On Balance March | April 2015

March | April 2015 | Vol. 11 No. 2 A publication of the Wisconsin Institute of CPAs | www.wicpa.org

PAYING IT

FORWARD David W. Gay, CPA Managing Partner Ernst & Young LLP, Milwaukee

Plus: Tips on landing your next big gig Tap into cash balance plans What’s new with labor and employment law?

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A publication of Wisconsin Institute of CPAs | www.wicpa.org

March/April 2015 Vol. 11 No. 2

6 Features

Columns

6 Paying it forward David W. Gay, CPA shares his career lessons with aspiring and young CPAs.

By Cynthia M. Hodnett

24 TAX

Ministerial housing allowance survives 7th Circuit Court challenge Learn about the U.S. Court of Appeals for the 7th Circuit’s recent decision to preserve a $700 million tax break for religious organizations and their ministers.

By R. Dan Fesler, CPA, DBA, CIA

10 How to land your next big gig Leverage your experience and prepare for an interview to land your dream job.

By David W. Gay, CPA 14 Cash balance plans: The untapped opportunity Cash balance plans that are properly structured, funded and managed can save your clients thousands a year in taxes and meet their retirement needs.

By Todd K. Voit, Ph.D. and Erik A. Swenson, AIF®, CRPS®, PPC®

www.wicpa.org

28 HUMAN RESOURCES

Labor and employment law: Issues for businesses in 2015 Employers should consider new mandates from government agencies that oversee labor and employment laws.

By John J. Kalter, J.D. 30 FINANCIAL PLANNING

Long-term planning for children with special needs Financial planners can help families with children with special needs identify strategies for long-term planning.

By James Kieckhaefer and Joseph Ferrazza

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14 Departments 2

Odds & Ends | news briefs

3 Outlook | chair’s letter 5

Membership Matters | member benefits

13 In Touch | president & CEO’s message 20 Kudos | members in the news 22 Memorials | departed members

On Balance

March|April 2015

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Odd & Ends Huberty CPAs & Trusted Advisors expands with merger

2013 Apex Award for Publication Excellence

2014–2015 WICPA OFFICERS/BOARD MEMBERS Chair Jean M. Hansen, CPA, MBA, CGMA Acting Chair-elect Katherine L. Hauser, CPA, CGMA Past-chair Robert A. Gruber, Ph.D., CPA, CGMA Secretary-treasurer Joy L. Hertlein, CPA, CGMA Directors Lucien A. Beaudry, CPA, J.D. Kyle J. Beld, CPA Greta C. Diercks, CPA Katherine L. Hauser, CPA, CGMA Matthew A. Los, CPA Kelly K. Miller, CPA Scott D. Miller, CPA, ABV, PFS, CVA Gregory L. Ryan, CPA Wendi M. Unger, CPA AICPA Council Karla E. Blair, CPA Nicholas S. Lascari, CPA, CEA, CGMA President & CEO Dennis F. Tomorsky, CPA, J.D., CGMA Vice President of Communications Amy E. Gaeth Vice President of Membership & Marketing Barb Gamez Editor Cynthia M. Hodnett Copy Editor Joan Bahr Design & Layout Rachel Moore Advertising Manager Ellen Engel Printing The Printery, An RR Donnelley Company Join us online!

On Balance is published six times a year by the Wisconsin Institute of Certified Public Accountants (WICPA). Change of address should be sent to: Membership, W233N2080 Ridgeview Pkwy, Suite 201, Waukesha WI 53188; Phone: 262-785-0445 or 800-772-6939 (WI/MN); Fax: 262-785-0838; email: jessica@wicpa.org. Statements and opinions expressed are those of the authors and not necessarily those of the WICPA. Publication of an advertisement does not constitute an endorsement of the product or service by On Balance or the WICPA. Articles may be reproduced with permission. © Copyright 2015 On Balance.

Huberty CPAs & Trusted Advisors in Fond du Lac has merged with Biwan & Biwan, a CPA firm based in Sheboygan. As a result, Huberty added offices in Sheboygan and Minocqua. In addition, Huberty has offices in Ripon, Plymouth and Markesan. The firm, founded by Wayne N. Huberty, CPA in 1981, now has 40 employees. Its clients include more than 4,000 small and midsize businesses, individuals and nonprofits.

Kempen & Co. CPA firm opens in Altoona Rhonda K. Kempen, CPA has opened Kempen & Co. in Altoona, according to the Eau Claire Leader-Telegram. The firm specializes in individual tax planning and preparation, retirement income planning, and trust and estate services.

KMA Bodilly CPAs & Consultants S.C. acquires Madison Bookkeeping and Tax Service Inc. KMA Bodilly CPAs & Consultants S.C., a full-service business accounting and financial services firm in Madison has acquired Madison Bookkeeping and Tax Service Inc. The acquisition allows both entities to provide more services, products and location options to their clients. KMA Bodilly’s headquarters is at 525 Junction Road, Suite 8200 in Madison. Madison Bookkeeping and Tax Service maintains its current name and original location at 6200 Gisholt Drive in Monona.

KerberRose S.C. acquires Wausau CPA firm KerberRose S.C. has acquired Koenig & Lundin in Wausau.

Fred Lundin, CPA, ABV, CVA, CFF and his staff continue to operate from their office at 4105 Dixie Ave. in Wausau.

KerberRose also has offices in Shawano, Appleton, Green Bay, Sister Bay, Sturgeon Bay, Clintonville, Rhinelander and Oshkosh. KerberRose is a full service accounting firm providing tax consulting and compliance, auditing and assurance, and accounting and business advisory services.

Schenck SC to merge with Manitowoc-based CPA firm Schenck SC has entered into an agreement with Manitowocbased Kroening, Stangel, Swetlik & Zinkel LLP for the firm to merge into Schenck. Kroening, Stangel, Swetlik & Zinkel LLP provides accounting and tax services to family-owned and privately held businesses, plus nonprofit organizations, throughout Manitowoc and the surrounding area. The transaction is expected to close in May 2015.

WANT YOUR BUSINESS MENTIONED IN ODD & ENDS?

Email your announcement to cynthia@wicpa.org.

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{ Outlook | chair’s letter } “If you’re feeling burned out or underappreciated, mentoring can give you and your career a positive boost. Mentoring can be a rewarding experience for you, both personally and professionally.”

Is mentoring for you?

A

good mentor has been in your shoes before and will easily appreciate all of the frustrations you face. This person would have certainly had similar experiences and will be able to provide you with the advice you need to feel at ease with any challenges you may be facing. Most important, understand that these stumbling blocks are to be expected, not feared.

