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Cypen & Cypen
April 6, 2017

Stephen H. Cypen, Esq., Editor

1.  PALM BEACH ADOPTS CHANGES TO GENERAL EMPLOYEES’ RETIREMENT BENEFITS:  Town employees can expect a boost to their pension benefits after the Town Council adopted a new plan according to the The plan allows general employees to start collecting pensions at age 62 rather than 65. The payments will also be larger, using a 1.70 multiplier, up from 1.25, to calculate payments. The change comes on the heels of an overhaul to the benefits for public safety workers. Deep pension cuts in 2012 resulted in high turnover and poor retention among firefighters and police officers. Since 2012, the town has matched, dollar for dollar, employee contributions of 4 percent into individually invested retirement accounts.  For four years, the council added a discretionary 4 percent to the accounts. Now, there will be no discretionary contributions.  That savings will go toward improving benefits.  The town’s pension plan assumes an average 7 percent return on market investments over 30 years. The new pension plan will go into effect the first pay period after May 1.
2.  RETIREMENT PREPAREDNESS IMPROVES FOR EMPLOYEES: Benefit News reports that Americans’ retirement preparedness improved from 2015 to 2016, in large part because more employees are running projections for their post-employment years, according to data compiled by Financial Finesse in its 2016 Year in Review.
By running a retirement projection, about four in 10 discovered they are underfunded and in need of making changes with respect to how much they save, how they invest, and how they prepare for retirement. The remaining six in 10 were on track for retirement, and confident in their ability to reach their savings goals, the report found. Despite the advances, slightly more than half of respondents were not sure if they were on track for retirement and had taken no steps to figure out how to get there. Overall financial wellness improved from 2015 to 2016, as well. On a scale of 0 to 10, people who participated in a financial wellness program at work saw their overall average fiscal health score increase from 4.7 to 5.4. For repeat users, those who had at least two interactions with their workplace financial wellness program saw their score increase from 5.7 to 5.9.
If people score in the 0 to 2 range, they are suffering financially. This means they are having trouble paying the bills and dealing with debt, according to Financial Finesse.
Financial Finesse looked at 69,081 financial wellness assessments that were taken between 2015 and 2016 to come up with its year-end findings. In that assessment, employees are asked common questions that a financial planner might ask during a one-on-one meeting, examining their cash flow, debt and retirement savings.
The assessment found a 6 percentage point gain year over year in the number of employees who claimed to have a handle on their cash flow. That means freeing up more money to focus on their future financial goals. There also was a 4 percentage point improvement in the number of people who have an emergency fund, and a 5 percentage point improvement in those reporting they contributed to their workplace retirement plan. Another interesting finding from the data was that a high percentage of millennials feel their financial situation has improved, and are ready to purchase a home. Forty-five percent of millennials reported that buying a home was their top financial priority in 2016, compared to only 27% in 2015. In 2015, there was only a 5 percentage point gap between males and females. In 2016, the gap had widened to 7 percent points. The widest gap is in the area of investing and money management. Both men and women showed increased confidence in their investment strategy but the slope is a little bit higher for men. Looking at cash flow management and debt, 70% of women say they have a handle on cash flow compared to 81% of men. The biggest disparity is between those who say they are on track for retirement. As the economy has improved, men beat out women by 10 percentage points when it came to saying they were on track for retirement. Women are more likely to use workplace financial wellness programs than men, but they also claim to need the program more. Of everyone who took the assessment, 80% of the people who said they were in financial crisis were women. The biggest differentiator between those with the lowest and highest levels of financial wellbeing was behavior.
Those on the lower end of the financial wellness range were the ones living paycheck to paycheck and were not well equipped to handle unexpected emergencies. Of that group, only 13% said they had a handle on cash flow; 8% said they had a handle on debt and 41% said they had taken a retirement plan loan or hardship withdrawal from their retirement accounts.  Of those on the higher end of the scale, 100% said they had a handle on their cash flow; 96% said they were comfortable with their debt and only 7% had taken a retirement plan loan or hardship withdrawal.
