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How to Balance Savings Between a 401 and a Roth IRA

Roth IRAs and 401(k)s are two of the most commonly used retirement savings accounts. For people with both a 401(k) and a Roth IRA, it is best to balance retirement savings between the two accounts in order to maximize employer contributions and tax benefits.

A Roth IRA provides considerable flexibility both before and after retirement. It is funded with after-tax dollars, so that it grows tax-free for the rest of the account holder’s life. There are no penalties or taxes for taking an early distribution of the amount contributed to the Roth IRA, providing peace of mind in case of an emergency later on.

A 401(k) is funded with pre-tax dollars and the account grows tax-deferred, so that taxes are paid when the distributions begin. Contributions to a 401(k) account receive an immediate tax deduction, but are subject to the uncertainty associated with future tax rates.

The most important consideration when balancing savings between a 401(k) and a Roth IRA is to make sure to contribute enough to the 401(k) to receive the full amount of the matching contribution from the employer. If there is no matching contribution or the match has already been met, then it is time to focus on the Roth IRA.

For people under the age of 50, there is a $5,500 annual limit on contributions to a Roth IRA. If an individual would like to keep saving after contributing enough to max out their Roth IRA and 401(k) employer matching, then more can be added to the 401(k) for additional tax deductions. If both accounts have been maxed out, it may be time to turn to a brokerage account or deferred variable annuities.

To learn more about our retirement planning services, visit www.littmankrooks.com.

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This entry was posted on Friday, November 14th, 2014 and is filed under Elder Law | no comments | Leave a comment

Consider the Details when Estate Planning

Once you’ve drafted a will and advance directives and signed a health care proxy, take into consideration some of the less obvious things that may alleviate some of the burden on a loved one or family member.  Here’s a quick list:

Access to Information

The family needs to understand and have access to the individual’s documents. Three steps are recommended: creating a centralized and comprehensive collection of documents and information; talking to family members about wishes; and providing key documents such as powers of attorney to family members named in those documents.

The collection of documents and information should include not just the estate planning documents, but also information regarding online accounts, burial arrangements, and all financial accounts.

Cash Flow

After the initial steps in administering the estate, cash from the estate will be available to settle debts and pay for estate administration costs. The cash from the estate may not be available immediately after the individual’s death, but bills such as burial costs and attorneys’ fees come quickly. Individuals should ensure that there is enough cash flow to handle the initial costs.

Bills and Accounts

Having a list of the account numbers and information for all financial accounts and debts prevent issues such as unknown creditors and unclaimed assets. There should also be a list of bills, particularly bills that are automatically withdrawn each month. Additionally, the individual should keep a list of online accounts and passwords.

Special Arrangements

Some people have special requests or arrangements which require additional planning. For example, the survivors of veterans who wish to be buried in a military cemetery must provide the veteran’s DD214; not having it on hand can cause delays. Such arrangements should be discussed and planned for.

Learn more about our estate planning services by visiting www.littmankrooks.com.

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This entry was posted on Tuesday, November 4th, 2014 and is filed under Elder Law | no comments | Leave a comment

Paid Time Off – What Household Employers Need to Know

By Tom Breedlove, HomePay by Breedlove

The holiday season is just around the corner, which means families are starting to make plans to travel, see loved ones and use up the rest of their vacation days before 2015 begins. So with the idea of time off on many people’s minds, it’s a good time to talk about how things like vacation and sick days work if you employ an in-home caregiver. Many of us are simply told when we began our current job how many vacation days, sick days or personal days we get each year and we just accept that. But did you know there are federal and state labor laws in place that dictate paid time off?

If you employ a caregiver in your home, federal law does not explicitly require you to offer any form of paid time off to your employee. However, in the state of New York, after 1 year of employment, you are required to provide at least 3 paid days off. The law makes no designation whether these should be vacation, personal days or holidays – just that your employee is entitled to have 3 paid days off. Most families that want to attract a quality caregiver probably already offer this minimum, but in case you’re reading this trying to plan the benefits package for your employee, keep that number in mind.