Not all of us are fortunate enough to have Yoda of “Star Wars” as our mentor. However, somewhere in our career, we have had a professional in our corner. This mentor helped us make better work-life choices and was a positive influence building our skills and self-confidence. Is mentoring for you?

Honest feedback

The skill of being people oriented is the start of the mentoring process. Without the ability to build rapport, it is hard to be an active listener, which is an essential ingredient. Listening is not just understanding the verbal cues but also listening to what is not said. The mentor also makes conversation a two-way street with the learner.

Part of demonstrating good listening ability is avoiding interruptions.

This allows the relationship to evolve naturally and the right questions to be brought to the forefront. Trust between both parties needs to be present when feedback is given: honest and straightforward without sugarcoating the situation.

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Making it work

Each mentoring situation is different, and you’ll need to shift your role depending on the person and their goals.

Always remember that mentoring is a shared job. You aren’t solely responsible for creating a successful mentoring relationship. The person being mentored needs to be open, honest and receptive to feedback and insight. The mentee has to take action in pursuit of goals, invest in learning and take steps toward needed change. Mentees also have to give you feedback and talk about what is or isn’t working well in the relationship.

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Self-reflection

The most effective mentors also improve their own leadership skills. As you assist your mentee, you have the chance to reflect on and articulate your own expertise and experience — something you probably don’t take time to do otherwise.

Along the way, you may see patterns in your own past that you could prevent repeating. Mentoring also helps you view the organization with a fresh eye concerning its functions, politics and culture. Many mentors say they get fulfillment from their mentoring relationships.

If you’re feeling burned out or underappreciated, mentoring can give you and your career a positive boost. Mentoring can be a rewarding experience for you, both personally and professionally.

As a mentor, you need to remember you are always learning and developing too. There is always room to improve. Often, you can learn new perspectives and ways of thinking, but most of all, gain a great sense of personal satisfaction helping others. Thank you to all the professionals out there actively mentoring and “paying it forward!”

Jean M. Hansen, CPA, MBA, CGMA is CFO/ vice president-finance at Manitowoc Tool & On Balance March|April 2015 Machining LLC. Contact her at 920-682-8825 ext. 114 or jhansen@mantool.com.

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2015

Join us for A

NIGHT

AT THE

MUSEUM

You will be guided on a tour to discover how your peers are pursuing and achieving excellence in a profession rich with history.

Honor our 2015 WICPA Excellence Awards recipients for their commitment and dedication.

Recognize and thank our 10, 25 and 40-year members for their membership longevity.

Elect the WICPA Board nominees to the WICPA Board of Directors.

Celebrate the WICPA’s 110th anniversary.

This notable event is for all members, including you!

HONORED CURATORS 10-year members (2004–2014) 25-year members (1989–2014) 40-year members (1974–2014) Excellence Award recipients WICPA Board of Directors

REGISTER TODAY! www.wicpa.org/banquet2015 Wednesday, May 6, 2015 Milwaukee Public Museum

RSVP by Wednesday, April 22, 2015 Free registration for members.

Additional guests are $40 each.

4

Event & Excellence Awards sponsor:

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March|April 2015

Thank you to our sponsors: Event sponsors:

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{ Membership Matters | networking } “Participating on a WICPA committee or conference planning task force is an excellent way to strengthen your leadership and communication skills as you look to advance your career.”

Your membership is The Standard Above™ for … raising your credibility!

T

he previous Membership Matters column featured in the January/February issue of On Balance focused on how the WICPA is The Standard Above™ for accelerating your networking. This issue will highlight specific ways you can raise your credibility as a WICPA member.

Increase your visibility

WICPA members we’ve surveyed have told us that one aspect of their membership they value most is being affiliated with the WICPA because they want to be regarded and respected by peers. You can be recognized for your affiliation by telling your employers, clients, peers and the community at large that you’re a member. The easiest way to tell them is to show them.

As a member, you are entitled to use the power of the WICPA logo in your advertising, marketing materials and communications. For logo usage guidelines, visit www.wicpa.org/logo.

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Share your expertise

Writing for a WICPA publication is a great way to raise your credibility while showcasing your expertise. If you are considered a “knowledge expert” in a particular topic area related to accounting, such as tax, technology or even human resources, consider writing an article and sharing it with your peers. Opportunities include writing for one of WICPA’s award-winning member publications, including On Balance, The Bottom Line or CPA2b. If you would like to contribute an article to a WICPA publication, contact Amy Gaeth, vice president of communications, at amy@wicpa.org.

Do you have a particular area of expertise, a passion for personal or professional development or innovative insights on emerging markets or trends? Share your knowledge as a presenter at a WICPA conference, seminar or meeting, and elevate your stature within the accounting community. For more information, contact Tammy Hofstede, chief financial and operating officer, at tammy@wicpa.org.

Demonstrate your commitment

expanding your professional network is by volunteering with the WICPA. Consider joining one of six WICPA committees in a topic area that appeals to you, such as state or federal tax, public policy, ethics or accounting careers. The WICPA also has an active young professionals committee that is always eager to accept new members.

WICPA members who volunteer for one or more of our seven conference planning task forces are vital to ensuring a successful conference by recommending or securing topics and presenters. In addition to valuable interaction with peers and speakers, task force members receive recognition and free conference registration.

Participating on a WICPA committee or conference planning task force is an excellent way to strengthen your leadership and communication skills as you look to advance your career. Be sure to add your experience to your performance evaluation and resume as well! For more about joining a committee or task force, visit www.wicpa.org/boards&committees. Let others know that you’re part of The Standard Above™ through these opportunities and add to your credibility as a trusted professional.

Another opportunity to raise your credibility while also

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Barb Gamez is vice president of Membership & Marketing at the WICPA. Contact her at On Balance March|April 2015 262-785-0445 ext. 4509 or barb@wicpa.org.

5

PAYING IT FORWARD David W. Gay, CPA shares his career lessons with aspiring and young CPAs

By Cynthia M. Hodnett

More than a year ago, Ousmane Kabre, a junior and accounting major at the University of Wisconsin-Madison, learned about a CPA who would leave a positive impression on him.

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Photography by Adam Ryan Mooris

K

abre attended a career fair at UW-Madison where David W. Gay, CPA, managing partner at Ernst & Young LLP (EY) in Milwaukee, was recruiting for the firm.

The student was already familiar with Gay, as he had previously attended a presentation on accounting careers that Gay had given on campus. He was so impressed with Gay’s presentation that he later researched the CPA’s bio online in case he would meet him on campus. Coincidentally, Kabre got that chance months later at the career fair.

“I thought to myself, ‘Wow, I would like to be like this guy and do some of things that he has done,’” he said. “So when I saw him again, I walked up to him and introduced myself and told him who I was. We had a good conversation, and he took time to talk to me and answer my questions.”

