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Cigar Reviews: Summer 2015

H. UPMANN BANKER – ANNUITY Dominican Republic     6″ x 52     Medium – Full An oily, eye-catching Habano wrapper underscores this savory 52-ring Toro from one of H. Upmann’s most recent releases. A sweet aroma enhances the rich and robust nutty taste profile that is complemented with well-balanced flavors laced with notes of spice and espresso. […]

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H. UPMANN BANKER – ANNUITY

Dominican Republic     6″ x 52     Medium – Full

An oily, eye-catching Habano wrapper underscores this savory 52-ring Toro from one of H. Upmann’s most recent releases. A sweet aroma enhances the rich and robust nutty taste profile that is complemented with well-balanced flavors laced with notes of spice and espresso.

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CAMACHO ECUADOR – TORO

Honduras     6″ x 50     Full

A gorgeous Ecuadorian-grown Habano wrapper caps a robust Honduran and Dominican leaf core bound in an earthy, spicy and semi-sweet Brazilian Mata Fina leaf. Opening with an initial blast of pepper, the smoke rounds out with a profusion of complex flavors that WOWS the palate.

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COHIBA COMADOR – DOUBLE CORONA

Dominican Republic     7_” x 54     Medium

Made as a joint venture with rapper superstar Jay-Z, the Cohiba Comador represents the ultimate in luxury class cigars. All of the tobaccos are specially grown just for this blend, resulting in a full-flavored, complex smoke with a perfect burn and flawless construction.

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ROCKY PATEL TORO

Nicaragua     6″ x 52     Medium – Full

This attractive Nicaraguan puro is ideal for cigar lovers who like to smoke hearty and carry a big stick. A shimmery Nicaraguan Habano wrapper seamlessly dovetails with a diverse longfiller core, offering a creamy, complex and affordable smoke brimming with dark tobacco flavors.

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PUNCH SUCKER PUNCH “CRITICAL CONDITION”

Honduras     7″ x 52     Medium-Full

A full-flavored Churchill that hits you with a wallop of robust flavor when you least expect it. Skillfully rolled in a rich-tasting Ecuadorian Connecticut wrapper, the smoke is well-balanced and complex enough to keep you guessing. That’s the beauty of this very reasonably priced cigar.

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Piedmont

Italy’s greatest & most highly regarded wines Located in the Northwest of Italy, the Piedmont region is the home of two of the most renowned red wines in the world, Barolo and Barbaresco. Sought after by connoisseurs and collectors, these magnificent wines are fairly expensive and can need years of bottle age before they are […]

Italy’s greatest & most highly regarded wines

Located in the Northwest of Italy, the Piedmont region is the home of two of the most renowned red wines in the world, Barolo and Barbaresco. Sought after by connoisseurs and collectors, these magnificent wines are fairly expensive and can need years of bottle age before they are ready to drink. Yet what really puts Piedmont on the map for the majority of wine lovers is that it also produces a wide range of wines that are affordable, ready to drink, food friendly, and perfect foreveryday enjoyment.

Like all great wine regions, the style and quality of Piedmontese wines is the result of millions of years of geologic evolution combined with the influences of climate (Mediterranean meets Alps), the grape varieties grown, and the traditions and wine making methods used to craft them. Piedmont, which means “foothills” in Italian, lies at the intersection of two great geological forces where the African and European continents collide. This massive force not only created the Alps, which are visible on a clear day from much of the region, but also pushed up an ancient seafloor to the surface creating a jumbled series of steep hills with a mix of different soils, slopes, altitudes and exposures that are perfect for growing grapes. The subtle differences between vineyard sites favor grapes with different ripening requirements, and a host of grape varieties are planted in the region depending on the specific microclimate where they are planted. While Piedmont is best known for its reds, there are also delicious white, rosè, sparkling, and sweet wines too.

Piedmontese whites are typically crisp, clean and on the light, refreshing side. Some of the best known are made from local varieties such as Arneis, Cortese (the grape in Gavi), and a few lesser known indigenous grapes including Erbaluce and Favorita. There are some international varieties including Riesling, Chardonnay and Sauvignon Blanc too. Moscato is widely planted and is mainly used in the production of sparkling sweet wine called Moscato d’Asti. Red grapes include Grignolino, Brachetto, Grachetto, Friesa, Croatina, and Vespolina to name a few obscure local varieties, plus Cabernet Sauvignon, Syrah, Merlot and Pinot Noir as the international representatives. But the bulk of red wine is made from Barbera, Dolcetto and Nebbiolo.

