Bartholomew & Company MonthlyProviding Trusted Financial Advice Since 1994

Thomas J. Bartholomew, AIF®President & CEOBartholomew & Company370 Main StreetSuite 1000Worcester, MA 01608508-753-8807800-440-8807info@bartandco.comwww.bartandco.com

401(k) Plan Participation Trends

September 2021See disclaimer on final page

Contributing to a 401(k) or similar work-sponsored retirement plan is one of theeasiest ways to invest for your future. Plan contributions are automaticallydeducted from your pay and invested in a tax-advantaged account before youreceive your paycheck, which helps avoid the temptation to spend it.

Nearly 9 out of 10 employees who are eligible to participate in a 401(k) planchoose to do so, and they contribute 6.7% of their earnings, on average.Here's a look at where those contribution dollars go.

Source: Plan Sponsor Council of America, 2020 (2019 plan data)

$111,839

Average account balance foractive 401(k) plan participantsand vested former employees

Source: Plan Sponsor Council ofAmerica, 2020 (2019 plan data)

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Four Reasons to Review Your Life Insurance NeedsYou may have purchased life insurance years ago andnever gave it a second thought. Or perhaps you don'thave life insurance at all and now you need it. Whenyour life circumstances change, you have a freshopportunity to make sure the people you love areprotected.

MarriageWhen you were single, life insurance might haveseemed like an unnecessary expense, but nowsomeone else is depending on your income. Ifsomething happens to you, your spouse will likelyneed to rely on life insurance benefits to meetexpenses and pay off debts.

The amount of life insurance coverage you needdepends on your income, your debts and assets, yourfinancial goals, and other personal factors. Even if youhave some low-cost life insurance through work, thismight not be enough. Buying life insurance coveragethrough a private insurer could help fill the gap.

ParenthoodWhen children arrive, revisiting your life insuranceneeds could help you protect your growing family'sfinancial security. Life insurance proceeds might helpyour family meet both their current obligations, such asa mortgage, child care, or car payments, and futureexpenses, including a child's college education. Even ifyou already have life insurance, children are amongthe most important reasons to review your policy limitsand beneficiary designations.

RetirementAs you prepare to leave the workforce, reevaluate yourneed for life insurance. You might think that you cando without it if you've paid off all of your debts and feelfinancially secure. But if you're like some retirees, yourfinancial picture may not be so rosy, especially ifyou're still saddled with mortgage payments, studentloan bills, and other obligations. Life insuranceprotection could still be important if you haven'taccumulated sufficient assets to provide for yourfamily, or you want to replace retirement income lostwhen you are no longer around.

Life insurance can also be an important tool to helpyou transfer wealth to the next generation. Or perhapsyou're looking for a way to pay your estate tax bill orleave something to charity. You may need to keepsome of your life insurance in force or buy a differenttype of coverage.

Health ChangesA common concern is that life insurance coverage willend if your insurer finds out that your health hasdeclined. But if you've been paying your premiums,changes to your health will not matter.

Consumers Understand the Value of LifeInsurance

Source: 2021 Insurance Barometer Study, LifeHappens and LIMRA

Some life insurance policies even offer accelerated(living) benefits that you can access in the event of aserious or long-term illness.

You may be able to buy additional life insurance if youneed it, especially if you purchase group insurancethrough your employer during an open enrollmentperiod. Purchasing an individual policy might be moredifficult and more expensive, but check with yourinsurance representative to explore your options.

Of course, it's also possible that your health hasimproved. For example, perhaps you've stoppedsmoking or lost a significant amount of weight. If so,you may now qualify for a lower premium.

The cost and availability of life insurance depend onfactors such as age, health, and the type and amountof insurance purchased. Before implementing astrategy involving life insurance, it would be prudent tomake sure that you are insurable. As with mostfinancial decisions, there are expenses associatedwith the purchase of life insurance. Policies commonlyhave mortality and expense charges. Any guaranteesare contingent on the financial strength andclaims-paying ability of the issuing insurancecompany. Optional benefits are available for anadditional cost and are subject to contractual terms,conditions, and limitations.

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Tips for Managing an InheritanceAs the beneficiary of an inheritance, you are mostlikely to be faced with making many importantdecisions during an emotional time. Short of meetingany required tax or legal deadlines, don't make anyhasty decisions concerning your inheritance.

Identify a Team of Trusted ProfessionalsTax laws and requirements can be complicated.Consult with professionals who are familiar with assetsthat transfer at death. These professionals mayinclude an attorney, an accountant, and a financialand/or insurance professional.

Be Aware of the Tax ConsequencesGenerally, you probably will not owe income tax onassets you inherit. However, your income tax liabilitymay eventually increase. Any income that is generatedby inherited assets may be subject to income tax, andif those assets produce a substantial amount ofincome, your tax bracket may increase. This isparticularly true if you receive distributions from atax-qualified retirement plan such as a 401(k) or anIRA. You may need to re-evaluate your income taxwithholding or begin paying estimated tax.