Additionally, if you live in New York City, you’re required to provide 2 days of paid sick time per calendar year after your caregiver has worked for you for 1 year. Any unused sick time is allowed to be carried over to the next year or paid to the caregiver if they are terminated. City law also requires you to keep sick time records for 3 years.

Finally, the state requires you to provide a written notice to your caregiver about your policy on sick leave, vacation, personal leave and holidays. This can be worked into your formal employment agreement and is a great way to get on the same page during the hiring process so your working relationship is positive from the start. Whatever you decide on with your caregiver, just make sure it’s in writing and understood by your employee before they begin working for you. The holiday season is not a good time to have a conversation about how many vacation days your caregiver has left in the year.

If you need help putting together a sample employment contract that includes paid time off, you can find one at Care.com. And if there are other aspects about being a household employer you get stuck with, just visit our state-specific tax page on the HomePay website.

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This entry was posted on Thursday, October 30th, 2014 and is filed under Elder Law, Special Needs Planning, Tax Planning | no comments | Leave a comment

National Estate Planning Awareness Week Starts October 20 2014

The Big Problem – Did You Realize That?

1. It is estimated that over 120,000,000 Americans do not have an up-to-date estate plan to protect themselves, and their families, making estate planning one of the most overlooked areas of personal financial management? Financial and estate planning is not just for the wealthy and is an important process for everyone. With advance planning, issues such as guardianship of children, managing bill paying and assets in the event of sickness or disability, care of a special needs child or parent, long-term care needs, and distribution of retirement assets can all be handled with sensitivity, care, and at a reasonable cost.

2. The majority of Americans lack the ability to adequately plan for their retirement as most Americans over 65 are totally dependent on Social Security. With proper knowledge and planning, future generations will certainly have a more secure future.

3. Most people mistakenly believe that concepts like financial awareness, financial planning , retirement planning, planning for major expenditures, investment planning, tax planning, insurance planning, and estate planning, are just for the wealthy. When, in fact, few people today can really attain and maintain their financial security without forethought and a strategy to protect themselves and their families. This attitude can be financially harmful and can be avoided with proactive action. Managing personal finances today is more complicated and more important than ever. We’re living longer, but saving proportionately less. Scores of us feel less secure in our jobs and homes than we did in the past. We see our money being drained by the high cost of housing, taxes, education, and health care while dealing with the uncertainty of investments and our economy. We worry about the future, or unfortunately in many cases, simply try not to think about it.

Click here to read the Six Steps Toward Successful Estate Planning. To learn more about The Financial Awareness Foundation and National Estate Planning Awareness Week, click here.

Learn more about the process of estate planning from Littman Krooks by visiting our website or contacting one of our attorneys.

This entry was posted on Friday, October 17th, 2014 and is filed under Asset Protection, Elder Law, Estate Planning, Special Needs Planning | no comments | Leave a comment

Aging Gracefully in Your Own Home - with a Little Help: Non-Profits Offer New Model for Growing Old on Your Own Terms

Our guest blogger this week is Jilana Van Meter, Communications & Administration Manager,  At Home on the Sound.

The term “aging in place” is being heard more frequently these days. Simply put, “aging in place” means remaining in your own home and maintaining your independence as you grow older. Some Americans hope to accomplish this entirely on their own; others assume they will have the aid of nearby family members. But there is another option. By joining a local aging-in-place organization older adults are now finding they can have the best of both worlds – the privacy and autonomy they value plus peace of mind from belonging to a community of people who are willing to step in to lend a hand when needed.

To date there are 145 such organizations (frequently referred to as “Villages”) already operating around the country. These nonprofit groups have proved so popular that 125 more are in development. There are ten “Villages” in New York State, with seven more on the way.

One such group in Westchester County is At Home on the Sound. Serving Larchmont and Mamaroneck, At Home on the Sound is currently comprised of 150 members (ranging in age from 62 to 100), plus approximately 80 community volunteers of all ages. Many of At Home’s members are also volunteers. Besides providing enriching programs and activities, At Home on the Sound matches the volunteers with members who need local transportation or other assistance. In any given week At Home on the Sound provides 25 to 30 rides to doctor appointments, errands – even the nail salon!