Both Dolcetto and Barbera are fairly early ripeners, making lovely fresh, lively wines that have the dual benefit that wine makers can sell them a year or so after harvest (and get paid sooner) and that wine lovers can drink them pretty much when they are released. Since they ripen earlier, they can be grown in vineyards in cooler sites and are a little less demanding than Nebbiolo. Dolcetto has a dark, edgy cherry character with moderate tannins and modest acidity. It can be made in a slightly rustic style with more structure, or in a more modern style that is juicier and more fruit driven. Either way it can be drunk young and fresh within a few years of the vintage. Barbera is typically a bit higher in acid and slightly lower in tannins than Dolcetto. Most Barbera is pretty simple and straight forward yet deliciously juicy wine with bright red fruits and cherry notes. When it is planted in top vineyard sites it can morph into a wine with much more stature, depth and power.

Barbera can be vinified in a more traditional style in large neutral barrels or concrete, or in a modern style and aged in barrique, and the best can age and improve for 8-10 years.
Nebbiolo, the sole grape in Barolo and Barbaresco, is a late ripening varietal. It is widely believed that it took its name from the mist and fog (Nebbia in Italian) that is typical in the late fall when the grape finally ripens. While Dolcetto and Barbera can thrive in cooler sites, Nebbiolo destined Barolo and Barbaresco needs the best of the warm, sunny, south facing vineyards to capture the heat and fully mature. It produces wines that can range in style from fresh and lively and ready to drink (Langhe Nebbiolo for example), to solid, tensely structured and firmly tannic wines that need a decade or two to reach their peak when planted in the Barberesco and Barolo DOCGs. The main determining factors in the quality and style of Nebbiolo are vintage conditions, vine age, vinification method, and perhaps most importantly, vineyard location. When made in the lighter style it undergoes shorter fermentation and maceration in order to keep its red fruit and freshness. Nebbiolo destined for Barolo and Barbaresco undergo much longer fermentation and maturation, with several years of barrel and bottle aging required by law before they can be sold, and only the best Nebbiolo grapes are used.

Most of the wine made in Piedmont is in the vineyards around the towns of Asti, Alba and Alessandria, but there are five main regions: Canavese (including Carema and Caluso), Colline Novarese, Coste della Sesia in the north, Langhe – including the hill country around the city of Alba and the Roero, and Monferrato which includes the areas around Asti and Alessandria. The region has 45 Denominazione di origine controllata (DOC) and 12 Denominazione di Origine Controllata e Garantita (DOCG). The DOCG wines are: Asti, Barbaresco, Barbera d’Asti, Barbera del Monferrato Superiore, Barolo, Acqui, Dogliani, Ovada, Gattinara, Gavi, Ghemme and Roero.

The Barolo DOCG has several sub zones – Castiglione Falletto, La Morra, Monforte d’Alba and Serralunga d’Alba – and each has its own unique terrior and style. Barbaresco also has several sub zones – Barbaresco, Treiso, and Neive – again with subtle influences on the style of wines produced. In both Barolo and Barbaresco, producer is important as styles can range from very traditional, austere and almost rustic to much more extracted, riper and more modern styles. The grape, with its firm tannins, good acidity and relatively low color component makes wines that are rarely inky dark purple, rather they have a little more garnet and lighter hues, almost brick hints at the edges. Barolo and Barbaresco are often described as “big wines” but to me, while definately intense, they are more nervy, racy and highly strung, less generous and more reserved and tight especially when young, and with more dried fruits, earth and leather notes than sheer power and opulence. In this sense they can be a bit stand-offish at first for lovers of riper, oakier, more fruit oriented wines.

The wines of Piedmont are fantastic partners at the table. From light fresh whites that are perfect as an apertif, with fish, appetizers, risotto or pasta with seafood, to medium bodied reds like Barbera or Dolcetto which are great with light meats, pasta with red sauce or pizza, and Barolo and Barbaresco with griiled lamb, veal chops or beef, they are well worth getting to know. For after dinner there are sweetly sparkling Moscato d’Asti with its peachy pear notes, or Brachetto d’Aqui, a sweet sparkling red that us like liquid raspberries. A series of great vintages has made a wealth of wine available for affordable everday drinking as well as for the collector looking to stock the cellar with age worthy gems making this a great time to explore this excellent wine region.

