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The Ohio Patrolmen's Benevolent Association (O.P.B.A)

Which 457 Deferred Compensation Plan is Right for You?

Life used to be simple.  Your community’s 457 deferred compensation plan probably offered only one option.  Now, however, many communities have adopted several options that are represented by various private financial firms, along with the state-run plan.  Each plan may have different features and investment options, along with a range of fees.  Some plans provide active management and will choose the funds on your behalf, making adjustments based on market conditions--while others require you to make the decisions yourself.  You may find yourself wondering which plan or plans are most suitable for your situation and how to know if you’ve picked the right one.

With the pension reform that took place last year, and more potential changes on the horizon, your deferred compensation assets are going to become even more important in your retirement planning strategy.  We encourage all employees to at least contribute something to a 457 plan, even if it’s a small amount to start.  Your contributions go into your plan pre-tax, thus lowering your taxable income for the year.  They potentially grow tax deferred throughout your career, and then will be taxable as earned income when you take distributions in retirement.  This compounding effect can really help you save money over your career as a Police Officer or Firefighter.  457 plans also allow for high contribution rates.  If you are under the age of 50, you can contribute up to $17,500 this year.  If you are age 50 or older, you can contribute an additional $5,500 for a total of $23,000!  Some employees are also eligible for a “special catch-up contribution,” which could allow you to contribute up to $35,000 per year for up to three years prior to your retirement (restrictions may apply).  The bottom line is that whatever amount you can spare to save, you will want to make sure it is managed properly and you are making the best use of these funds.

Our company currently services numerous municipalities in the Greater Cleveland area as a deferred compensation provider.  We are constantly fielding questions on how all the different plans work and their advantages and disadvantages.  To help you through this process, we felt it would be important to arm you with some questions you can ask your provider(s) to ensure you know how your deferred compensation plan works and to help you decide if it matches your goals and objectives.

Here are some questions to get you started:

  • How many investment options are available?
  • What are your current fees and fund expenses?
  • Does your current plan have a surrender charge?
  • Does your plan allow for an easy access emergency loan program? What are the start-up costs and interest rate charges?  Is any of the interest credited back to your account?
  • Does your plan have a principal protection feature, regardless of market conditions?
  • Does your plan have an income or withdrawal benefit attached to it?  If so, what are the fees for this and how does it work?  What are the restrictions?
  • Does your deferred compensation provider offer full financial planning services to handle and coordinate all your financial, tax, legal, and insurance matters? Do they offer an ongoing program of current educational programs for you and your family?

At Lineweaver Financial Group, we feel knowledge is important, and an informed client often results in a happy client.  Retirement planning can be a very stressful process-- and in some cases, you may not get a second chance.  Having a properly structured deferred compensation plan can be critical to the success of your plan.  If you have further questions or would like a complimentary analysis of your plan versus your other available options, feel free to give us a call.  We would be happy to assist you.

Lineweaver Financial Group

9035 Sweet Valley Drive

Valley View, OH 44125

216.520.1711

Securities offered through Sigma Financial Corporation. Member FINRA/SIPC

Lineweaver Financial Group is independently owned and operated.

This is for informational purposes only and should not be construed as tax, legal, or financial advice. Please consult your tax, legal or financial advisor.

 

In Memoriam

Our thoughts and prayers go out to the families and friends of the following OPBA members who have recently passed away: 

Richard Haverlack, Retired Member

Maurice Lamar, Cuyahoga County Sheriff’s Office


 

A Picture is Worth… A Guilty Verdict

A few years ago, one of our prosecutors was trying a drug possession case. The drugs in question were found in the defendant’s car, under the center console of the vehicle. The defendant denied the drugs belonged to him, and even tried to blame a passenger for placing the drugs there just before the police pulled him over. The only exhibit presented at trial? A photograph of the drugs under the console, exactly as they were found by the investigating officer. After deliberating for a little less than an hour, the jury came back with a guilty verdict. They later told the prosecutor that the photograph was the deciding factor in their verdict. As the photograph depicted, it was unlikely a passenger could have placed the drugs where they were found.