At Home on the Sound volunteers are also available to handle simple household maintenance tasks like changing a hard to reach light bulb or fixing a leaky faucet. Several times throughout the year local high school students offer technology workshops providing one-on-one assistance to At Home members with cell phones and iPads. Staying up-to-date with technology not only has wonderful social benefits but can be a matter of safety as well.  An occupational therapist offers free home safety assessments, while a volunteer Medicare expert conducts annual seminars to keep members up-to-date on laws and deadlines. Trained volunteer patient advocates are even available to accompany members to medical appointments.

At Home on the Sound schedules at least a dozen social and cultural programs each month for members. A gentle yoga class is offered every week. Lectures are held on a vast array of topics from Acupuncture to the Constitutional Convention. Bus trips are organized for outings to museums, Broadway shows, and concerts. Activities such as Scrabble, Bridge, foreign language conversation, and current events discussions bring together like-minded members for fun and intellectual stimulation. All the programs are designed to ward off the sense of isolation that can sometimes come with age.

Not only do aging-in-place organizations improve the lives of members, these nonprofits can also be a godsend for family members who live far away and may not have regular contact with their older loved ones. With a quick local phone call, the older adult who belongs to an aging-in-place group can easily access a ride or other assistance when needed.

Aging-in-Place organizations around the country offer similar services to enhance and improve the quality of life for older adults – and their families. To see if an aging-in-place organization is currently serving your area visit the Village to Village network for a searchable map of the US.

Learn more about At Home on the Sound by clicking here.

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This entry was posted on Tuesday, September 30th, 2014 and is filed under Elder Law | no comments | Leave a comment

New Workforce Development Initiative Includes Job Training for People with Disabilities

The Workforce Innovation and Opportunity Act is a new piece of legislation that was recently passed in Congress. The law is intended to improve federal job-training programs and reauthorizes existing programs that supply federal funding for state and city job retraining programs. It also aims to eliminate overlapping programs to increase efficiency.

The Workforce Innovation and Opportunity Act includes a “job-driven checklist” that is intended to ensure that participants in the programs are being trained for jobs in industries that actually need more workers. Much of the focus is on the long-term unemployed and on people who have experience but need re-training.

The new law will also focus on job training for people with disabilities. According to a Senate summary of the legislation, the unemployment rate is highest among people with disabilities. Over two-thirds of people with disabilities do not participate in the workforce at all. The law aims to address that problem by training individuals with disabilities in the skills that are necessary to be successful in a competitive, integrated workplace. The act also aims to improve outreach to young people with disabilities, to provide them with the training needed for successful employment.

Read more about The Workforce Innovation and Opportunity Act by clicking here. Learn more about our special needs and special education advocacy services by visiting our website, www.specialneedsnewyork.com.

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This entry was posted on Thursday, September 11th, 2014 and is filed under Elder Law | no comments | Leave a comment

Tax and Legal Issues Household Employers Should Address at the Time of Hire

By Tom Breedlove, HomePay by Breedlove

Because of the complexities in hiring private duty care, it’s easy for families to misstep if they don’t have adequate help from the start. In fact, many of the more common household employment payroll and tax mistakes can be avoided by addressing a few key items at the time of hire. So if you’re about to hire in-home care, keep these three things in mind as you’re discussing the details of the employment arrangement with your new employee:

1. Go over the New York Wage Notice together. State law requires all employers to provide a Wage Notice to their employee at the time of hire and again by February 1st of each subsequent year of employment. But aside from complying with the law, the Wage Notice requires a myriad of information that will get both of you on the same page right away, including;

  1. Your name, address and phone number
  2. The employee’s hourly and overtime rates of pay
  3. The day of the week the employee will be paid and what they’ll be paid weekly

2. Talk about your time off policy. Similar to the Wage Notice, the state of New York requires employers to give their employee written notice about their policy on sick leave, vacation, personal leave and holidays. After one year of employment, your employee is entitled to at least three paid days off. And if you live in New York City, you’re required to give your employee two days of paid sick time per year as well. These requirements are important to know – not only from a compliance standpoint, but also because many families overlook time off and are unprepared for when their employee asks for a vacation or calls in sick.