Cheers!

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What Makes A Company High-Tech?

Let’s face it – high-tech is in…everyone wants to be a high-tech company. Why? It’s good business—having a “reputation” as a high-tech company says you are relevant with the times, on the cutting edge of growth and progress, a place where people want to work and customers want to bring their business. It matters, but […]

Let’s face it – high-tech is in…everyone wants to be a high-tech company. Why? It’s good business—having a “reputation” as a high-tech company says you are relevant with the times, on the cutting edge of growth and progress, a place where people want to work and customers want to bring their business. It matters, but being high-tech means a company’s business technology is more than just its computers and devices. It is not only the tangible hardware and software but also the intangible elements that drive technology implementation and usage. It is just as important to consider how a company embraces and makes use of their tools to implement operating processes with the result of improved efficiency, output, and results on a day to day basis. Being high-tech is an evolution, a transformation, and one that if implemented well makes you a better company.

We all know that here in 2015, very few companies could function if every computing device were to disappear, so let us consider what else defines the technology equation. Ultimately the greatest factor as to whether a company is high-tech comes down to whether they have developed a technology culture. Starting with the CEO at the top, down to the lowest level function employee, does the company embrace the ever changing options that enhance, define, and revolutionize any and every given function in the workflow of the day to day operations? A technology culture embraces technology-driven change and not for the sake of change, but change that makes the company and its people better.

It is far too frequent that employees fear rather than embrace the tools that can make their processes more streamlined. The weakest link metaphor has a chance to manifest itself anywhere an employee has developed this fear of technology. It is up to the executive team and management to identify and strengthen these links, and bring up every participant that affects the company’s technology IQ. This can be done by investing in technology education. Training employees to strengthen their technology skills improves your company, and more importantly, your people.

As technology improves and evolves, the gap only widens. A strong technology culture is able to evolve with the new technology and adapt specific technology enhancements to fit their company’s unique needs. The greatest asset in becoming a high-tech company is the willingness to ask “How can we improve how we do things and are we willing to change?” This requires research and the fortitude to implement those methods. There is always a better way to do something, either available now or around the corner. If every employee participates in that discovery process, then a company thrives in a high-tech world and builds a technology company. So are you a high-tech company?

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The Right Insurance

Do I Need It… Is It Affordable? You’ve worked hard for to accumulate the assets you have.  One unfortunate incident could jeopardize your financial world.  What should you do?  One solution is to protect yourself with an excess liability policy, also known as personal umbrella policy.  An umbrella policy provides additional liability coverage, over and […]

Do I Need It… Is It Affordable?

You’ve worked hard for to accumulate the assets you have.  One unfortunate incident could jeopardize your financial world.  What should you do?  One solution is to protect yourself with an excess liability policy, also known as personal umbrella policy.  An umbrella policy provides additional liability coverage, over and above the limits of liability on your automobile and homeowner’s insurance policies.  When endorsed properly a personal umbrella will provide protection over your boat, motorcycle, and other recreational vehicles.  Although coverage limits may vary per insurance company, you can purchase coverage in amounts of $1 million up to $5 million from most insurance companies.  Several insurance companies will offer limits up to $100 million. A Personal Umbrella policy typically costs $250 for the first million and approximately $1,000 for a five million dollar policy.

Do you have a swimming pool in your yard?  Do you have any youthful operators (ages 16-23) covered by your automobile policy?  Is there a trampoline on your property?  Do you have a high net worth?  If you answered yes to any of these questions, then a personal umbrella policy would be beneficial to you.  Umbrella policies may also cover certain liability issues that are normally excluded by your homeowner’s policy such as slander, libel, false arrest and invasion of privacy to name a few.  (Coverage may vary per insurance company- check your umbrella policy for specific exclusions.)

In the event of a covered claim, your automobile or homeowner’s policy will pay up to the policy’s maximum limits of liability.  The umbrella policy will then cover any remaining costs, up to the limit of liability purchased.  To be eligible for umbrella coverage, certain limits of liability on underlying policies may be required.  For example, some insurance companies require automobile liability limits at  $250,000 per person and $500,000 per accident and homeowner’s liability limits at $300,000 in order to qualify for an umbrella policy.