This is just one of the many examples of the impact a photograph can have on a jury. Just one photograph can take a jury back to the scene of a crime, letting them see the scene for themselves. Trials often occur months or even years after the crime is committed. Despite a prosecutor’s best efforts, it is often difficult to re-create a crime scene exactly as it was at the time.

Most police departments have a dedicated crime scene unit or designated officers to process a crime scene, which includes taking photographs. While this is helpful in prosecuting serious cases, these units and officers are not often used in less serious cases like drug possession, simple assaults, domestic violence or property crimes. Such cases may be less serious than homicides, but in order to be successfully prosecuted, the evidence must still prove guilt beyond a reasonable doubt. As noted in the example above, sometimes a single picture can be a key piece of evidence.

Some police departments provide cameras for their patrol officers to use, while others may not. Regardless, just about everyone today has a phone that can take pictures, which can be quickly emailed to a work account and filed with the police report. Taking a quick shot of a victim’s injuries, where drugs are found, property damage, how a suspect looked or simply the area surrounding a crime scene can really make a difference in how the case is handled in court. Moreover, a picture can often corroborate a victim’s version of events or bolster a police officer’s testimony under cross-examination.

Being a police officer, especially on patrol, can be a stressful and demanding job. No patrol officer wants to make arrests and then later have the case tossed out of court for a lack of convincing evidence. And while evidence can come in many forms, including witness testimony, DNA and fingerprints, the saying still stands true; a picture can be worth a thousand words. So the next time you are out on patrol, remember that sometimes the nearest camera can be the most effective crime-fighting tool of all.

This article is not to be considered legal advice. Please consult your police legal advisor regarding any legal issue.

Sherri Bevan Walsh

Summit County Prosecuting Attorney

 

The Ever Challenging Task of Maintaining Affordable Health Care

Let’s face it, having health care insurance is almost as important as having a monthly paycheck when you retire.  The older we get the more susceptible we are to needing health care.  While we are younger we may not realize the need and importance but as we approach retirement we appreciate more and more the option of having it.

Earlierl, I mentioned what I call in health care as “arbitrary billing.”  A scary thought but this is reality as I recently had another child via C section.  No staff came in told me how much it would cost, no one told us how much each shot or anesthesia would cost or even the stay each night in the hospital.  Even if they would have I couldn’t tell them “well, let me shop that around.”  I was stuck and whatever procedure they did I had to live with.

A month later I receive summary of charges in the mail (what the insurance was billed).  They billed $11,000.00 for the procedure.  Ironically, my two year old came the same way and the insurance was billed only $4500.00 for the same C section.  The increase in a two year period was ridiculous but again arbitrary and there was nothing I or you will be able to do about it.  For us the cost was $500.00 for the first child and $1700.00 for the second

Insurance costs keep rising beyond the cost of inflation.  The pension board based on recommendations by actuaries had to raise health care rates this year alone by 13.2%.  When you add the fact that we can only subsidize a spouse and children by 25% it makes the cost to the retirees rough.  We continually fight this as it challenges the financial being of the fund and the health care stabilization fund.  Recently, Ohio Public Employee’s Pension Plan (OPERS) phased out spousal subsidies and is moving toward a stipend system where employees must purchase their own health care.

Move now to the “Affordable Health Care Act” and now no one knows what is going on.   Basically everyone is in some type of limbo until this act goes into effect in 2014.  If a plan wants grandfathering status which appears to be advantageous then the plan cannot make any changes.  OP&F has to wait to see if grandfathering is more advantageous or making changes and losing that status is more beneficial.

The solution is always challenging and the good news is the health care stabilization fund is doing well and growing.  The pension board is continually looking at ways to keep health care for the retirees for a long period of time.  There has never been talk on removal of health care, only ways to make it more affordable.  It is a challenge we are up to and we will continue to work to provide health care options for the members and their families.