That meeting eventually resulted in a summer internship at EY in Milwaukee for Kabre in summer 2014. It also laid the foundation of a mentorship that continues today. Gay was one of the first accounting professionals that

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7

Gay encourages young professionals to embrace the firm’s mission of having a global mindset: one that combines an openness to and awareness of diversity across cultures and markets.

Kabre had met since coming to the United States from his native west African country Burkina Faso nearly four years ago.

Kabre is one of several people who Gay has mentored. In addition to future CPAs like Kabre, Gay also helps shape young accounting professionals, primarily at his firm.

“I think that his story can be an inspiration to young and aspiring CPAs,” said Keith R. Burns, audit partner at EY’s Milwaukee office, describing Gay’s role as mentor.

Gay’s “story” includes 18 years of experience in accounting and auditing, focusing primarily on multinational consumer and industrial products companies. He has extensive experience coordinating global audit services, consulting on technical matters, and advising on both private industry and Securities and Exchange Commission reporting and internal control matters.

Gay also provides advisory and technical accounting assistance to his clients’ strategic transactions. These transactions include acquisitions, disposals, restructuring, and joint venture investments. He has provided assistance on more than 60 strategic transactions during his career.

MOTIVATING ONESELF AND OTHERS Named to his current position last year, Gay credits his progression in the firm to several factors. They include technical competency, coaching and guidance from senior leaders and the willingness to stretch his comfort zone.

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“Our most successful professionals are those who take a career view,” he said. “They ask for more experiences, they observe and model their behaviors off the successful clients and managers they work with, and they focus on making a difference. This increases the volume and impact of their experiences, and in turn accelerates their development.”

Becoming managing partner has been rewarding, including a highly visible leadership role for Gay, which extends to serving as audit committee chair of the University of Wisconsin-Madison’s Center for Advanced Studies in Business, and on the Wisconsin School of Business Diversity Advisory Council and Accounting Advisory Council.

Although Gay enjoys his responsibilities as partner, he enjoys mentoring and coaching young accounting professionals just as much.

“The average age of an EY employee is 27, so our staff is fairly young,” he said. “They have so much enthusiasm and fresh ideas. It definitely keeps me motivated and energized, and I enjoy it. I’ve benefitted from some great mentors throughout my career. I want to provide that to our young people.”

Gay encourages young professionals to embrace the firm’s mission of having a global mindset: one that combines an openness to and awareness of diversity across cultures and markets. This idea serves as the foundation of the Global Mindset Leaders Program, a collaborative effort between EY and UW-Madison, which teaches students about cultural and social diversity in business. www.wicpa.org

LEADING BY EXAMPLE Gay graduated with a Bachelor of Arts in Accounting from UW-Madison in 1996. Besides serving on both councils at the university, he also helps place accounting students with internships at EY. “Both of my parents are teachers, so I think that’s where my interest in coaching and developing people comes from,” he said. “I really enjoy on-the-job coaching and training, and I have the opportunity to help young professionals develop their skills and develop a global mindset. As a firm, we don’t make anything or sell anything — we offer our clients our ideas and our skills.”

To his colleagues, Gay is often a sounding board for various projects and technical issues, Burns said. The two men met when Burns transferred to the firm to become its office managing partner in 2004.

“David was a senior manager in the audit practice when I arrived, so I was able to work with him on specific client accounts,” he said. “But it was also clear to me right away that David was a leader of his peers and other office staff. So I

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worked with him on office human resource issues, staff recruiting and development issues, and our office community engagement efforts. It was obvious to me from the start that he was a leader. He was able to identify an issue and, more importantly, to develop potential solutions to the issues and advocate for a particular course of action.”

Gay’s sense of helping others extends to the community. He is an advocate and board member of the United Way of Greater Milwaukee, as well as Boys and Girls Club and College Possible.

He also participates in the firm-wide annual EY Connect Day in which employees volunteer in their communities.

“It’s so important to be engaged in the communities in which we work,” he said. “I’ve been very fortunate to have wonderful experiences and met some great people along the way who have helped me. It’s my way of giving back.”

Cynthia M. Hodnett is editor of On Balance magazine.

Contact her at 262-785-0445 ext. 4516 or cynthia@wicpa.org.

On Balance

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9

HOW TO LAND YOUR

NEXT BIG GIG

By David W. Gay, CPA

G

etting that first job upon graduation from college is arguably the toughest task when launching a career, but the reality is that you may work for five, 10 or even 15 different companies during your career. Here’s my advice for leveraging your

current experiences and preparing for an interview in hopes of landing your next big gig.

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www.wicpa.org

Experiences

First, treat your chosen profession as a career, not a job. I didn’t make partner only in my 12th year with Ernst & Young LLP (EY), I made it through decisions in my first, my fourth, my eighth and every other year in between. Why? Because careers are cumulative. Every opportunity builds from what you’ve done previously.

So care deeply, ask for new responsibilities and observe what successful people do and emulate them.

Make decisions as if you owned the company. You will develop more rapidly, and people will notice your initiative. No matter how long you expect to stay in your current role, treat it as if it’s the most important job you’ve ever had because right now it is — without it, you won’t get from “here” to “there.”

Second, develop a deep and committed network.

Think broadly about who you know: colleagues (at your current employer and elsewhere), vendors, friends, neighbors and former professors. Widen the net and build your base. To create a committed network, avoid the trap of focusing on what it can do for you. Not now.

Rather, find ways to help each person in it as often as you can. Then, when you need help, you’ll have willing advocates stepping forward on your behalf.

At Ernst & Young, LLP our Employee Referral Program is our largest and most effective source for U.S. hiring.

We have increased hiring of experienced candidates through employee referrals from 28 percent in 2010 to nearly 50 percent in 2014. This is a trend with other companies as well, and it underscores the importance of having a network advocating on your behalf. It also means you’ll likely have an opportunity to advocate for others at your current employer.

Lastly, seek opportunities to lead. Businesses, including EY, are dependent on their ability to assemble high-performing teams. Every business desires candidates who have a proven track record of leadership, whether professionally or in extracurricular activities.

If you can demonstrate how you have made a difference and successfully encouraged others to do the same, you’ll differentiate yourself from others.

When we look for leaders, we don’t seek a personality type — A, B, C, D or otherwise. We look for inclusive leaders, people with a global mindset. These are leaders who have knowledge about other cultures, have a passion to try new things and meet new people, and can combine these attributes to identify the best solution.

We look for this because these leaders strengthen www.wicpa.org

culture and inspire people to want to be their best every day. As a result, these leaders achieve better results.

