rate. This can be much higher than the long-term capital gains tax for assets held over a year. Consider waiting to sell until you hit that long-term mark.
  • Neglecting Tax-Advantaged Accounts: Contributing to IRAs, 401(k)s and other tax-advantaged accounts, like a health savings account, allows your investments to grow tax-deferred or tax-free until withdrawal. This can significantly boost your returns in the long run.
  • Letting Losses Linger: Selling investments at a loss can offset capital gains and reduce your tax bill. This is called tax-loss harvesting. Don’t miss opportunities to claim these deductions! However, be mindful of the wash-sale rule, which limits claiming losses if you repurchase a similar investment within 30 days before or after selling.
  • Forgetting IRA Contributions: Investment companies typically don’t send the supporting tax document 5498 until May each year (because investors have until April 15 to make their IRA contribution for the prior year). This leads many investors to forget to record their IRA contribution on their tax return.

Wisconsin Specifics:

  • Missing Long-Term Care Premiums: Wisconsin allows a deduction for qualified long-term care insurance premiums on the state income tax return, even if you don’t claim an itemized deduction on the federal return. Plus, you won’t necessarily get a supporting tax document from your insurance company, so this is easy to miss.
  • Missing Edvest Contributions: Wisconsin residents contributing to an Edvest college savings plan may qualify for a state tax deduction on contributions. This is another one that’s easy to miss; there’s no supporting tax document sent out by Edvest.

Please note, this is not professional tax advice. For specific guidance on your situation, consult a tax professional. By being aware of these common pitfalls, you can keep more of your hard-earned investment returns come tax time, especially when considering Wisconsin’s unique tax landscape.

For personalized help eliminating debt, investing smart and securing retirement, please contact Mark Ziety, CFP®, AIF® 608.442.3750.

Mark Ziety, CFP®, AIF®

WisMed Financial, Inc. part of the Wisconsin Medical Society

Note: This article is for informational purposes only and should not be considered as financial or tax advice. Please consult with a qualified financial advisor or tax professional before making any financial decisions. Full disclosures.

Winter 2024 Issue

Don’t Let Taxes Take a Bite Out of Your Finances: Common Errors to Avoid

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

Crumpled tax form with money, calculator and notepad on the table.

Investing is a smart way to grow your wealth, and keeping more of it from taxes is even smarter.  Let’s explore some common tax mistakes investors make and how to avoid them.

Read more…

Change Healthcare™ Attack Highlights Often Overlooked Cyber Insurance Coverage

illustration of umbrella protecting computer screen from an attack

By Shawna Bertalot, CIC, ACI, WisMed Assure President

Many health care practices rely on a third party for access to their EMR and for billing. This creates a “contingent” or “dependent” risk. The February 21 cyberattack on Change Healthcare changed the world for many patients and health care providers.

Read more…

Disability and Life Insurance Taxation

Tax payment concept. State Government taxation, calculation of tax return. Blank tax form, calendar, magnifier, money, notebook, calculator, coins, glasses, watches, documents, computer.

By Chris Noffke, GBDS, CSFS, Vice President of Employee Benefits

Taxation of benefits is a unique and important topic. Many groups I work with want to make sure their employees are not taxed for an employer paid life insurance benefit and other clients want to ensure that if an employee becomes disabled, they do not have to pay taxes on their already reduced income.

Read more…

Tornadoes Can Strike in Seconds. Are You Ready?

photo of tornado

By The Hartford

Tornado season is upon us and could bring more storms in the months ahead. In fact, the U.S. experiences the most tornadoes of anywhere in the world.

Read more…

Tax Treatment of Long-term Care Insurance a Game Changer

Nurses, doctor and caregivers in nursing home take care of old men and women. Volunteers help aged people at home and hospital.

By Tom Strangstalien, Insurance Advisor

We put my dad into a nursing home on Monday. My mom had been his caretaker since he was diagnosed with a somewhat rare neurological disorder. My mom has been superwoman, a real- life example of a family member caring for a loved one.

Read More…

Your Medicare Update

Open Enrollment concept.

By Mary Krueger, Medicare Specialist

It’s early 2024 and its already time to explore Medicare options for 2025. Many Medicare enrollees want to look at what is suitable for their needs in the Medicare market. If you have started looking for yourself or someone else, there are many different ways to procure coverage.

Read More…

Life, Death and Taxes

Photo of a grandfather and his granddaughter loving autumn. Throwing leaves in the air.

By Lisa Koerner, Insurance Advisor

If you are looking for some creative ways to avoid paying taxes, don’t overlook the benefits of Life Insurance. There are several different types of life insurance policies to serve several different objectives, the greatest being a tax-free death benefit for your beneficiaries.

Read More…

Making Part D of Medicare brighter

photo of an elderly man looking at medications with his physician

By Mary Krueger, Medicare Specialist

As many of you on Medicare know, October 15 to December 7 is the Annual Election Period for Medicare Part D and Medicare Part C (Medicare Advantage). This often coincides with a flurry of research needed and concerns expressed by client recipients and this year was no exception.

