WRMarketplace

AALU’s traditional (gold-standard) professional development piece, the Washington Report Marketplace provides members with vital business insights and best practices in a diverse set of life insurance markets to help strengthen and grow their businesses. This report offers actionable advice for producers—from advanced markets to basic life insurance sales—providing essential knowledge to help our members serve clients better and identify additional opportunities for life insurance sales and professional advice.

Intergenerational Legacy Planning Opportunities in the Wake of the COVID-19 Crisis

Statutory “hurdle rates” published by the IRS remain attractively low and, coupled with depressed asset values in many sectors, create opportunities for clients and their advisors to amplify the benefits of intergenerational legacy planning using loans between grantor trusts with different GST tax attributes, leveraged sales to grantor trusts that are exempt from the 40%…

Deferring Compensation to Conserve Cash During the COVID-19 Economic Crisis

While a number of companies have cut compensation to employees due to the economic damage caused by the COVID-19 pandemic, other companies withless dire business conditions may still need to deal with shorter-term cash constraints. Companies looking to defer current cash payments to top-paid employees could consider several strategies, including (1) deferring current 2020 salary…

Free Fallin’ – Plummeting Interest Rates Create Opportunities During Turbulent Times

Planning approaches tied to certain statutory “hurdle rates” established monthly and published by the IRS have become particularly attractive under today’s market conditions, particularly as the benefits of the low rates are further amplified by severely depressed asset values. As a result, clients and their advisors may consider revisiting intra-family loans, grantor trust installment sales,…

Harnessing the Pandemic Pandemonium: Focus on Spousal Lifetime Access Trusts

SLATs represent one of the most effective approaches available to families seeking to transfer assets to lower generations while leaving themselves an escape valve if they experience future declines in their remaining net worth. SLAT assets can be accessed, if needed, through distributions to the spousal beneficiary. The spouse also can serve as the trustee…

When Opportunity Knocks: Planning for the Harmonic Convergence of High Volatility, Low Interest Rates, and a Looming Sunset

The Tax Cuts and Job Act (“TCJA”) temporarily doubled federal gift, estate, and generation-skipping transfer (“GST”) tax exemptions. As a result, individuals can transfer up to $11.58 million (and married couples can transfer twice that amount) to their heirs without federal transfer taxes. After December 31, 2025, the exemption will revert to $5 million (adjusted…

SECURE Act Expands Opportunities for “Open MEP” 401(k) Plans

Topics: SECURE Act

A “multiple employer plan” (“MEP”) is a retirement plan offered by a single plan provider to the employees of multiple unrelated employers. Before the SECURE Act, MEPs were not broadly available to smaller employers. Recent Department of Labor (“DOL”) proposed regulations would have permitted 401(k) and other defined contribution MEPs to be offered by certain…

Highlights from the 54th Annual Heckerling Institute on Estate Planning

Topics: Estate planning

The 54th Annual Heckerling Institute on Estate Planning (the “Institute”) focused on the ongoing effects of the Tax Cuts and Jobs Act (“TCJA”), including: (1) legal and regulatory developments concerning life insurance; (2) benefits and burdens of grantor and non-grantor trust status; (3) planning considerations for migratory clients; (4) state income taxation; (5) implications of…

The SECURE Act Is Here, Now What Do We Do? 

Topics: SECURE Act

The SECURE Act encourages 401(k) plan sponsors to consider adding lifetime income products, such as annuity contracts, by removing some of the obstacles to those products. The SECURE Act also makes certain 401(k) safe harbor designs potentially more attractive. Small employers may also qualify for increased tax credits for start-up costs related to adopting a…

Legacy and Retirement Planning Considerations After the SECURE Act

Topics: SECURE Act

The SECURE Act brings a number of significant changes to retirement planning, including: (1) instituting a 10-year payout requirement for qualified retirement plans (e.g., traditional IRAs, Roth IRAs, and 401(k) and 403(b) plans) inherited by a non-spouse beneficiary; (2) eliminating the 70 ½ maximum age restriction for contributing to a traditional IRA; (3) increasing the…

Electronic Delivery of Required ERISA Notices for 401(k) Plans Made Easier Under New DOL Proposed Rules

The new proposed safe harbor applies to any participant, beneficiary, or alternate payee who provides the plan sponsor or administrator with an e-mail address or smartphone number. Plan sponsors and administrators deliver required ERISA notices by a combination of (i) providing the covered individuals with an electronic “notice of internet availability” that identifies a website…

Year-End Planning Considerations

As 2020 approaches, year-end planning considerations for clients include: (1) making use of temporarily higher transfer tax exemptions; (2) managing market gains in 2019; (3) planning to take advantage of continued low interest rates; (4) closing life insurance transactions; and (5) monitoring developments in generational split-dollar.

409A Failure Leads to Employee Lawsuit Against Employer: Lessons Learned

NQDC plans that fail to comply with the requirements of 409A can be subject to significant additional taxes for the participating employees. In Wilson, the employee had deferred about $9 million under a NQDC plan sponsored by Safelite Group, Inc. (“Safelite”). The IRS found a 409A failure related to the deferrals during an audit and…

Legacy Management: A Fresh Look at an Age-Old Business.

As family wealth often fails to travel beyond two generations, it seems arguable that the traditional estate planning model, which is largely defined by episodic services, minimal financial analysis, and limited client contact post-implementation, no longer meets a successful family’s legacy planning needs. Legacy management is a different approach. It seeks to provide families with…