Some of the most important benefits of a personal umbrella policy include:

  • Protection for incidents involving the operation of most motor vehicles, including cars, trucks, motorcycles, Recreational Vehicles (RV’s) and most watercraft.
  • Extra protection if a covered driver causes an accident and was liable for injury to others or property damage.
  • Increased protection if someone is hurt on your property.
  • Coverage for family members, worldwide, for actions that may cause injury to others or property damage.
  • Defense coverage for attorney’s fees and other legal costs, even if you are not found liable.

The possibility of a lawsuit can happen to anyone.  The best way to protect yourself is to discuss purchasing a personal umbrella policy with your insurance agent.  A few minutes of your time could help prevent a significant financial loss in the future.

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Consultant & Entrepreneurial CFOs

The average LinkedIn user has 930 connections.  How many do you have? It’s no secret that we live in a hyper-connected world.  Social media has enabled unheralded intimacies between people, and between companies and their value chain.  Relationships have become a catalyst to growth, and to succeed we must continually connect with new people, nurture […]

The average LinkedIn user has 930 connections.  How many do you have?

It’s no secret that we live in a hyper-connected world.  Social media has enabled unheralded intimacies between people, and between companies and their value chain.  Relationships have become a catalyst to growth, and to succeed we must continually connect with new people, nurture emerging relationships, and leverage existing connections.

Your ability to network and form meaningful relationships has become a valuable asset.  A strong network of versatile connections provides a more productive, proficient, and enduring outlet to achieve business goals.  As such, the concept of Networking is at the forefront of a business’ journey to successful growth.

Businesses today must embrace networking and leverage it’s powers in all business methodologies and processes.  This starts with an executive team that understands that “networking is the single most important tactic to accelerate and sustain success” (Adam Small).  Executives must operate outside of traditional roles, providing broader assistance by maximizing their network to build a support team that is qualified to address today’s challenges.

The executive role that has evolved the most is that of the Chief Financial Officer (CFO).  As William Fuessler, a global leader of IBM’s financial management practice, proclaims, “the era of the CFO as a key influencer in the C-Suite has arrived, and those who are ready for it will reap the rewards for their organizations–increased competitiveness and greater profits.”

CFOs are no longer seen as just number crunchers.  Stakeholders expect CFOs to broaden their focus on company-wide concerns and help shape the overall strategic direction.  They are expected to cut costs, grow revenue, ensure financial controls, and provide fact-based insight.  As a result, CFOs are emerging with far greater clout and responsibilities than before.

Many small businesses cannot afford a full-time CFO and instead have opted to hire consultants as part-time CFOs.  Sometimes these services are labelled as CFO for Hire or CFO in a Box.

With a strong focus on return on investment (ROI), consulting CFO services should supplement the normal expectations of a CFO with the focus, determination, and adaptability of an entrepreneur.  Consider some of the advantages of a consultant/entrepreneurial CFO:

  • Provides financial leadership and aligns business and finance strategy to grow the business.
  • Stimulates change by bringing a fresh perspective to tackle ongoing or new challenges; breaks traditional, and possibly stale, processes and mindsets.
  • Drives business improvement initiatives such as improved cost reduction, procurement, pricing execution, and other process improvements and innovations that add instant value to companies.
  • Brings diverse experiences from serving as a C-level finance executive in other enterprise.  Experience makes all the difference!  All the difference between telling you how other companies have handled certain situations and telling you this is how we have handled similar situations in the past.
  • Provides higher ROI than a high-priced, in-house CFO
  • Leverages your network.  The entrepreneurial consultant CFO has a more diverse network than individuals working 100% in your business do.

In a fast paced, slimming margins world, leveraging your resources, and maximizing your return on investment are essential.  Your CFO should be leading the efforts in this area.  Consider the options you have available to you.