Read More…

Consolidation leads to $600,000 student loan forgiveness – a case study

By Mark Ziety, CFP®, AIF®, Financial Advisor, WisMed Financial

Good financial planners do much more than help with investments. They look at the entire financial picture, which includes debts too. Today’s case study shows how a unique rule, available until December 31, is facilitating more than $600,000 in student loan forgiveness.

First, the rule

When consolidating federal student loans, according to the FAQ section on the Federal Student Aid website, “Assuming your repayment history overlaps for each loan, the consolidation loan will be credited with the longest amount of time in repayment of the loans that were consolidated.”

How we applied the rule

A resident physician is a career changer with more than $600,000 of student loan debt. Some of the debt was from undergrad loans from the early 2010s before she changed careers to become a physician. By consolidating her old and most recent loans together, her new consolidation loan will use the payment count of her oldest loans.

The $600,000 loan forgiveness benefit

Those who work for a non-profit, government or other qualifying employer can have any remaining balance of their student loans forgiven after making 120 qualifying monthly payments through the Public Service Loan Forgiveness program. And the loan forgiveness is tax free! Since this borrower will have 120 qualifying payments on the oldest loans, her consolidation loan will also be credited with 120 qualifying payments, and her entire loan balance will be forgiven!

The rule changes in 2024

Next year, a consolidation loan will have a pro-rated payment count based on the payment count of the loans being consolidated. That makes 2023 an ideal time to review your loans to see if a consolidation would benefit you too.

For personalized help eliminating debt, investing smart and securing retirement, please contact Mark Ziety, CFP®, AIF® 608.442.3750.

Mark Ziety, CFP®, AIF®

WisMed Financial, Inc. part of the Wisconsin Medical Society

Note: This article is for informational purposes only and should not be considered as financial or tax advice. Please consult with a qualified financial advisor or tax professional before making any financial decisions. Full disclosures.

Fall 2022 Issue

Affordability testing

By Chris Noffke, GBDS, CSFS, Vice President of Employee Benefits

The Affordable Care Act (ACA) brought a lot of extra work to employers and insurance companies. Whether you are pro-health care reform or against it, per the Health Affairs article, the ACA has not made insurance more affordable.

Read more…

Don’t forget to call your mom – and your insurance agent

By WisMed Assure Service Team

With the intention of easing administrative burden for WisMed Assure client physicians, several of our Medical Professional Liability carriers have significantly reduced or suspended asking for renewal applications over the past few years. While this does save time, renewal applications were an opportunity to touch base, review and discuss any changes to your practice that could impact your premium or coverage.

Read More…

Year-end tax planning for 2022

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

Want to put thousands of dollars back into your pocket? Who doesn’t. Choices you make during your employer’s open enrollment period and for year-end tax planning can really add up.

Read More…

Graded premium disability? Yes, you can!

By Tom Strangstalien, Insurance Advisor

I recently worked with a young physician to set him up with personal disability protection to provide some financial security if life throws him and his family a curve ball. Prompting our planning was that one of his peers in the general surgery specialty sustained a serious hand injury, ending his ability to perform hands-on surgery.

Read more…

5 ways to develop inclusive hiring practices

By Society Insurance Human Resources, reposted with permission from Society Insurance

Inclusive hiring practices recognize diversity and embrace a wide range of perspectives that candidates from all walks of life bring to the organization. And according to research from Monster, “Four in five (86%) candidates globally say diversity, equity and inclusion in the workplace is important to them.”

Read more…

Build your financial wisdom

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

Mark Ziety

Join us for online educational sessions presented by WisMed Financial exclusively for Wisconsin Medical Society members. Session topics include retirement planning, social security and tax planning. Be sure to register – the replay and materials will be provided even if you miss the live event.

Social Security; $111,000 More

September 9 from 12:00-12:30 p.m.

  • Ideal for anyone age 59 and over who has not filed for Social Security
  • With more than 2,700 rules and 567 separate filing strategies, 96% of people fail to make the optimal claiming decision and miss out on $111,000 of benefits for the average household1
  • Uncover various claiming strategies whether single, married, widowed or divorced
  • Optimize Social Security timing

Medicare Open Enrollment

October 19 from 12:00-12:30 p.m.

  • Ideal for anyone age 65 or older
  • The A, B, C and D puzzle of Medicare
  • Pros and cons of original Medicare versus Medicare Advantage
  • Wisconsin Medicare supplements are unique compared to other states
  • Tips when shopping for a policy

Year-end Tax Planning Workshop

November 18 from 12:00-12:30 p.m.

  • Ideal for everyone
  • This is a hands-on workshop, so bring your 2021 tax return
  • Review key tax numbers
  • Adjust your taxable income and deductions for 2022, 2023 and beyond

6 Keys to Retirement Success

January 20 from 12:00-12:45 p.m.