The interview

So you’ve decided it’s time to explore your options, look for your next big gig and interview. How should you prepare? I’d recommend the following.

Differentiate yourself. It’s not uncommon for EY to have more than 100 applicants for a given position. Now is not the time to try to fit in; it’s the time to celebrate what makes you unique and what you do best. Focus on experiences that show how you approached an issue and made an impact, how you treated the situation differently than others might have, and why your approach was successful.

Also, recognize that it’s not about what the position can do to advance your career. It’s about what you can do to advance the organization. Too often, when I ask candidates why they’re interested in a role, they provide a list of benefits that the position will provide them. What I really want to hear is how they’re going to make a difference for our organization. That shows me they’re thinking about the “big picture” and that they understand how their success is linked to ours.

Finally, do your homework. In addition to researching the role and the organization, take the time to learn who you will meet during the interview process. This shows how much you care about the opportunity and will help put you at ease during the interview. You’ll already have vetted whether or not you can see yourself fitting in with the organization, and you will be prepared to ask the most impactful questions, both for you and the interviewer.

Consider this

You may not need to look very far for your next big gig. Reread this article, but now with the perspective of advancing your career to the next level with your current employer. Can you further leverage your experiences?

Can you make your case in a promotion interview? Don’t underestimate the equity you’ve already created right where you are. Whichever direction you choose to go, these tips should help you land your next big gig.

David W. Gay, CPA is the managing partner for Ernst & Young LLP in Milwaukee. Contact him at 414-223-7092 or david.gay@ey.com.

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{ In Touch | president & CEO’s message } “As CPAs’ roles continue expanding in areas of trend and risk analysis, change management, long-term strategic planning, and stakeholder communication, they will have more opportunities to make and implement decisions that leverage their strong analytical skills.”

The future isn’t what it used to be

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W

hatever you may have thought 10 years ago about what you would be doing in 2015 is likely very different from how things turned out. Mobile devices, social media, the Great Recession, geopolitical events and many other developments have permanently and dramatically impacted us all in a variety of ways. The pace of disruption continues to accelerate, creating opportunities for those who embrace change and have the vision to exploit innovation. These recent and emerging disruptions are consistent with the concept of VUCA, an acronym derived from military vocabulary in the 1990s that recognizes analytical and decision-making environments that are volatile, uncertain, complex and ambiguous.

CPAs are very well-positioned to leverage our strong analytical skills in creating positive outcomes despite challenges of VUCA environments. WICPA members have shown exceptional resilience and an ability to quickly adapt to these challenges and changes without losing focus on goals and service to others. And our younger members have demonstrated especially high levels of interest and talent in creating change and positive disruption that are certain to improve operational efficiencies and accelerate positive outcomes.

Business owners have begun to recognize the importance of CPAs’ analytical skills in future planning as they increasingly call upon their CPA employees and consultants to apply strategic insight to optimize outcomes in a VUCA world. The extension of CPAs’ strategic influence beyond historical accounting roles of processing, summarizing and reporting past transactions in monthly, quarterly and annual reports will accelerate, increasing CPAs’ executive decision making authority.

As CPAs’ roles continue expanding in areas of trend and risk analysis, change management, long-term strategic planning, and stakeholder communication, they will have more opportunities to make and

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implement decisions that leverage their strong analytical skills.

These new executive responsibilities will require participating in continuing professional development activities beyond technical update lectures attended primarily to satisfy arithmetic CPE requirements.

For WICPA members to have the greatest opportunities for success, the WICPA is collaborating with the AICPA and others to reshape CPA continuing education. For example, the WICPA Board of Directors recently approved five-minute increments after Jan. 1, 2015, for creditable learning activities that are measured by participation time. During 2015, the WICPA Competency Enhancement Task Force will explore allowing credit for competency-building activities that will be convenient, costeffective and extend well beyond traditional lectures.

Dennis F. Tomorsky, CPA, J.D., CGMA is president & CEO of the WICPA. Contact him at 262-785-0445 ext. 4519March|April or On Balance 2015 dennis@wicpa.org.

13

CASH BALANCE PLANS:

The untapped opportunity

A

By Todd K. Voit, Ph.D. and Erik A. Swenson, AIF®, CRPS®, PPC®

re you aware there is a qualified retirement plan that allows employers to contribute an additional $200,000–$230,000 per year beyond their 401(k) and other retirement plan limits? These plans can achieve hefty annual funding limits and more, yet they remain unknown to many

company owners and senior level executives who qualify for them. This presents an ideal opportunity for CPAs who seek to provide value-added services to their clients.

Cash balance plans are defined benefit pension plans that include elements similar to defined contribution plans. These plans may be beneficial for professional organizations, sole proprietors, and profitable privately held companies whose owners or principals seek additional tax considerations. As they are Employee Retirement Income Security Act (ERISA) plans, these assets can be protected from creditors in the event of bankruptcy or lawsuit.

Contributions into cash balance plans are tax deductible, grow tax deferred, and while they are

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commonly integrated with 401(k) and/or profit sharing plans, they can also stand alone. The assets are held in a pooled account with a primary focus on stability of principal, and participant balances are subject to a vesting schedule.

Employers fund a single pooled account based upon actuarial calculations that blend age, wages and interest earnings credits; the interest credits are guaranteed, as they are in all defined benefit plans. Participants receive an annual account statement showing their vested cash balance at year end.

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Maximum funding for 401(k), profit sharing and cash balance plans for 2015 Age

401(k) with profit sharing

Cash balance

Total

60-65

$59,000

$230,000

$289,000

55-59

$59,000

$185,000

$244,000

50-54

$59,000

$141,000

$200,000

45-49

$53,000

$108,000

$161,000

40-44

$53,000

$83,000

$136,000

35-39

$53,000

$63,000

$116,000

30-34

$53,000

$48,000

$101,000

Unique benefits of properly designed cash balance plans include: 1) Plan contributions heavily skewed toward owners and highly compensated employees (HCEs).

2) Owners and HCEs determining their respective funding amounts independent of one another.

3) Employing a tax advantaged vehicle to fund a company sale or business succession.

There are costs to establishing and maintaining these plans, yet they generally represent a fractional percentage of the tax savings the owners and/or executives obtain in any given year. Start-up costs, which include plan document and plan design consultation, generally range from $5,000–$10,000 or more, depending on the complexity of the plan, with annual ongoing plan fees of $4,000–$8,000 or more.

Defined benefit plans are complex, the federal guidelines for ERISA qualified plans are formidable, and the employer and other plan fiduciaries can be held personally liable for plan violations. For this reason, and to ensure the plan is customized to each specific client’s needs, it is important for employers to select a highly competent adviser, team or firm that specializes in qualified plans, has ERISA expertise, and is experienced with cash balance plans.