3.  GENERAL ASSEMBLY SENDS BILL TO GOVERNOR FOR NEW JERSEY POLICE, FIRE PENSION PLAN AUTONOMY:  According toPensions & Investments, the New Jersey General Assembly voted overwhelmingly to allow the Police and Firemen’s Retirement System to break away from New Jersey Department of the Treasury administration and investment management. By a 61-4 vote with 10 abstentions, the General Assembly joined the state Senate in calling for the pension fund to have a more powerful board of trustees and autonomy from the state’s management of the New Jersey Pension Fund. The Senate voted 37-0 for the same bill on March 13. The legislation, which was approved by veto-proof majorities, now goes to Gov. Chris Christie, who has not commented on the bill. The Police and Firemen’s Retirement System is the second largest of the seven pension systems within the $71.2 billion New Jersey Pension Fund. For the fiscal year ended June 30, PFRS had $22.8 billion in assets. The bill increases the size of the police and fire fund’s board to trustees to 12 from 11 and gives it more power to administer the fund and make investments. The bill removes the fund’s administration from the Treasury Department’s Division of Pensions and Benefits, and it severs its investment practices from the Treasury Department’s division of investment. Supports of the legislation said PFRS can do a better job of administrating and investing as a separate fund rather than being lumped in with six other public pension funds under the umbrella of the New Jersey Pension Fund.
Any increase in the administrative costs will depend on the board’s decisions to establish its own staff and vendors instead of continuing to use the services of the Division of Pensions and Benefits and Division of Investment. The trustees must hire an executive director, actuary, chief investment officer and ombudsman.
The bill permits trustees to change benefit payments, modify members’ contributions, create compensation formulas and reinstate cost-of-living adjustments, COLA payments were suspended for New Jersey Pension Fund participants by a 2011 law, whose constitutionality was upheld by the State Supreme Court in 2016. The legislation also installs an escape clause. It requires the board of trustees to review the performance and funding levels six years after the bill becomes law. The review will compare the pension fund to available market data, including performance of the division of investment’s handling of other public pension funds. After six years, a majority of fund participants can ask the trustees to petition the Legislature to consider legislation that reverts control of the system to the Department of Treasury or such other agency as the state deems appropriate, the bill says.
4.  ILLINOIS GOVERNOR VETOES BILL TO HELP IMPROVE FUNDING RATIO FOR 2 CHICAGO PENSION PLANS:  Pensions & Investments reports that Illinois Gov. Bruce Rauner vetoed a bill to help shore up Chicago's municipal and laborer pension funds.  The measure, which passed the Illinois Legislature on Jan. 9, was intended to improve the pension plans' funding ratios to 90% each by 2057 through higher contributions for certain employees and increased city contributions. The bill required that Chicago begin making contributions on an actuarial basis to both pension funds in 2023. Revenue received from a 2014 increase in the city's emergency phone surcharge and a new water and sewer tax were expected to cover the increase in the city's contributions. The bill would also have raised payroll contributions for participants of both pension funds hired after Jan. 1, 2017, to 11.5% from 8.5%, and reduced their age of eligibility for full benefits to 65 from 67. Employees hired on or after Jan. 1, 2011, would have had the option of increasing their payroll contributions to 11.5% from 8.5% in return for their retirement age being reduced to 65 from 67. The bill did not affect employees hired prior to 2011. The $4.6 billion Chicago Municipal Employees' Annuity & Benefit Fund had $18.6 billion in liabilities as of Dec. 31, 2015, for a funding ratio of 24.7%. The $1.2 billion Chicago Laborers' Annuity & Benefit Fund has a funding ratio of roughly 45%.
It's like trying to fix a drought with a drop of rain. We see pension funding challenges throughout the state — one-off, shortsighted approaches will not really fix the problem, Mr. Rauner added in the news release. We must have comprehensive, long-term pension reform. Let's get it done. Illinois faces roughly $130 billion in combined unfunded pension liabilities across its five state retirement systems.  A pension reform proposal, which includes an option for certain state workers to give up some cost-of-living increases or accept limits on how salary increases will affect their benefits, is currently making its way through the Illinois Legislature.  Chicago Mayor Rahm Emanuel called Mr. Rauner’s veto irresponsible.