  • Ideal for anyone approaching or in retirement
  • Social Security benefits
  • Bridging the health insurance gap between early retirement and Medicare
  • Generating income from investments
  • Identifying a long-term care plan with or without insurance
  • Estate plan considerations
  • Optimizing the retirement tax bracket drop and rebound

To register, click here.

For personalized help eliminating debt, investing smart and securing retirement, please contact Mark Ziety, CFP®, AIF® 608.442.3750.

1. The retirement solution hiding in plain sight. InvestmentNews. (2020, June 12). Retrieved August 4, 2022, from https://www.investmentnews.com/whitepapers/the-retirement-solution-hiding-in-plain-sight

Your life has only 3 planning scenarios

Mark Ziety

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

You’ll either have a long life, health problems along the way or a short life. That’s it.

Plan for those three situations whether you’re single, married, with or without kids and most of your planning is done. Let’s look at how to plan for each.

First, essential tasks for everyone

  • Manage monthly cash flow. Call it a budget, spending plan, living below your means or whatever makes it appealing to you. It doesn’t matter if you have high income or low income, everyone needs to control their inflow and outflow.
  • Life happens, have an emergency fund.
  • Pay off all high interest consumer debt.
  • Give of your time, resources and be thankful. Live happy.

Plan for a long life

  • Are you saving at least 15% for retirement with the right investments? Boosting it to 20-25% is even better.
  • Have you maximized your tax advantaged retirement accounts through your employer and on your own?
  • Will your tax burden be higher or lower in the future? Hint – if you have a lot of tax deferred investments, you could be igniting a tax bomb that hits later in life.
  • Save for kids’ education expenses.
  • Determine the monthly income you’ll have in retirement from all sources.
  • Dream about your future.

Plan for health problems

  • Health insurance is the obvious answer.
  • Auto and umbrella insurance can provide for you via uninsured/underinsured coverage.
  • Disability insurance that replaces two-thirds of your income if you can’t perform your own occupation is critical, especially during your early and mid-career. A policy with an inflation adjustment is even better.
  • Everyone over age 18 should have health care and financial power of attorney documents.
  • Do you have a source to pay for long-term care expenses? If not, consider an insurance policy.

 Plan for a short life

  • If anyone depends on you for income, get term life insurance. It’s cheap, so don’t skimp.
  • Are your beneficiary designations correct?
  • Do you need a will or trust?
  • Ensure your family knows where to find your documents and accounts.
  • Tell your family you love them. And if you’re faithful, pray.

Since we don’t know the future, all three plans are important for everyone. Our Physician’s Financial Guide has even more tips. Or, for one-on-one help schedule an appointment.

To your best life and healthy finances.

Mark Ziety, CFP®, AIF® 608.442.3750.
WisMed Financial, Inc. part of the Wisconsin Medical Society

Your 2022 Tax Strategy

Mark Ziety

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

Tax laws feel like stepping into quicksand lately, don’t they? Trying to understand if, when and how the tax laws will change can make you feel like the floor will fall out from under you at any moment. (Particularly at tax time.)

This is especially true if you’re a high earner or have accumulated a significant nest egg. With each tax change, it feels like your tax-saving strategy is in jeopardy. However, we are in familiar waters because the tax laws have evolved constantly. In the past 20 years alone, the wealthiest taxpayers’ top marginal tax rate has shifted between 35% and 39.6%.

It sounds all doom and gloom, but it’s possible to find tax-saving opportunities hiding inside your current strategy and every new tax law update.

With your 2021 tax return in hand, it’s time to start planning your 2022 tax strategy by checking some important lines on your 1040 or 1040-SR. Things to consider:

  • Lines 2b and 3b show dividends and interest that are adding to your current tax bill. Should you hold these investments in a tax deferred account?
  • Was line 4b exactly $6,000 or $12,000? If so, your backdoor Roth IRA contribution(s) was probably not reported correctly.
  • Did you have realized capital gains that may have added to your tax? Check line 7 to find out. If your capital gain tax rate is low, consider whether you should realize additional capital gains in 2022 or defer them to a future year.
  • Did your deductions help you? If line 12a is $12,550, $14,250, $18,800, $25,100, or $27,800 you did not get a deduction. Consider bunching multiple years of deductions into a single tax year so you can itemize deductions.

US Senators still intend to pass portions of last year’s failed Build Back Better Act in 2022, so the timing of property tax payments, additional tax deferral, and Roth conversions are all strategies that should be considered this year.

Want help with your tax strategy? Download WisMed Financial’s free tax planning guide  or schedule an appoinment.

P.S. Download the 2022 tax brackets, retirement contribution limits, investment checklist, and quick decision flow charts from the new WisMed Mobile app.

To your best life and healthy finances.

Mark Ziety, CFP®, AIF® 608.442.3750.
WisMed Financial, Inc. part of the Wisconsin Medical Society