3. Purchase workers’ compensation and disability insurance policies. If your employee will work 40 hours or more per week – or is a live-in employee – you must purchase a workers’ compensation and disability insurance policy. These two items are not handled through the tax and payroll process, but are very important because they provide financial assistance to your employee if s/he is unable to work due to injury or illness. Families caught without coverage can be held liable to pay their employee’s medical bills and lost wages and can be subject to large fines from the state. The most convenient solution for obtaining both a workers’ compensation and disability insurance policy is to contact the New York State Workers’ Compensation Board at (877) 632-4996.

By addressing these three topics before your employee starts, you’ll avoid getting off on the wrong foot both with your employment relationship and your payroll and tax situation. Like any new endeavor, mistakes can happen, but if you spend the time to research what your requirements are and come up with a game plan that is easy to execute, household employment doesn’t have to be as complicated as many people make it out to be.

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This entry was posted on Tuesday, September 2nd, 2014 and is filed under Elder Law | no comments | Leave a comment

Changes In SSI Benefit Payments in New York

By Amy C. O’Hara, Esq., Littman Krooks LLP

New York State residents who receive Supplemental Security Income (SSI) also receive a state supplement.  For 2014, the maximum federal SSI amount is $721 and the NYS supplement is $87 bringing the maximum SSI benefit to $808 per month.  At this time, New York State residents receive these benefits in one payment from the Social Security Administration (SSA), usually direct deposited into the recipient’s bank account.  Starting October 1, 2014, New York SSI recipients will receive their federal SSI benefit and the state supplement benefit separately.  The reason for this change is because New York State will realize significant savings by administering the state supplement benefits directly instead of paying the SSA to administer this program on its behalf.

The New York State Supplement Program, Bureau in the Center for Employment and Economic Supports within the NYS Office of Temporary and Disability Assistance (OTDA) will be responsible for administering this benefit. All business will be conducted by telephone, fax or mail only. There will not be walk-in offices to handle questions or requests. A customer support center with a toll free number will be available to assist recipients and is expected to be available starting August 2014.

The only change NYS SSI recipients will notice is that they will receive two monthly payments instead of one.  NYS SSI recipients will receive their state supplement benefits in the same manner that they receive their SSI benefit. Direct deposits will go into the same account and payments will be issued on or before the first of each month.  Starting in August 2014, NYS SSI recipients should receive notice by the State Supplement Program Bureau of this change. If the recipient has a representative payee for SSI purposes, this payee will remain the same for the state supplement benefit.

For more information please visit http://otda.ny.gov/programs/ssp/.

This entry was posted on Monday, August 4th, 2014 and is filed under Elder Law | no comments | Leave a comment

Why the Gross Wage vs Net Pay Discussion is Important for Private-Duty Care

By Tom Breedlove, HomePay by Breedlove

Families in need of a private-duty caregiver have a laundry list of items to account for during the hiring process. Most importantly is selecting the right candidate, but once that item is crossed off the list, it’s crucial to account for the expenses of hiring this new household employee.

When you make a caregiver a compensation offer, it is critical that both of you are on the same page as to what the Gross Wages and Net Pay will be. For those in the professional world, this seems like a no-brainer, but it’s actually quite common for caregivers and families to confuse the two. Just to be clear, Gross Wages refers to the amount of money an employee earns prior to taxes being withheld and Net Pay is the amount the employee actually takes home.

So just as in the professional world, if you’re hiring private-duty care, it’s paramount that the compensation offer is in gross wages. It’s impossible for you to know what your caregiver’s Net Pay should be before they accept your offer because you don’t know exactly how much in taxes to withhold until the appropriate paperwork is filled out.

