May 2015 Connections Newsletter

Issue #0515  
The American College of Financial Services® Connections
6 Reasons to Consider Buying Longevity Insurance
  Over the last few years, annuities have begun to take a more prominent role in the retirement income planning process and part of the reason is longevity risk. One particular type of annuity, often referred to as a deferred income annuity, or longevity insurance, is one product that has seen the fastest growth. Below are six reasons why someone would want to purchase longevity insurance as part of their retirement income plan.

  1. Protect against longevity risk
  2. Maintain more flexibility
  3. Prepare for Long-term care costs
  4. Prepare for frailty
  5. Replace other lost income sources
  6. Peace of Mind

Including longevity insurance in your retirement income plan is a complex decision that has to be made in the context of a comprehensive retirement income plan. There are other annuity products, which may be better suited for a specific situation. For these reasons, it is best to work with a qualified financial planner with retirement planning expertise when building a retirement income plan.
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The American College Celebrates 100 Heroes!
  The American College Penn Mutual Center for Veterans Affairs awarded its 100th scholarship on May 7, 2015. Reaching this milestone demonstrates the Center’s continued commitment to honor active duty, veterans, and their spouses, supporting its motto of “Empowering Heroes.”

Rachel Lucas of Pompano Beach, FL became the 100th recipient after receiving a full scholarship for the Chartered Life Underwriter® (CLU®) designation. Rachel is a U.S. Navy veteran, an independent insurance agent, and a single mother of four. Her boys are her motivation. She wants them to see that with hard work and determination, anything is possible.

The Center was established in 2012, and has seen considerable growth over the past year. "We are thrilled to achieve this milestone,” said Ted Digges, Executive Director, “but we are just getting started. The quality of the scholarship candidates we are seeing is really terrific. I am extremely optimistic about all of our students' futures and the impact they will ultimately have on the financial services industry.”
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Meet Wade!
  To celebrate their 35th year, Investment Advisor recently put together a list of 35 of the most influential people in financial services. Of this list, five were considered people to watch who are predicted to continue being influential well into the future — Wade D. Pfau, PhD, CFA®, Professor of Retirement Income at The American College, was one of them.

This distinguished honor is just one of Wade’s recent media mentions. His work has been discussed in outlets such as The Economist, Wall Street Journal, Money Magazine, and SmartMoney. Not only is Wade a monthly columnist for Advisor Perspectives, but also a RetireMentor for MarketWatch, and an Expert Panelist for the Wall Street Journal. To read more, visit the links below.

As Professor of Retirement Income at The American College, Wade has contributed to the curriculum of The American College’s Retirement Income Certified Professional® (RICP®) designation. He also teaches three courses in the Ph.D program related to retirement planning, public policy, and research methods, and co-teaches the retirement planning class in the MSFS program.
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The C versus S Choice
  As advisors, we are often asked what the optimal form of business is for our entrepreneurial business clients. Historically, choices have included organizing the business as a sole proprietorship, a partnership, a limited liability company (LLC) or a C or an S corporation.

C corporations are clearly more tax advantageous in terms of fringe benefit treatment when compared to shareholder-employees of S corporations, especially with regard to the health care and long-term care benefit. Although health insurance premiums paid by S corporations on behalf of their more-than 2% shareholders are included in the income of the employee-owner, the shareholder is entitled to an “above the line” deduction in arriving at adjusted gross income (AGI) on their individual income tax return for the same amount.i
However, a significant difference exists for long-term care (LTC) insurance fringe benefits afforded to shareholder-employees of C corporations when compared to a more-than 2% shareholder-employee of an S corporation. LTC premiums paid by the corporation would not be included in income of the C corporation shareholder-owner, but would be included in the income of an S corporation’s more-than 2% shareholder-employee. In addition, the individual’s deduction for AGI attributable to the LTC premiums reported on their W-2 may be reduced since the deduction is limited by an annually adjusted age based IRS table (i.e., lesser of premium paid or statutory maximum based on age).ii No such limitation applies to the C corporation with the entire long-term care insurance premium being deductible in full on the entity’s tax return!

C versus S corporation choices are explained in further detail in HS 321 as part of the ChFC® and CFP® programs.

  i 2% shareholders are treated as partners for benefits. The Internal Revenue Code allows shareholders to deduct on their individual income tax returns the amount of premium reported as income on Form 1040, Line 29, “Self-employed health insurance deduction.”

ii The deduction on the individual tax return of the more-than 2% shareholder-employee may be limited by IRC §213(d)(10). This provision provides (for 2015), if the individual is 40 years of age or less, the annual deductible limit for the LTC premiums is $380. For individuals over 40 but not over 50, the limit is $710. For those who are 50 but not over 60, the limit is $1,430. For those who are 60 but not more than 70, the limit is $3,800. For those who are 70 or older, the limit is $4,750. The allowable deduction attributable to LTC premiums for the more-than 2% shareholder-employee is on Form 1040, Line 29.

*As an accredited educational institution, The American College does not provide tax, legal or investment advice.

The American College Featured in Leading Publications!
The American College in USA Today, The Washington Post, and more!
ThinkAdvisor - Most Americans Illiterate Regarding Retirement Income Planning
ThinkAdvisor - The 2015 IA 35 for 35
Forbes - 6 Reasons To Consider Buying Longevity Insurance
Insurance News Net - Ignoring the Millennials Will Lead to the Industry's Demise

Save the Date for the 10th Annual CAAFP Conference in Tampa, FL!

Join leading companies in the financial services industry August 18-19 in Tampa, FL to further the education, advancement, and heritage of African American financial professionals.

Featured speakers include:
Vernice “FlyGirl” Armour - America’s first African-American female combat pilot
Leland Melvin - NASA astronaut
Albert Mensah - the “Ambassador of Opportunity”

This year’s conference features a full agenda of workshops and speakers with topics covering everything from faith-based marketing to positioning life insurance to Millennials. Registration is now open. Learn More.

Register Now!
News & Events

Alumnus of
The Month

Steven Thompson

Steven Thompson

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Upcoming Events

•  10th Annual CAAFP Conference:
August 18-19, 2015 in Tampa, FL - Email: for more details.
•  MSFS Residency:
9/14/15 - 9/18/15 Bryn Mawr, PA - Email: for more details.
•  MSM Residency:
9/28/15 - 10/2/15 Bryn Mawr, PA - Email: for more details.
•  Knowledge Summit:
October 22-24, 2015 in Honolulu, Hawaii - Visit:
for more details.


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