INVESTMENT POLICY AND INVESTMENT MANAGEMENT The investment framework of a cash balance plan differs greatly from 401(k) and/or profit sharing defined 16

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contribution plans, and is generally similar to that of other pension plans. Plan assets are managed in a pooled account, and the trustees would work with an investment adviser to select and manage the appropriate underlying investments.

An Investment Policy Statement (IPS) is used to set forth and document clear objectives and guidelines for the trustee(s) and the plan, and the investment management, including: 1) The determination of the investment objective depending on the demographics of the participants and the discretion of the trustee(s). The IPS should specify certain constraints of the plan in terms of: a) Liquidity of plan: To ensure investments meet distribution needs. b) Time horizon: The period of time in which cash outflows will be required. c) Regulatory constraints: ERISA, Prudent Person Rule, and the plan document. d) Unique constraints: Deal with ethical or social issues relating to the types of securities in the plan. (For example, the plan should avoid tobacco securities, etc.)

2) Specific guidelines as to allocation, core and tactical ranges.

3) Defined structure of composition and weightings.

The typical trustee(s) of a cash balance plan will need guidance to determine how to structure the management of their plan, which will often focus on a www.wicpa.org

balanced approach. This is where the investment managers and the CPA’s role as an adviser can help.

Performance, in terms of investment returns, can be based on the blended returns of cash, bonds and stocks or equities. Since it is typical for the equity holdings of such portfolios to include a mix of large, midsize and small companies, a weighted average of equity indices, such as the Dow Jones Industrial Index (DJIA), S&P 500, Russell 2000, etc., can be used to monitor performance. In addition, with the increased globalization of securities markets, the performance benchmark may include an international equity index.

Asset Classes

Index Average Returns1

Benchmark Allocation

(1928-2014)

Conservative

Cash/Cash Equivalents

3.53%

30%

Fixed income

5.64%

50%

Stocks

11.78%

20%

Blended Benchmark Average Return

6.2%

Index information: Cash = U.S.-T-bill, fixed income = Barclays Aggregate Bond, Equities = S&P 500

1

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.

In summary, cash balance plans that are properly structured, funded and managed can save a substantial amount per year in taxes, and result in a substantive asset base to assist in meeting retirement needs. A CPA or other trusted adviser could be the catalyst to opening the door to this untapped opportunity.

LEARN MORE Voit and Swenson will present, “Cash balance plans: The untapped resource Help clients maximize retirement savings and minimize taxes,” at 8 a.m., May 19.

Visit http://www.wicpa.org/Public/Catalog/CourseDetails.aspx?courseID=15WBP0519 for more details.

Todd K. Voit, Ph.D. is a portfolio manager at Voit & Company LLC in Brookfield. Contact him at 262-784-2775 or info@voitcompany.com.

Erik A. Swenson, AIF®, CRPS®, PPC® is principal and president of Retirement Plan Solutions Inc. in Delafield.

Contact him at 262-641-0800 or erik@rplansolutions.com.

The opinions voiced in this material are for general information only and are not intended as authoritative guidance or tax or legal advice. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risks, including possible loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.

Todd K. Voit, Ph.D. and Voit & Company LLC are not affiliated with Retirement Plan Solutions, Inc. or LPL Financial.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Retirement Plan Solutions, Inc., a registered investment advisor and separate entity from LPL Financial. www.wicpa.org

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kudos

Bruce D. Berndt, CPA, CGMA

Bonnie J. Baerwald, CPA was recently selected as interim president at Moraine Park Technical College in Fond du Lac, according to The Fond du Lac Reporter.

Bruce E. Bain, CPA recently joined the Appleton office of SVA Certified Public Accountants, S.C. as director of business advisory services.

Eric Bradley, CPA

Bruce D. Berndt, CPA, CGMA, owner of Berndt CPA LLC in Madison, recently received the Small Business CFO of 2014 award from InBusiness Magazine.

Eric Bradley, CPA was recently promoted to partner at Johnson Block & Co. Inc. in Mineral Point.

Jon S. Danforth, CPA recently retired as a partner at Hawkins Ash CPAs after working more than 35 years at its Manitowoc office.

Jeffrey W Dvorachek, CPA

Nathan A. Dassler, CPA was recently named partner at Parent Dott CPAs in Beaver Dam, according to the Beaver Dam Daily Citizen.

Jeffrey W. Dvorachek, CPA was recently named partner at Hawkins Ash CPAs in Manitowoc.

Derek J. Hammen, CPA, CFE was recently hired as an audit associate at Hawkins Ash CPAs in LaCrosse.

Derek J. Hammen, CPA, CFE

Lucretia S. Mattson, CPA, DBA, CFP was recently hired at Kempen & Co. in Altoona, according to the Eau Claire Leader Telegram.

Terry J. Miller, CPA recently retired as a partner at Hawkins Ash CPAs after working 25 years at its Manitowoc and La Crosse offices.

Derek J. Nest, CPA was recently promoted to accounting manager and controller for commercial services at CliftonLarsonAllen LLP in Stevens Point, according to the Portage County Gazette.

Jenna E. Northouse, an accounting major at the University of Wisconsin-Whitewater, was recently hired as an intern in the Tax & Business Services department at Wegner CPAs in Madison.

Michael W. Steinl, CPA, CGMA was recently hired as a new partner in the Tax & Business Services department at Wegner CPAs in Madison.

Nathan G. Volkomener, CPA was recently named a shareholder at Huberty CPAs & Trusted Advisors in Plymouth.

Daniel J. Walsh, CPA, attorney and partner with Stellpflug Law, S.C. in De Pere, was recently selected as a 2014 Wisconsin Super Lawyer for excellence in elder law practice.

James A. Holmes, CPA, president of Vrakas/Blum in Brookfield, was recently elected chairman-elect of the North America Board of Directors of CPA Associates International, Inc. Sara J. Jacobson, CPA was recently promoted to senior accountant at Johnson Block & Co. Inc. in Mineral Point.

Sara J. Jacobson, CPA

Randy L. Juedes, CPA was recently named partner at Hawkins Ash CPAs in Medford.

Melanie Lendosky, CPA was recently promoted to manager at Johnson Block & Co. Inc. in Viroqua.

David J. Lewis, CPA was recently hired as an account director at Suttner Accounting in Oshkosh, according to www.newnorth2b.com.

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promotion or

award mentioned in Kudos?

Email your announcement and photo in JPG format to cynthia@wicpa.org.