You also may need to consider the amount of potentialtransfer (estate) taxes that your estate may owe, dueto the increase in the size of your estate after factoringin your inheritance. You may need to consider ways tohelp reduce these potential taxes.

How You Inherit Assets Makes a DifferenceYour inheritance may be received through a trust oryou may inherit assets outright. When you inheritthrough a trust, you'll receive distributions according tothe terms of the trust. You may not have total controlover your inheritance as you would if you inherited theassets outright.

Familiarize yourself with the trust document and theterms under which you are to receive trustdistributions. You will have to communicate with thetrustee of the trust, who is responsible for theadministration of the trust and the distribution of assetsaccording to the terms of the trust.

Even if you're used to handling your own finances,receiving a significant inheritance may promotespending without planning. Although you may want toquit your job, or buy a car, a house, or luxury items,this may not be in your best interest. Consider yourfuture needs, as well, if you want your wealth to last.It's a good idea to wait at least a few months afterinheriting money to formulate a financial plan. You'llwant to consider your current lifestyle and your futuregoals, formulate a financial strategy to meet thosegoals, and determine how taxes may reduce yourestate.

Develop a Financial PlanOnce you have determined the value and type ofassets you will inherit, consider how those assets willfit into your financial plan. For example, in the shortterm, you may want to pay off consumer debt such ashigh-interest loans or credit cards. Your long-termplanning needs and goals may be more complex. Youmay want to fund your child's college education, putmore money into a retirement account, invest, plan tohelp reduce taxes, or travel.

Evaluate Your Insurance NeedsDepending on the type of assets you inherit, yourinsurance needs may need to be adjusted. Forinstance, if you inherit valuable personal property, youmay need to adjust your property and casualtyinsurance coverage. Your additional wealth from yourinheritance means you probably have more to lose inthe event of a lawsuit. You may want to purchase anumbrella liability policy that can help protect youagainst actual loss, large judgments, and the cost oflegal representation. You may also need to recalculatethe amount of life insurance you need because of yourinheritance. The cost and availability of life insurancedepend on factors such as age, health, and the typeand amount of insurance purchased.

Evaluate Your Estate PlanDepending on the value of your inheritance, it may beappropriate to re-evaluate your estate plan. Estateplanning involves conserving your money and putting itto work so that it best fulfills your goals. It also meanshelping reduce your exposure to potential taxes andcreating a comfortable financial future for your familyand other intended beneficiaries.

Some things you should consider are to whom yourestate will be distributed, whether the beneficiary(ies)of your estate are capable of managing the inheritanceon their own, and how you can best shield your estatefrom estate taxes. If you have minor children, you maywant to protect them from asset mismanagement bynominating an appropriate guardian or setting up atrust for them. If you have a will, your inheritance maymake it necessary to make significant changes to thatdocument, or you may want to make an entirely newwill or trust. There are costs and ongoing expensesassociated with the creation and maintenance of trustsand wills. Consult with an estate planning attorney forproper guidance.

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A Map for Your Family

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021

Securities and advisory services offered through Commonwealth Financial Network® , Member FINRA/SIPC, a Registered InvestmentAdviser. Fixed insurance products and services offered through CES Insurance Agency.

The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible fortheir content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials aregeneral in nature and do not address your specific situation. For your specific investment needs, please discuss your individualcircumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pagesshould be construed as specific tax or legal advice.

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A will is an essential legal document that describeshow your estate should be distributed upon yourdeath. It is the basis for the probate process and canserve as a guide for your heirs.

A letter of instruction — which has no legal status —provides information that can help your loved onessettle your estate and move forward with their lives.You might consider it a map for your family.

Unlike a will, which must follow legal guidelines foryour state and may require an attorney, a letter ofinstruction can be written yourself in any way youchoose. Here are some topics you may want toaddress.

Financial accounts and account numbers, includingonline user names and passwords. If you prefer not towrite down user names or passwords, the executor ofyour estate should be able to access accounts with theaccount numbers and your Social Security number.

List of documents and their locations, including (butnot limited to) your will, insurance policies, tax returns,bank and investment account documents, real estatedeeds and mortgage documents, vehicle titles, SocialSecurity and Medicare cards, marriage and/or divorcepapers, and birth certificate.

Contact information for professionals who handleyour financial and legal affairs, such as your attorney,financial advisor, insurance agent, and accountant.

Also include others who may be helpful, such as abusiness partner or trusted friend.

Bills and creditors, including when payments are dueand other pertinent information, such as loan termsand balances as of the date of the letter.

Your final wishes for burial or cremation, a funeral ormemorial service, organ donation, and charitablecontributions in your memory.

You might also include more personal thoughts or lifelessons that you want to pass on, or you could write aseparate letter. Keep your letter of instruction in a safe,yet accessible place and tell your loved ones where itcan be found. It might be wise to give a copy of theletter to the executor of your estate and other trustedfriends or advisers.

Be sure to review the letter regularly and update it asappropriate. Your heirs will thank you for taking thetime to prepare.

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