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PA Business Barometer 2014

Just-Released Survey by The Provident Bank Reveals 88% of Business Owners in Eastern PA are Optimistic About 2015 (Iselin, NJ) February 3, 2015—Nearly nine out of ten businesses in eastern Pennsylvania are optimistic about 2015, and more than one-third expect to show significant growth in the next 12 months, according to survey data released today […]

Just-Released Survey by The Provident Bank Reveals 88% of Business Owners in Eastern PA are Optimistic About 2015

(Iselin, NJ) February 3, 2015—Nearly nine out of ten businesses in eastern Pennsylvania are optimistic about 2015, and more than one-third expect to show significant growth in the next 12 months, according to survey data released today by The Provident Bank, http://www.providentpa.com.

Specifically, Provident Bank’s 2014 Business Barometer, which surveyed more than 150 business owners in seven counties in eastern Pennsylvania, found that 88% of business owners are either somewhat or very optimistic about the coming year, and 36% expect growth of 5% or more in the coming year. Further, 48% of companies surveyed felt their business performed “great” or “good” in the past 12 months, while an additional 37% said they “held their own.” Only 3% felt their business performed poorly last year.

“Our survey results point to a very real sentiment among local business owners that the region encompassing eastern Pennsylvania is poised for strong growth in the coming years,” said Bruce Dansbury, Senior Vice President, Director of Lending – PA, The Provident Bank. “As a large community bank with a strong capital base, vast experience with our lending team and a history of providing quick, seamless financial solutions for our commercial clients, Provident is prepared and eager to encourage and support this growth.”

Among the 2014 Business Barometer’s other findings are:

  • Among those who said business was “good” or “great” in 2014, respondents most often attributed increased sales (28%) and new customers (16%) for their success.
  • Slightly more companies plan to borrow money for business this year than in 2014 (38% vs. 33%, respectively) and supporting growth continues to be the primary reason for needing capital (39% in 2014; 42% in 2015).
  • Nearly three-fifths of business owners said their workforce numbers remained the same in 2014 (59%) and they don’t plan on making any changes this year (60%).
  • Of those companies that made workforce changes in 2014, 10% reduced staff while only 31% added workers. Of those who plan to make changes in 2015, 40% said they will hire full-time employees, 48% will add part time workers and 19% will increase their use of consultants.
  • More than half (54%) of business owners indicated that they worked more hours in 2014 than in 2013.
  • When asked what is the most important business concern their company faces, the state of the economy was the most popular response (rated 4.23 on a scale of one to five), followed by state property taxes (3.67), terrorism or natural disasters (2.76) and cyber threats (2.69).
  • Half of respondents (50%) indicated that they conduct business banking online more than half of the time and 51% percent said that they use online bill-pay frequently.
  • Almost one-quarter of respondents (23%) indicated that Millennials encompass 50% or more of their target audience.
  • About nine out of ten (88%) businesses in the region indicated that their company made some kind of charitable contribution in 2014 and 75% said they plan to give the same or more this year.

“Perhaps among the most encouraging data to come from this survey is that so many companies throughout the region are actively giving back to their communities in the form of charitable giving and volunteerism,” noted Dansbury. “As local nonprofits continue to feel the strain that the recent recession has placed on their balance sheets, we are pleased to join these local efforts and give whatever we can to support essential programs and services.”

About the Survey

Provident Bank’s 2014 Business Barometer is an annual survey of local business owners and senior management that assesses their views about the state of their businesses and the overall business economy. More than 150 respondents in seven counties in eastern Pennsylvania completed the survey in December 2014 (154 total). Counties represented were: Bucks, Lehigh, Northampton, Montgomery, Carbon, Monroe and Berks.

Of the companies surveyed in the region, 3% were publicly traded, 40% were privately held and 57% were family-owned and operated. Their longevity ranges from one to five years old to more than 50 years in business, with a slight majority of respondents having been in business for 1-10 (47%), closely followed by those in business 21-50 years (23%). A majority of respondent businesses (80%) had less than 20 full-time employees. Respondents fell across a wide range of business and industry, with the highest concentration of respondents in service (55%), manufacturing (16%) and retail/hospitality (13%) sectors.

For a copy of the survey, please contact Diana Braga at Diana.Braga@providentnj.com or call (732) 590-9405.

More information about The Provident Bank is available at ProvidentPA.com. Visit Facebook.com/ProvidentNJ andTwitter.com/ProvidentNJ to join the conversations.

