Financial, Tax and Benefits Strategies: Why the Team-Driven Approach Is the Best Hedge Against Tax Reform Uncertainties

May 9, 2018

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You and your employees or coworkers are not the only ones concerned about federal tax code revisions. Since last December’s passage of the Tax Cuts and Jobs Act, uncertainties seem to be front and center in nearly every taxpayer’s thoughts. An April 18, 2018, article cited a recent Gallup poll on tax reform and concluded simply: “The majority of Americans don’t know whether the new tax code will help or hurt them.”

Caleb D. Lendy, CPA, MST, is a partner at Bronswick Benjamin Certified Public Accountants & Advisors. He shared that, these days, the most frequently asked question his firm hears is, “How will tax code changes affect my tax liability going forward?”

Unfortunately, not all the answers to that question are clear cut. Tom Chisholm, Managing Director Fulcrum Partners Chicago said, “As we have stated frequently to our clients and on our website over the past few months, guidance and clarifications from the Internal Revenue Service regarding select aspects of the tax revisions are still forthcoming. While there is much we know and understand, there are some areas that are yet to be fully defined.”

“The question of impact,” observed Caleb, “is hard to answer off-the-cuff. It’s a loaded question as each taxpayer and each organization’s situation is specific and unique. In every case, the facts need to be analyzed carefully to help ensure that desired results are achieved.”

Two Perspectives. One Concern.

Fulcrum Partners Financial Consultant, Kenny DePaola points to two significant demographic patterns that are putting increased pressure on employers to strengthen and improve the benefits they use to attract and retain employees, even in the face of tax reform uncertainty.

“Record numbers of baby boomers,” said Kenny, “reach retirement age each year. Too often, workers are finding they are unprepared or underprepared for retirement with benefits that will not allow them to maintain their current lifestyle. As a result, they are staying in the workforce longer, scrambling for better tax and retirement planning options.

“At the same time, an emerging generation of millennials in the workplace is pushing employers to enhance their offerings with better retirement savings opportunities, better healthcare packages, and other benefits to enrich financial, physical, and mental well being and life balance. They expect to be rewarded for their time, talents, and commitment.”

Equipping Your Company with Strong and Meaningful Financial, Tax, and Benefits Strategies

During this transitional period, tax code changes are inspiring organizations to revisit their long- and near-term financial strategies. Companies are also reevaluating both their key talent and the tax and benefits professionals on whom they rely. Caleb adds the following critical thoughts:

“One thing that has not changed with the new tax laws, is the importance of building a great team of employees and business partners around you to operate a successful business. Financial visibility and understanding can help lead to better informed, risk-based decision making. Creating and executing a business strategy and exit plan is essential as business owners and their organizations evolve. Attracting and retaining key talent to navigate the always-changing business environment is more important than ever.

As the population ages, ensuring you have an exit/retirement vehicle in place becomes more critical. High-income individuals may not be able to rely on a 401(k) plan alone to replace current income streams in retirement, potentially making them look for higher paying jobs in the marketplace.

In some cases, nonqualified deferred compensation plans (NQDC) can be used as an incentive to help attract and retain key employees. Essentially, these plans can allow employees to defer a portion of their compensation until some agreed upon point in the future to help alleviate cash flow or tax burdens while providing the potential for the balance to grow income tax deferred (payroll taxes are due) in the future. Also, an NQDC plan can be structured around life events (babies, college funds, retirement), so the timing can be advantageous for employees.

There are risks and many other considerations in determining if a NQDC plan is right for you and your business, but the benefits to retaining key employees can potentially be great. And now is an excellent time for employers to revisit and reevaluate the people and the practices that are shaping their company’s future.”

Caleb D. Lendy, CPA, Bronswick Benjamin Certified Public Accountants & Advisors serves clients in many different industries but has a special focus on software and information technology, manufacturing and distribution, professional services, and real estate.

Tom Chisholm, Managing Director Fulcrum Partners LLC, consults on a wide range of executive benefits issues, including nonqualified benefit programs, employee retention, senior management compensation, change in control issues, and plan integration during mergers and acquisitions.

Kenny DePaola, Financial Consultant Fulcrum Partners LLC specializes in working with individuals, families, corporations, and organizations that want to reward and retain their best employees through meaningful and creative compensation strategies.

Securities offered through Valmark Securities, Inc. Member FINRASIPC, 130 Springside Drive, Akron, OH 44333-2431, Tel: 1-800-765-5201. Investment Advisory Services offered through Valmark Advisers, Inc., which is a SEC Registered Investment Advisor. Fulcrum Partners LLC is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.

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