Melanie Lendosky, CPA

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Want your

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{ Tax | tax-exempt clergy housing allowance }

Ministerial housing th allowance survives 7 Circuit Court challenge

24

I

By R. Dan Fesler, CPA, DBA, CIA

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n November 2014, the 7th Circuit Court of Appeals vacated a 2013 Federal Court for the Western District of Wisconsin ruling that IRC Section 107(2) of the Internal Revenue Code (IRC) was a violation of the Establishment Clause of the U.S. Constitution. Section 107(2) allows ministers/clergy to exclude cash housing allowances from their taxable income.

However, in vacating the lower court decision, the constitutionality of 107(2) was not considered; the lower court decision was vacated due to plaintiffs’ lack of standing. www.wicpa.org

{ Tax | tax-exempt clergy housing allowance }

Two Freedom From Religion Foundation (FFRF) co-presidents started receiving cash housing allowances in 2011. Although similarly situated to ministers, they never claimed exclusion of their cash housing allowances on their personal returns. Lacking denial of the exclusion, the 7th Circuit ruled there was a lack of standing to bring suit. Nevertheless, constitutionality of 107(2) remains a highly controversial and complex issue. Here, positions of both the government, which supports 107(2), and FFRF, which opposes 107(2), are briefly summarized.

GOVERNMENT: IRC 107(2) IS CONSTITUTIONAL Since ministers/clergy of non-Christian groups (including Buddhists, Taoists and Secular Humanists) are allowed the exclusion and the IRS explicitly attempts to be inclusive in application of IRC 107(2), the statute is not “underinclusive” as claimed by FFRF. Per the government, plaintiffs themselves might have successfully claimed the exemption since “non-theistic beliefs” pertain to religion and can fulfill a role similar to the beliefs of traditionally religious taxpayers.

Plaintiffs performed functions somewhat in alignment with IRS factors used to ascertain qualification as a “minister.”

Plaintiff Dan Barker was quoted as saying he did “much the same thing” as an officer of FFRF as he did earlier, as a traditional minister. Barker’s relevant documented functions and activities included involvement with FFRF debaptism certificates, lecturing, performing marriages, as well as promotion of free thought and irreverent music. Both FFRF co-president plaintiffs, Dan Barker and Annie Gaylor, instructed on things like teaching morality without religion, as well as conducting godless funerals and secular memorials. Madison Magazine had voted plaintiff Gaylor as “Madison’s favorite religious leader.” Per the government, some of the non-theistic rituals presided over

by Barker and Gaylor might fit within the definition of worship services.

Defending 107(2), the government contended exclusion of cash ministerial housing allowances (started in 1954) simply puts the recipients on equal footing with ministers/clergy receiving tax-free on-premises housing. The government pointed out that the minister’s

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“The 7th Circuit challenge to ministerial cash housing allowances was unsuccessful.

Ministers/clergy may continue to exclude their cash housing allowances from taxable income.” residence is often an extension of church premises/ offices that is frequently used as a study, as well as a meeting, entertaining, and lodging place. In this regard, the exclusion for cash ministerial housing allowances is somewhat akin to the tax treatment of Section 119, which requires that tax-free employer-provided housing be for the “convenience of the employer.”

Per the government, ministers are not alone in excluding cash housing allowances. Members of the U.S. military are provided a tax-free “basic allowance for housing” when not housed on U.S. government property. Officers and employees of the Foreign Service, the CIA, and other agencies, as well as members of the Peace Corps, can exclude cash housing allowances from their incomes.

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{ Tax | tax-exempt clergy housing allowance } 26

In short, the government took the position that IRC 107(2) is simply one IRC provision that provides an income exclusion for employees having unique housing needs. It does not violate the Constitution’s Establishment Clause, which requires separation of church and state, nor does it violate the Equal Protection Clause.

FFRF: IRC 107(2) IS NOT CONSTITUTIONAL Plaintiffs argued that their failure to claim the exclusion should not preclude a timely 7th Circuit decision since further challenges to IRC 107(2) are likely soon.

Plaintiffs Barker and Gaylor vigorously objected to the notion they could have successfully excluded their cash housing allowances since they were not ministers working in a church or religious organization, e.g., within the context of IRC 107(2). They strongly fought the idea that atheistic beliefs can play a role similar to that of traditional religious beliefs.

An FFRF brief pointed out that neither plaintiff was an ordained, commissioned, or licensed minister, and that neither plaintiff was recognized as a spiritual leader. It was also pointed out that atheism lacks a body of dogma, tenants, or sacred writings, and also lacks the hierarchical/congregational structure of organized religions. Also, unlike organized religions, FFRF did not ordain, commission, or license ministers.

It was contended the debaptismal certificates issued

by FFRF (signed by plaintiff Barker) were not akin to sacerdotal functions of organized religions, but rather, a “whimsical” means of drawing attention to religious sacerdotal rituals viewed skeptically by FFRF. The Madison Magazine recognition of plaintiff Gaylor as Madison’s favorite religious leader was per plaintiffs, not a bonafide acknowledgement of religious leader status.

Plaintiffs cited U.S. Supreme Court language in the Texas Monthly case that “any exclusion providing unjustifiable assistance to religious organizations cannot but convey a message of endorsement of religion” and therefore a violation of the Establishment Clause.

Distinguishing IRC 119 housing/lodging benefits from the 107(2) ministerial exclusion, it was pointed out that 119 applies only to in-kind (as opposed to cash) housing provided on premises for the “necessity of the employer.” Section 107(2) differs significantly in that

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March|April 2015

ministers need-not live in the immediate area of their employing church/religious organization.

Due to its tax exclusion, 107(2) enables lower salaries for ministerial employees AND their employing churches/religious organizations. Ministers, exclusively, are enabled to double-dip by excluding their cash housing allowances from income while simultaneously deducting mortgage interest and property taxes as an itemized deduction on Schedule A. Section 107(2) also enables ministers to purchase what is generally an appreciating asset (residence) with tax-free salary, which is not possible for any other group.

The legislative history of Section 107(2) also provided strong support for the plaintiffs’ case. U.S. Rep. Peter Mack at the height of the Cold War (1953) is on record as saying: “Threatened by a godless and anti-religious world movement we should correct this discrimination against certain ministers of the gospel (ministers receiving a cash, rather than an in-kind housing allowance) who are carrying on such a courageous fight. ” Rep. Mack also urged support for 107(2) as a means to subsidize the low incomes of religious officials.

Plaintiffs argued that the duties of ministers should not qualify them for preferential tax treatment, and that the low pay of ministers should not be a duty of government to correct via preferential and “under inclusive” tax exclusions.