5.  FREE FILE TOPS 50 MILLION USERS; SAVES TAXPAYERS $1.5 BILLION SINCE INCEPTION:  The Internal Revenue Service announced that Free File – the pioneering public private partnership that makes free tax software available to 70 percent of taxpayers recently surpassed 50 million users since the program started.
Since 2003, the 50 million taxpayers who used this free tax service saved approximately $1.5 billion based on a conservative estimate of $30 per tax software product. Taxpayers who earned $64,000 or less can choose from among a dozen, brand-name software products offered by leading private sector companies for free. Taxpayers who made more than $64,000 may use Free File Fillable Forms, the electronic version of Internal Revenue Service paper forms. Free File is available exclusively at Several products offer both free federal and free state return preparation. Each software provider sets its own eligibility standards but anyone who made $64,000 or less will find at least one product to use.

This year, Free File web pages have been optimized for smart phone and tablet use. This means taxpayers can use their phones or their tablets to prepare and file their taxes just as they can with their computers. And, IRS2Go, the mobile app available for download, provides an easy means for taxpayers to access Free File and file their returns. Also for this year, active duty military personnel who earn $64,000 or less can choose any of the dozen Free File products, regardless of the providers’ eligibility standards. All taxpayers who want to file an extension can use Free File to submit Form 4868. Just look for the “request an extension” link at the top of the Free File main page. This is a six-month extension to file a tax return, not to pay. If additional tax is owed, it must be paid by April 18. Remember: always save a copy of any federal tax return and supporting documents. Keep it in a safe and secure location or encrypted if stored digitally.
6.  TEN TAX TIME IRS TIPS TO CONSIDER:  The tax filing deadline is Tuesday, April 18 this year. This is because April 15 falls on a weekend and the following Monday is a holiday in the District of Columbia. Even with an extra three days, the IRS urges taxpayers to avoid waiting until the last minute to file their taxes.
For those who have yet to file, the IRS has 10 quick ideas to help:

  • Gather Records. Good record keeping is important. It helps to ensure that nothing gets overlooked. Records such as receipts and cancelled checks also provide expense documentation.
  •  Use IRS Online Tools. The IRS has many useful online tools. The Interactive Tax Assistant tool provides answers to many tax questions. It gives the same answers that an IRS representative would give over the phone.
  • File Electronically. Most taxpayers file electronically these days. It offers ease and convenience. The tax software guides people through the entire process. There are no forms to fill out. Electronic filing is also a more accurate way to file.
  • Use IRS Free File. Free File is available only on Taxpayers earning $64,000 or less last year can use free name-brand tax software to file a federal tax return. Free File Fillable Forms, an electronic version of IRS paper forms, is available for those who earned more than $64,000. People can use Free File to get an automatic six-month extension to file. An extension to file a tax return, however, is not an extension to pay any taxes owed. April 18 is still the deadline for any taxes owed.
  • Taxpayers can now use their cell phone or tablet to prepare and e-file a federal tax return through IRS Free File. Access Free File two ways: Use the IRS app, IRS2Go, which has a link to the Free File Software Lookup Tool, or use the device’s browser to go to and select the “Free File Software Lookup Tool” or “Start Free File Now” to find the software product desired. The IRS2Go app is available for Android and iOS devices.
  • Report All Income. Taxpayers must report all of their income from Forms W-2, Wage and Tax Statements, and Forms 1099. Other income may be reportable as well, even if the taxpayer does not receive a statement.
  • Choose Direct Deposit. The fastest and safest way to a refund is to file electronically and choose Direct Deposit. The IRS issues most refunds in less than 21 days.
  • Visit is an excellent resource. Taxpayers can click on the "Filing" icon for links to filing tips, answers to frequently asked questions and IRS forms and publications. The IRS Services Guide outlines the many ways to get help on
  • Explore Filing Options. Taxpayers have many options to file. Self-prepare or use a tax preparer. Millions are eligible for free help from a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site. The IRS Directory of Federal Tax Return Preparers provides information on tax professionals including their qualifications and credentials. IRS tools are available 24/7.
  • Check out IRS Publication 17, Your Federal Income Tax, is a complete tax resource. This 300-page guide is available as aneBook as well.
  • Avoid Errors. Taxpayers should take extra time to review their return to file accurately the first time. Mistakes slow down refunds. IRS e-file is the most accurate way to file as using it eliminates many common errors. Paper return filers should check all names, Social Security numbers and sign the tax return.

7.  NEW OFFICE ADDRESS: Please note that Cypen & Cypen has a new office address: Cypen & Cypen, 975 Arthur Godfrey Road, Suite 500, Miami Beach, Florida 33140. All other contact information remains the same.
8.  CRAZY STATE LAWS: Good Housekeeping reminds us that there are crazy laws in every state. In Illinois it is legal for minors who are in culinary school to drink alcohol.  In 2012, the state acknowledged that it is legal for a minor to "drink" (sip and spit) if he or she is enrolled in a legitimate culinary program. Cheers to a well-rounded, or should we say full-bodied, learning experience!

9.  ZEN PROVEN TEACHINGS TO LIVE BY:  Give a man a fish and he will eat for a day. Teach him how to fish, and he will sit in a boat and drink beer all day. 
10.  PONDERISMS: All of us could take a lesson from the weather. It pays no attention to criticism
11.  OLD CEMETERIES & EPITAPHS:  A truly happy person is one who can enjoy the scenery on a detour and one who can enjoy browsing old cemeteries. For example, Harry Edsel Smit of Albany, New York: Born 1903 – Died 1942, Looked up the elevator shaft to see if the car was on the way down.  It was.
12.  TODAY IN HISTORY: This day in 1998, Citicorp and Travelers Group announced that they would be merging. The new creation was the largest financial-services conglomerate in the world. The name would become Citigroup.

13. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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