If you have already offered a Net Pay amount, feel free to use our Employee Paycheck Calculator to translate it into Gross Wages. Once the caregiver has filled out a Federal W-4 and a New York IT-2104, the calculator can determine their federal, state, and perhaps local income tax withholdings.

This is extremely important for you to do since all compensation you pay your employee must be reported to the government in terms of Gross Wages. It’s also the figure that will be used to calculate your caregiver’s benefits and your taxes and tax breaks. For example, let’s say a family (who doesn’t live in Yonkers or New York City) offers a candidate $550 a week, but it’s Net Pay. The caregiver is Single with no children, so she fills out her W-4 as Single with 2 allowances and her IT-2014 as Single with 0 allowances. Using our Employee Paycheck Calculator, the family can easily make the adjustment from Net pay to Gross Wages as follows:

Net Pay:                          $550.00
Social Security Tax:      $43.48
Medicare Tax:                $10.17
Federal Income Tax:     $67.20
State Income Tax:          $29.90
State Disability Tax:      $0.60

Gross Wages:                   $701.35

This calculation takes seconds to process and immediately the caregiver can see what her gross wages are, what taxes are being withheld and how much she’ll take home. Additionally, the calculator will also show that the family will need to budget for an additional $62.58 in employer taxes each week, which means their budget for hiring the caregiver is really $763.93 each week.

The main point to take away from looking at these numbers is that open communication is extremely important when discussing compensation with a caregiver. When both of you understand the true cost of hiring an employee and what taxes are involved with being an employee, conflicts are less likely to occur and the employment relationship starts off on the right foot.

This entry was posted on Friday, July 25th, 2014 and is filed under Elder Law | no comments | Leave a comment

LEARNet: Unique Approaches in Addressing the Needs of Students with Brain Injury

Each year in the United States, more than 30,000 children become permanently disabled following a brain injury resulting from such incidents as falls, sports-related concussions, anoxia, stroke, and vehicular crashes. As a child gets older, that part of the brain previously damaged may not work as well as it should. Problems seen in children after brain injury include deficits or altered development in attention and concentration, memory, and organizational skills as well as changes in behavioral, social, and emotional functioning. The consequences may present significant challenges for parents and educators of children with brain injury who struggle to meet their unique needs. There are a variety of approaches that provide information about brain injury to educators and families, although resources for these support systems are extremely limited.

The Brain Injury Association of New York State is pleased to announce the implementation of Project LEARN: Living Education and Resources Network and LEARNet. Recognized by the Brain Injury Association of America’s State Award of Excellence in 2007, Project LEARN’s primary objective is to create and sustain competency for those supporting children with brain injury at home and at school by establishing an easily accessible, interactive, user-friendly web-based information and resource program.

LEARNet is designed to provide information and support to educators and parents of a student with brain injury. LEARNet provides a step by step, common-sense approach in determining the factors that contribute to specific problems that students with brain injury often experience. It then instructs users on effective intervention strategies illustrated by video demonstrations. The format and content of the site reflects input gathered across the state from families, students, educators, and experts in the field.

Resources provided on the LEARNet website include an extensive listing of literature, media resources, books, other helpful websites, and links to state and local programs; a comprehensive glossary of terms related to brain injury; information about the brain, how it works, and what happens when it is injured; and support materials, including short articles on a wide range of topics relating to life after brain injury.

Project LEARN and LEARNet offer a unique approach in addressing the needs of students with brain injury and the educators and parents who strive to meet them effectively. The projects provide invaluable information to help develop appropriate educational plans using proven interventions. As a result, frustration and exacerbation of problematic behaviors are minimized.

Developed and supported by BIANYS staff and a team of nationally recognized experts in the field of pediatric brain injury, LEARNet is available to the general public and state affiliates free of charge, by visiting http://www.projectlearnet.org/.User suggestions are welcome and encouraged; LEARNet continues to evolve in response to its audience.

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This entry was posted on Tuesday, July 15th, 2014 and is filed under Special Needs Planning | no comments | Leave a comment