About The Provident Bank

The Provident Bank, (www.providentnj.com) a community-oriented bank offering “commitment you can count on” since 1839, is the wholly owned subsidiary of Provident Financial Services, Inc. (NYSE:PFS), which reported assets of $8.4 billion as of September 30, 2014. With over $5.7 billion in deposits, The Provident Bank provides a comprehensive array of financial products and services through its network of branches throughout northern and central New Jersey and eastern Pennsylvania. The Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company.

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Building Your Team

Using Benefits to Attract and Keep the Best You’ve launched your business, lined up some customers and are now ready to start building your staff. Before you start interviewing, however, you may want to think about employee benefits. The benefits package you offer can make a big difference in both who you attract and whether […]

Using Benefits to Attract and Keep the Best

You’ve launched your business, lined up some customers and are now ready to start building your staff. Before you start interviewing, however, you may want to think about employee benefits. The benefits package you offer can make a big difference in both who you attract and whether you’ll be able to hold on to them in the future.

Indeed, many employees these days judge the strength of a company by the quality of the benefits they provide.  Often the first perk offered by fledgling businesses is health insurance, followed shortly by some kind of retirement plan. As companies grow, however, a sweetened benefits package can be a particularly effective way of keeping people happy with their jobs and loyal to the company.

At University Medical Imaging—a 20-year-old company that provides MRIs, CAT scans, x-rays and ultrasound procedures—benefits planning gets a lot of attention these days. “We look at it constantly,” says Michael Lechner, practice administrator, noting that the company needs the right staff in order to provide quality patient care.

Finding good workers, however, is never easy, even with today’s high unemployment. And once the staff is trained and in place, Lechner says, it’s important to keep competitors from poaching the talent. “So we need to make sure that the grass always looks greener on our side,” he says.

The good news: Many of the most valued perks are relatively inexpensive for employers. Moreover, companies are allowed to create small classes of employees that qualify for enhanced benefits. That means a group of highly-valued executives might, for example, get improved life insurance coverage or an upgraded disability policy. Such offerings—while extremely meaningful to the employee—are both tax deductible and significantly less expensive than an increase in pay.

At the executive level, special benefits packages can be an important way to attract key employees and keep them on board. Aimed at the highly-compensated employee, these arrangements can often involve some kind of executive bonus or deferred compensation, often funded with permanent life insurance.

Companies can be very creative in designing these top-tier plans. Often, they come with a vesting schedule to keep the employee tied to the company. A deferred-compensation plan, for example, might offer key personnel an additional $40,000 a year for 10 years, requiring those executives to stay on the job for a decade in order to collect the full amount.

But these arrangements can offer more than golden handcuffs. A supplemental employee retirement plan or SERP, for example, can be designed to not only provide the executive with additional retirement income, but also to pay the company a death benefit if that employee should die. In some cases, this may even allow the company to recoup the cost of premium payments in the event of a death.

When it comes to benefits planning, however, one size does not fit all. Company perks tend to change as the business gets bigger, and offerings vary from industry to industry and from region to region. The employees themselves are a critical part of the planning equation.     Older employees, for example, may be primarily interested in health and retirement benefits, but studies show Gen Xers consider paid time-off an exceptional value.

That means companies can’t simply offer a richer benefits package and expect good results. Instead, companies need to make sure they are offering the right benefits—the ones that make a difference to their employees.

Finally, employers need to make sure they not only put together a good package, but also communicate the value to employees. After all, what good are the benefits if the employees have no idea they exist?

Provided by Miriam Zettlemoyer, a financial representative with MassMutual Eastern Pennsylvania, a MassMutual Agency; courtesy of Massachusetts Mutual Life Insurance Company (MassMutual)The information provided is not written or intended as specific tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. © 2014 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001 CRN201504-170817

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The New Defined Benefit Plan

The Fall of Pensions Traditional defined benefit plans are quickly becoming a thing of the past. Throughout the 20th century pensions were the most important part of retirement income outside social security. Despite recent buzz about their resurgence, statistics show a decline in use; the decline has only slowed recently due to low interest rates […]

The Fall of Pensions

Traditional defined benefit plans are quickly becoming a thing of the past. Throughout the 20th century pensions were the most important part of retirement income outside social security. Despite recent buzz about their resurgence, statistics show a decline in use; the decline has only slowed recently due to low interest rates and funding, which make terminating pensions costly. As market conditions improve, the rate of termination will accelerate again.