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Nullification of the preferential tax benefit of Section 107(2) was presented as the least disruptive remedy to the tax collection system. Nullification would eliminate the favoring/endorsing of religious workers and their employing religious organizations, as well as equalizing government treatment of ministerial and non-ministerial groups. It was contended that nullification would remedy 107(2)’s violation of the Establishment Clause, as well as its violation of the Equal Protection Clause.

CONCLUSION The 7th Circuit challenge to ministerial cash housing allowances was unsuccessful. Ministers/clergy may continue to exclude their cash housing allowances from taxable income. However, the strong opinions on both sides of the issue suggest another challenge to the constitutionality of IRC 107(2) soon. Going forward, ministers and religious organizations should consider the possibility of losing this valuable tax benefit.

What’s new with you?

Update your membership profile and stay connected > Help us and your fellow members get to know you better for greater networking opportunities and greater control of the communications you want to receive from us. Update your member profile today by logging in to www.wicpa.org/memberprofile with your WICPA username and password.

The 7th Circuit Court of Appeals is the ranking federal court in Illinois, Indiana, and Wisconsin. See the 7th Circuit opinion at: Freedom from Religion Foundation, Gaylor, and Barker v. Lew, Secretary of the Treasury, and Koskinen, Commissioner of Internal Revenue, Case No. 14-1152.

The Establishment Clause (separation of church and state) mandates equal treatment of different religious AND secular groups per United States v. Lee, 455 U.S. 252, 263 n. 2, 102 S. Ct. 1051, 71 L. Ed. 2d 127 (1982).

Freedom From Religion Foundation, Gaylor, and Barker v.

United States of America. U.S. District Court for the Western District of Wisconsin, Case No. 11-cv-0626.

Texas Monthly, Inc. v. Bullock, 489 U.S. 1, 109 S. Ct. 890, 103 L. Ed. 2d 1 (1989).

See: Hearings on General Revenue Revisions before the House Committee on Ways and Means, 83d Cong., Sess., pt. 3, at 1576 (1953).

R. Dan Fesler CPA, DBA, CIA is professor of accounting at Tennessee Technological University in Cookeville, Tenn.

Contact him at dfesler@tntech.edu.

REMEMBER TO RENEW YOUR MEMBERSHIP! If you have not yet renewed your 2015-2016 membership, visit www.wicpa.org/renew for quick and easy online payment to keep your valuable member benefits coming, including On Balance magazine.

Pay your dues in the “Renew My Membership” section on the Members web page. For information regarding your membership or username and password, contact Jessica Murphy at 800-772-6939 ext. 4502 or Jessica@wicpa.org.

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{ Human resources | labor and employment law }

Labor and employment law: Issues for businesses in 2015

By John J. Kalter, J.D.

A

s promised by President Barack Obama at the beginning of 2014, the recently concluded calendar year saw significant action from administrative agencies in many areas of the law. Not forgotten among this administrative tidal wave were noteworthy new rules and decisions from government agencies that oversee labor and employment laws.

More agency activity in the labor and employment arena is promised for 2015. This agency activity, together with pending court decisions, give Wisconsin employers a number of issues to watch in 2015. Among the most significant:

update the wage and hour regulations that govern the minimum wage and overtime requirements of the federal Fair Labor Standards Act (FLSA). This proposed update to the regulations arises from the March 2014 direction of President Obama to “modernize and streamline� the overtime exemptions of the FLSA. It is widely anticipated that the proposed rule, if made final, would increase the number of employees who are eligible to receive minimum wage and overtime compensation. The proposed rule must go through the federal rulemaking process before becoming final, and this process likely will last at least into the summer of 2015.

NEW DOL WAGE AND HOUR REGULATIONS

NLRB OPENS EMPLOYER EMAIL SYSTEMS TO EMPLOYEE UNION ACTIVITY

By the time this article is published, the U.S. Department of Labor (DOL) may have issued a proposed rule to

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In December 2014, the National Labor Relations Board

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{ Human resources | labor and employment law }

“More agency activity in the labor and employment arena is promised for 2015. This agency activity, together with pending court decisions, give Wisconsin employers a number of issues to watch in 2015.”

(NLRB), in a much anticipated case (Purple Communications Inc.), decided that employees have a statutory right to use their employers’ email systems for “statutorily protected communications on nonworking time.”

Statutorily protected communications include the right to organize a union and engage in concerted activities with coworkers for the purpose of collective bargaining or other mutual aid or protection. The decision reverses significant precedent that employer email systems are company property which employees do not have a right to use for such concerted activities. The NLRB stated a number of purported limitations on the new decision including: 1) that it applies only to employees who have already been granted access to the employer’s email system in the course of their work and, 2) that it does not address email access to nonemployees. Although this highly significant decision is likely to be appealed, employers should work with their attorneys to determine any responsive changes that need to be made to their employment policies and when those changes should occur.

NLRB ISSUES NEW RULE FOR QUICK UNION ELECTIONS Having failed to pass “card check” legislation during President Obama’s first term, union organizers scored a victory in December 2014 when the NLRB issued a hotly contested new rule to quicken the process of union elections. Among other things, the rule, which will take effect April 14, 2015, will significantly reduce the time between the filing of a union petition with the NLRB and the date of the union election (from about 40 days to 10 to 14 days). This will severely hinder an employer from campaigning against a union bidding to represent its employees. Among other things, the new rule will also require employers subject to a union election to provide the union with an electronic list of employee telephone numbers and personal email addresses (where available). The new rule makes it even more important that non-union employers educate their managers and supervisors regarding union organizing issues in general

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and the new rule in particular so that they can keep their ears open for union organizing activity and know how to properly react if it occurs.

EEOC TAKES ACTION AGAINST EMPLOYER WELLNESS PROGRAMS After years of refusing to take a position on how the Americans with Disabilities Act (ADA) interacts with employer wellness programs, in 2014, the U.S. Equal Employment Opportunity Commission (EEOC) brought federal court complaints against three employers, two of them in Wisconsin, in which the agency claimed that the employers’ wellness programs violated the ADA’s prohibition against making medical inquiries and requiring medical examinations of current employees. The issue in all of the cases involved whether certain penalties issued by the employers against employees who refused to participate in their wellness programs caused the programs to be “involuntary” under the ADA. With the EEOC finally focusing on this issue, employers with wellness programs that make medical inquiries or require medical examinations, e.g. blood pressure or cholesterol checks, should consult with their attorneys to determine the risk of their wellness program violating the ADA.

WISCONSIN SUPREME COURT DECISION ON NONCOMPETITION AGREEMENTS The Wisconsin Supreme Court (in Runzheimer International Ltd. v. Friedlen) is likely to issue a decision in the spring of 2015 on the issue of whether Wisconsin employers need to offer anything other than continued employment to current employees who are being asked to sign restrictive covenant agreements, e.g., noncompetition, nonsolicitation and confidentiality agreements. Employers who are considering implementing restrictive covenant agreements with their employees should work with their attorneys to determine if they should wait to do so until the decision is issued.

