Obamacare Delay

On a daily basis it seems as if new information or debate is sparked by the Affordable Care Act (ACA or Obamacare). At the moment, the state-based health insurance exchanges are expected to begin enrollment on October 1, 2013. This upcoming launch is scheduled even though a major part of the bill, the employer mandate, has been pushed back until 2015.

The employer mandate specifies that all companies with 50 or more full time employees must offer affordable health insurance coverage or potentially pay steep fines. This mandate was supposed to go into effect on January 1, 2014, however the date has been pushed back a full calendar year. This delay was put into effect to allow the reporting requirements to be simplified and to give employers more time to act in accordance with coverage mandates.

The full ramifications of Obamacare remain to be seen and may be a major factor for the equity market in 2014 and beyond. If you have any questions regarding the upcoming changes with health insurance, contact Mitlin Financial for a free consultation.

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Pros and Cons of Annuities

Annuities have been written about quite frequently in the last several months. We would like to take a moment and outline some general pros and cons to investing in annuities


  • Potentially unlimited contributions
  • Account grows tax-deferred
  • Provide the opportunity for guaranteed lifetime income
  • Flexible investments


  • Most annuity companies charge surrender fees if money is withdrawn during the first 1-10 years (the length of time varies depending on the insurance carrier and contract)
  • Gains are taxed as ordinary income when withdrawn from the contract. When making withdrawals, gains are always removed first
  • Must be careful in making payout elections. For example, if you elect a single life payout option and pass away the next day, the insurance company will keep the proceeds that remain in the account
  • Owners must wait until age 59.5 to withdraw assets penalty free, surrender charges may still apply

Generally speaking, annuities should be reviewed every year. If you have an annuity that requires review or you believe an annuity may be a suitable option for retirement saving, please contact Mitlin Financial for a free consultation.

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Irrevocable Life Insurance Trusts

An Irrevocable Life Insurance Trust (ILIT) is a trust used to purchase a life insurance policy or it can be used to accept a gifted policy, one already owned by the grantor of the trust. ILITs are useful because they ensure that the death benefit proceeds of the policy are not included in an insured’s gross estate while also providing liquidity to the estate. The proceeds of the policy can be used by the beneficiaries to pay taxes and other expenses that arise at the grantor’s death.

The mechanics of an ILIT are quite simple, the trust would be both the owner and beneficiary of the policy. The policy’s owner and beneficiary would need to be updated at the time of gifting, if you were using an already owned policy to fund the trust. Keep in mind, by gifting the policy, the grantor would need to live more than three years from the date the policy was transferred to the trust in order for the proceeds at death to be excluded from the taxable estate. On the other hand, if the policy is applied for and owned by the trust from the inception, the three year wait period is waived and the proceeds will not be included in the estate regardless of the date of death.

Premiums for an ILIT are paid by the trustee from either trust corpus or from gifts given by the grantor. Keep in mind that the trustee is not required to use the gifts to pay the premiums.

ILITs are most useful for those who believe they will be paying significant estate taxes upon their death. The policy owned by the ILIT, upon death of the grantor, will pay out tax free proceeds to the trust which can help alleviate the tax burden of the grantor’s estate assuming everything was set up and executed properly.

If you feel that you may have a significant estate tax liability, contact Mitlin Financial in order to see if you can benefit from an Irrevocable Life Insurance Trust.

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Is Advisor Diversification Optimal for an Investor’s Portfolio?

According to financial advisor’s, diversification of one’s assets is essential to ensuring one reaches their financial goals. Diversification prevents an investor from being over concentrated in one specific asset class and/or sector, whether it is in stocks, bonds, cash, real estate, etc. While allocating one’s portfolio over many asset classes may be beneficial, is it helpful to have multiple financial advisors?

Having multiple financial advisors that are not affiliated (working together) can be very damaging to an investor’s financial well-being. Although both advisors want what is best for their client, each financial professional has his/her own style of managing assets in order to reach the client’s goals. These styles can clash and leave the client susceptible to severe fluctuations in the market if the assets are not allocated properly on the aggregate level. It is nearly impossible to come up with a financial plan to monitor your progress towards your financial goals if an advisor is only aware of a portion of a client’s investment assets. This is another reason why advisor diversification can negatively impact one’s portfolio.

Let’s suppose you were to go to a doctor because you were not feeling well. Would you want the doctor to know of all your symptoms in order to make an accurate diagnosis or would you only mention half of them? This question is also relevant to financial planning. Advisor’s that are not aware of a client’s outside assets, because they are under another professional’s management, will not be able to make an accurate “diagnosis” or financial plan for a client.

The key to working with any financial advisor is trust. The feeling that you require multiple financial advisors may be due to a lack of trust in one or both of your advisors. At this point, it may be time to look elsewhere. Having multiple advisors can lead to your assets working against you instead of for you, which can put a damper on your retirement plans and financial goals.

If you have multiple financial advisors and feel that your current situation is not helping you reach your financial goals, please contact Mitlin Financial for a consultation.

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Net Unrealized Appreciation

In our last blog, “401(k) Rollovers”, we discussed the advantages of rolling over your 401(k) to an IRA. Many can benefit from rolling over their assets, however if you have a 401(k) that has highly appreciated company stock, you may be able to utilize a technique called Net Unrealized Appreciation (NUA). NUA represents the difference in value between your cost basis of company shares and their current market value.

The tax benefit of NUA occurs when rolling over company stock into a non-qualified account as opposed to a tax deferred IRA. When distributing the stock, you will pay taxes on the cost basis at ordinary income (as long as you are over age 59.5, otherwise, you will incur an additional 10% penalty), however you will not owe taxes on any NUA. Once in the non-qualified brokerage account, any NUA will only be taxed as a long term capital gain as opposed to ordinary income which may result in a large tax savings. Any additional appreciation, following the stock being placed in the non-qualified account, will be taxed as either a long term or short term capital gain, depending on when the gain is realized. Depending on your tax bracket and how much your company stock has appreciated will dictate whether or not utilizing NUA would significantly lower your tax liability.

Keep in mind that the tax benefits of NUA is only for company stock. All other stocks, bonds, etc. in your 401(k) will be taxed at ordinary income if you rollover your assets into non-qualified brokerage account. It is important to consult with your tax advisor prior to making the decision of transferring qualified assets into a non-qualified account, as it may result in a significant tax liability if not done properly.

Please contact Mitlin Financial if your retirement account has company stock. We can work with you to determine if the technique of NUA would make sense for you.

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

More Articles ...