Initially, pension plans were attractive to employers and employees. Employers could set aside substantial amounts of cash on a tax-favorable basis and provide retirement income for employees. Markets were advantageous, interest rates were attractive, profitability was strong and life expectancy was shorter.

The complex dynamics of pension plans now make them unattractive to many companies. They require substantial resources—riddling budgets and squeezing profitability. There is little control over variables embedded into the plan design, such as interest rates, market volatility, annual funding, liability, increased life expectancy, PBGC (Pension Benefit Guaranty Corp.) premiums, plan complexity and administration.

The Rise of the Cash Balance Plan

The fall of pensions gave rise to a new type of plan design: the cash balance plan. Introduced in 1985, the first cash balance plan was adopted by Bank of America. It gained more traction after the Pension Protection Act of 2006. Cash balance plans have since experienced double digit growth every year, rising by 500% over the last decade.

These plans are hybrid retirement plans, offering the governance of a defined benefit plan with the look and feel of a defined contribution plan. Contributions are now commonly a percent of compensation, but can also be a specific dollar amount, hence the feel of a defined contribution plan.

Although still relatively novel, cash balance plans could be a significant resource for organizations wanting to maximize retirement savings in a tax-favorable manner. They also complement the defined contribution plans used today. Cash balance plans can stand alone or be used in combination with current 401(k) or profit sharing plans. When used concurrently with existing plans, the total retirement contribution could provide significant savings per employee, per year.

Plan Advantages

Cash balance plans make benefit calculations simple for employees. Participants receive an annual statement of their accumulated balance, which is the total of employer annual contributions and credited growth rate. Each year, contributions and benefits are credited with a rate of growth based on a chosen benchmark. The most common benchmark is the 30-year Treasury Bond, which provides four to five percent credit annually.

Cash balance plans don’t require individuals to be investment experts; assets are pooled and invested based on the direction of the plan trustee. It remains the employer’s responsibility to ensure monies are available to pay benefits and growth. Because rates can be more modest and palatable, investments need not assume high levels of risk and can be invested conservatively to temper volatility.

Another advantage is that cash balance accounts are portable, so employees can take it with them when they go. There is still a vesting requirement, but once an employee has accrued vested status and separates service, they may roll the account value into another employer’s sponsored plan. Additionally, retirement income payments are no longer an employers’ lifetime obligation; participant balances are paid in lump sum or used to purchase an annuity for the beneficiary upon retirement.

Concerns that retirement plans are struggling are warranted. Employees don’t save enough on their own, and defined contribution plans can be favorably biased toward owners and highly compensated employees. However, cash balance plans level that playing field and provide everyone with a suitable vehicle for retirement income. Their momentum will continue to rise as traditional pensions fade away.

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Using S-Corporations to Reduce Self-Employment Income

As you are aware, income that you generate conducting your business as a sole proprietorship (or through a wholly-owned limited liability company (LLC)) is subject to both income tax and self-employment tax. The self-employment tax is imposed on 92.35% of self-employment income at a 12.4% rate for social security up to the social security maximum […]

As you are aware, income that you generate conducting your business as a sole proprietorship (or through a wholly-owned limited liability company (LLC)) is subject to both income tax and self-employment tax. The self-employment tax is imposed on 92.35% of self-employment income at a 12.4% rate for social security up to the social security maximum ($118,500 for 2015; $117,000 for 2014) and a 2.9% rate for Medicare, without any maximum. In addition, there is an additional 0.9% Medicare tax on income exceeding $250,000 for married couples ($125,000 for married persons filing separately) and $200,000 in all other cases. Similarly, if you conduct your business as a partnership in which you are a general partner, in addition to income tax you would be subject to the self-employment tax on your distributive share of the partnership’s income. On the other hand, if you conduct your business as an S corporation you will be subject to income tax, but not self-employment tax, on your share of the S corporation’s income.

An S corporation is not subject to tax at the corporate level. Instead, the corporation’s items of income, gain, loss, and deduction are passed through to the shareholders. However, the income passed through to the shareholder is not treated as self-employment income. Thus, by using an S corporation, you can avoid self-employment income tax.