These highlights represent just a sample of the labor and employment activity that will affect employers in 2015. As always, it is worthwhile for businesses to pay close attention to labor and employment law as it develops in the year ahead.

John J. Kalter, J.D. is partner at Sorrentino Burkert Risch Kalter LLC in Waukesha. Contact him at 262-513-3315 or jkalter@sbrklaw.com.

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{ Financial planning | special needs } 30

LONG-TERM PLANNING FOR CHILDREN WITH SPECIAL NEEDS

By James Kieckhaefer and Joseph Ferrazza

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{ Financial planning | special needs }

A

ll parents face challenges. Parents of children with special needs face unique challenges and know that day-to-day life takes careful planning. In addition to being primary caregivers, parents of children with special needs are faced with the unenviable task and financial burden that comes with providing for their children after they themselves have passed away.

Fortunately, there are governmental benefit programs and estate strategies that can provide necessary financial and future care support to families. Federal and state government programs often provide medical care and income for the life of an individual with special needs.

An inheritance for an individual with special needs is intended to provide for basic needs like shelter and transportation along with daily necessities. However, if received without the appropriate safeguards, the inheritance can cost the individual the governmental benefits they rely upon: Medicaid, Supplemental Security Income (SSI), and access to specialized affordable housing.

One way a family can protect against this “disqualification” and still provide for their loved one after he or she is gone is by using a Discretionary Special Needs Trust (DSNT). The primary purpose of the DSNT is to provide funds to pay for certain expenses that enhance the quality of life for the individual without jeopardizing governmental benefits. The trust is a legal entity that owns assets such as investments, property and life insurance.

An appointed trustee manages the assets on behalf of the appointed person. Whereas the proceeds of many trusts count as income, a DSNT is not considered an asset to the beneficiary and as such, the proceeds do not qualify as income. A common challenge families face is the actual funding of the trust when they are working just to fund day-to-day expenses. This is precisely where life insurance can provide an immediate, cost-effective, substantial and tax-free* benefit to the DSNT. Too often, setting up a trust and purchasing life insurance are hindered by common mistakes. There are three common mistakes when it comes to structuring a special needs legacy plan: 1) NAMING THE CHILD WITH SPECIAL NEEDS AS THE BENEFICIARY OF THE LIFE INSURANCE POLICY. This may disqualify the child from the governmental benefits that the trust was set up to protect. Additionally, the child may not be capable of managing the financial assets.

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2) LEAVING ASSETS DIRECTLY TO THE CHILD WITH SPECIAL NEEDS FROM PARENTS OR OTHER FRIENDS AND RELATIVES. This may also disqualify the child from government benefits as the assets can be counted as income and quickly exceed the set income limits.

3) APPOINTING THE CHILD’S INHERITANCE TO ANOTHER FAMILY MEMBER TO MANAGE. This can create two new problems. First, the appointed family member may not be willing, able or old enough to manage the financial responsibility. Second, when the assets are in the hands of anyone other than the child with a special need, they are immediately subject to bankruptcy, divorce, litigation, creditors or seizure of the owner.

Detailed long-term planning is essential to help ensure that the required care of a child will continue long after the parents are gone. If parents and caregivers fail to put a plan in place before they die, for after they die, the future care of the child may be at risk.

“

When it comes to planning for the long-term future and care of a loved one with special needs, often the most difficult step is simply getting started.

”

How can the best-laid plans today be potentially achieved in the future? Aside from properly drafted trust documents, families should set up a “roadmap” for how they want the care of their loved one to look.

This map can be summarized with six steps: • SET SPECIFIC GOALS. Important to any solution is a clear vision. What you want your dependent’s life to look like? The goal of this process is to identify and establish manageable goals and ensure every family member involved in the life of the child understands the goals.

• ANALYZE THE CURRENT SITUATION. One of the most challenging aspects of financial planning is determining the financial cost to provide a certain quality of life for a child with special needs. Understanding the funding afforded by governmental programs, what may be reduced in the future and what alternatives exist once a child is of adult age is essential.

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{ Financial planning | special needs }

• SEEK LEGAL OPINION. Special needs planning requires the consideration of the possibility that you may predecease your loved one. Legal documentation in the form of wills, trusts and guardianship is essential.

• MAP IT OUT. Before any journey, it is important to map out where you are going in advance. Life tells us there will be forks in the road where critical decisions must be made. A map will always keep you on your desired course.

• START THE JOURNEY. Getting started may be the most important phase of planning and quite possibly the most difficult.

• REVIEW. Now that you have worked to develop and implement your plan, biannual review and assessment is essential to ensure you stay on course.

All parents face challenges. When it comes to planning for the long-term future and care of a loved one with special needs, often the most difficult step is simply getting started.

*In certain situations life insurance death benefits may be partially or wholly taxable. Please speak with your tax adviser regarding your specific situation. Trust services available through banking and trust affiliates in addition to nonaffiliated companies of Wells Fargo Advisors. Wells Fargo Advisors and its affiliates do not provide legal or tax advice. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.

Investment and insurance products: NOT FDIC-Insured

NO Bank Guarantee

MAY Lose Value

Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.

James Kieckhaefer is a non-practicing CPA and a senior vice president-investment officer with The Kieckhaefer Investment Group of Wells Fargo Advisors, LLC Member SIPC in Waukesha. Joe Ferrazza is president of J. Ferrazza & Associates in Chicago, Ill. If you have any questions or would like more information, contact Kieckhaefer at 262-798-3713 or 800-323-1410 or james.kieckhaefer@wfadvisors.com.

COMING IN APRIL

Reading Makes ¢ents

Read-A-Thon Help Wisconsin kids become money smart! Visit the local elementary school of your son, daughter, niece, nephew or neighbor during the month of April and read to students about the basics of money. Select a book from a recommended reading list or choose your own book with a money-related theme.

Borrow a book from your

In conjunction with Financial Literacy Month,

To pledge your participation,

Money Smart Week and Teach Children to Save Day,

email Mary Murray at

the WICPA will host its seventh Read-A-Thon in April.

32

local library or purchase a book and leave it with the teacher.

WICPA members will receive handouts to bring to class, including information for parents, a prize for students and financial literacy curriculum for teachers. For more information, visit www.wicpa.org/Reading.

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March|April 2015

mary@wicpa.org.

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Whether you’re looking for a new career or a new employee, the WICPA’s enhanced Career Center can help you make the most of your search.

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