Top Five Reasons to Open an HSA in 2014

February 04, 2014

As employers search for ways to lower their health care costs, many are encouraging employees to sign up for a high-deductible health insurance policy paired with a health savings account. An HSA gives you a triple tax break: Your contributions are sheltered from income taxes, the money grows tax-deferred, and the funds can be withdrawn tax-free for medical expenses. It’s like a supercharged flexible spending account that never expires, and it can even serve as an extra retirement-savings fund. Most employers also add a few hundred dollars to the accounts each year as a bonus.

We’ve chosen our top five reasons to open an HAS in 2014:

#1 Deduct up to $8,550 on your 2014 tax return.

You can deduct your HSA contribution and save money even if you do not itemize your taxes. With deduction amounts of up to $8,550 (family maximum contribution of $6,550 for 2014 plus two $1,000 catch-up contributions if you are between 55-65) the tax savings can be substantial. You must have two HSAs, husband and wife, to get the full $8,550.

#2 Cut your insurance costs.

High deductible health plans can be significantly cheaper than low deductible plans. Your savings, when put into an HAS, can be used to cover your entire medical expenditures for the year, or better yet, rolled over and saved for future years.

#3 Pay for eligible medical expenses tax-free.

HDHP you must open your HSA before you incur any medical expenses. Use your HSA to pay for eligible medical expenses tax free. See HSA Resources’ list for a list of eligible and not eligible expenses.

#4 No “Use it or Lose it” provisions.

There’s no need to spend the end of the year stocking up on glasses, contacts and other things you don’t need just so you can spend everything left in your health care account. With an HSA the fund belong to you. There are no use it or lose it provisions. Any unused funds stay in your HSA for your benefit in the future. Even better, earnings on the HSA are not taxable. See the HSA Resources’ Distribution Worksheet for a complete list of eligible distribution reasons.

#5 Start a Heath Savings Account with only $25.

Low on cash? Opening an HAS won’t break your bank. HAS offers a low $25 account deposit requirement to get started. Since you must open your HAS before you incur an expense, it makes sense to open your account as soon as your insurance starts. Some customers open with the minimum amount and add more when they need it.

For other resources, take a look at HSA Resources’ Tax Savings Worksheet to see how much you can save and their Contribution Worksheet for details. Catch-up contributions must go into each spouse’s respective HSA so no more than $7,550 can go into one HSA and you need two HSAs to contribute the full $8,550 limit.

For more information, visit HSA Resources’ website or call 866-757-4727.



Effective Estate Planning for your Family

July 22, 2013
Greg Gandy

Greg Gandy


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What does an effective estate planning and what can it mean for you and your family? Effective estate planning should address wealth transfer from a practical and cost-effective approach. One estate planning strategy that families with significant wealth should consider is the Family Limited Partnership (“FLP”).

A FLP is a partnership agreement that exists between family members that divides rights to income, appreciation, and control of the FLP among the family members according to the family’s overall objectives. Under family partnership rules, family assets placed into an FLP can include real estate, investments (stocks and bonds), alternative assets (partnerships or LLC interests) or a closely held family business.

Under the most common form of the FLP, general and limited partnership interests are created. Once the partnership is established, you then gift the limited partnership interests to your children. By holding the general partnership interest, you are considered the “general partner” and maintain control of all decision making aspects of the FLP. Your children are the “limited partners,” and the limited partnership interest lets them share in the ownership of the FLP which includes rights to income, distributions and asset appreciation.

The FLP enables you to provide your children with an interest in family assets while achieving many goals. First, it removes assets from the parents’ estate, thus helping lower potential estate tax liability of the parents, if properly executed. In addition, you can transfer the limited partnership interests in increments over time, resulting in a gradual and systematic transfer of ownership. Finally, and perhaps most importantly, there may be immediate income tax benefits.

The limited partnership interests transferred to your children, including all appreciation since the transfer, escape inclusion in the parents’ estate when they die. Only the value of the taxable gifts of the limited partnership interests would be included in the parents’ estate. This results potentially large estate tax savings to the parents’ down the road.

By gifting the limited partnership interests in increments over time, you can take maximum advantage of the $14,000 annual gift tax exclusion. The exclusion increases to $28,000 if married and if each spouse elects to give the maximum amount. The annual gift tax exclusion is indexed for inflation over time.

The use of discounting, the allowable reduction of value of the gift because it is a minority interest, can lead to greater leverage of the annual gift tax exclusion and the unified credit. For instance, you may be able to discount the value of the gift by thirty percent (30%) or more. However, in order for the discount to be valid, there must be a legitimate business reason for the partnership. Generally, the consolidation of family assets for ease of investment management is a valid business purpose for the existence of the partnership.

Aside from the estate planning advantages, the FLP can result in substantial income tax saving. By including your children as partners and sharing partnership income with them, total family income tax burden may be reduced. You should be aware, however, that if the income in unearned (interest, dividends, capital gains) and the recipient is under age, kiddie tax rules could apply.

Another incentive for formation of an FLP is that it may protect assets in the event of future problems with creditors. Provided that the transfer of assets to a FLP is not a fraudulent transfer the creditors of the partner who made the asset transfer should not be able to attach the FLP’s underlying assets. Instead, such creditors limited to seeking a “charging order,” which is the equivalent of a garnishment on any distributions made by the partnership interest of the debtor partner. However, if the General Partners of the FLP elect not to make any distributions, the charging order has little or no value because the creditors have no ability to compel the General Partners to distribute FLP profits.

The benefits of the FLP can be significant. But they can only be realized if the arrangement is valid under the requirements of the Internal Revenue Code and regulations thereunder. Consult a qualified legal or tax advisor if you think your family could benefit from an FLP.

If you have questions, please contact Greg Gandy, CPA.


Could “Family Office” Support Benefit You?

October 05, 2011
Greg Gandy

Greg Gandy


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In this day and age of social media, e-mails, texts, professional obligations and personal obligations, it seems as if there is no time to stop and smell the roses. In our fast-paced society, one of the most valuable resources that people fail to accumulate is their free time. The use of a Family Office can help you, the busy professional, regain your most valuable asset…your time.

The term Family Office is often a misunderstood term that most seem to associate with the rich and famous. While it is the rich and famous for whom Family Offices were originally created, it is a service that now is available to any professional who wants to regain their free time.  

While Family Offices take many forms and vary depending upon the individual that is being served, the most important feature that is common to all Family Offices is that there is a Trusted Advisor in place to oversee all aspects of your financial life.  For the remainder of this article, we will focus on the CPA serving the role of Financial Trusted Advisor. 

The services that a CPA can offer in a Family Office environment are that of a true Trusted Advisor, overseeing your entire financial life.

These services include:

  • Personal bill paying
  • Preparation of monthly personal financial statements
  • Personal budgeting and cash flow planning
  • Investment review and evaluation 
  • Insurance review and evaluation
  • Estate planning review and evaluation
  • Asset protection review and coordination
  • Charitable contribution planning
  • Retirement  planning review and coordination
  • Education planning review and evaluation
  • Other concierge services as requested

A CPA can also perform more services that are offered by traditional accounting firms:

  • Income tax return preparation
  • Income tax planning

As you can see from the nontraditional Family Office services that a CPA can provide, one of the key features is the review and evaluation of investments, insurance, estate and asset protection planning. This coordination means that you need only one point of contact, the CPA. Your CPA can coordinate and monitor all other members of your financial team, like your attorney, investment advisor, etc.

 Please view our Web site for more information on how your CPA can help you manage your most valuable asset…your time.

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