There is a problem, however, in that IRS requires that the S corporation pay you reasonable compensation for your services to the S corporation. The compensation is treated as wages subject to employment tax (split evenly between the corporation and the employee), which is equivalent to the self-employment tax. If the S corporation does not pay you reasonable compensation for your services, IRS may treat a portion of the S corporation’s distributions to you as wages and impose social security taxes on the deemed wages. There is no simple formula regarding what is reasonable compensation. Presumably, reasonable compensation would be the amount that unrelated employers would pay for comparable services under like circumstances. There are many factors that would be taken into account in making this determination. These and other techniques can save businesses tax dollars.

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Legal for Less

An Insurance Tragedy Not one person injured in a car accident wake up that morning thinking, “I bet today is the day a careless driver will put me in the hospital.”  But have you ever seen how many drivers are texting while driving on Route 22?  And have you noticed that there are more trucks?  […]

An Insurance Tragedy

Not one person injured in a car accident wake up that morning thinking, “I bet today is the day a careless driver will put me in the hospital.”  But have you ever seen how many drivers are texting while driving on Route 22?  And have you noticed that there are more trucks?  The number of tractor-trailers in the Lehigh Valley corridors will double by 2019.

Yet, we never wonder how much insurance a negligent driver will have if he hit us.  To be “legal” in Pennsylvania, a driver must carry a mere $15,000.00 of liability insurance.  If that driver veers into your lane of travel, will that $15,000.00 cover six months of your disability, your absence from your work during physical therapy and rehabilitation?  And what if that driver is instead one of the many uninsured drivers passing through the Lehigh Valley?

Now, instead of $15,000.00 to protect you, there are zero dollars to cover your losses.  If you are a self-employed professional, can you survive being away from your business for six months?  You can’t control how much insurance another driver carries to protect you.  And yet, that driver can injure you, causing financial ruin.  So, what can you do?

Fortunately, this article provides that answer.

While you can’t control other drivers on the road or the amount of their coverage, you do have an inexpensive option in selecting automobile insurance that includes a provision for UNINSURED/ UNDERINSURED MOTORIST BENEFITS, or “UM/UIM” for short.  Here’s how UM/UIM works: A 32 year old financial advisor in the Lehigh Valley spent three months in the hospital following a head-on collision in which she sustained a severe concussion and a broken pelvis followed by two months at a rehabilitation facility.  She then returned to work three hours a day, while still receiving cognitive therapy.  She was making slow progress and continued to require narcotic pain medication to get through the day.  She was finding she could no longer retain information as she did before the impact.  A medical and vocational economist might show the value of her case to be $3.8 million when her future lost earning capacity was considered through the age of retirement.

If the driver who caused the collision carried $15,000.00 of liability insurance, that would typically be paid immediately. Without UM/UIM coverage, this professional might lose her home, and be unable to get the best therapy in the future. However, for a relatively low premium payment, she could have added UM/UIM coverage to her own automobile policy.  As soon as it was determined that the responsible driver lacked insurance or sufficient insurance (in other words, he is either uninsured or underinsured), the UM/UIM coverage would be available.

This coverage is critically important, especially to any self-insured professional.  It covers all damage to a person’s earning capacity, unpaid medical expenses and pain.  Amazingly, your rates should not increase, and your coverage will not be impacted if a  UM/UIM claim is made.  And, by directing your agent to “stack” your UM/UIM coverage on each vehicle, the coverage becomes a multiple of the number of vehicles that you own.  For example, someone owning three cars with $100,000.00 of stacked UM/UIM coverage would actually have $300,000.00 of this safety net insurance for any one accident.

As a lawyer representing people who have already been injured, I can only tell my clients that I wish they had protected themselves with strong UM/UIM coverage.  Once they are injured, it is, of course, too late.  Such coverage can’t restore a person’s health but it can keep him or her financially solvent and independent, and that is sometimes as close to justice as we can get.

I urge you to write yourself a note to check with your insurance agent that you have as much UM/UIM coverage as you can reasonably afford.

I’m always interested in what my doctor takes as her cholesterol-reducing drug, what my architect friends use as siding on their own homes and where my own investment counselor invests his own money.  Feel free to contact me, as I would be glad to share with you my levels of coverage and the premiums I pay after spending more than 25 years representing injured victims in the Lehigh Valley.  Adding UM/UIM coverage may be the single best insurance decision you will ever make.

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