/General/General%209.png?width=1280&height=853&name=General%209.png)
Healthcare Provider Update: Healthcare Provider for Nokia Nokia primarily utilizes Aetna, a leading health insurance provider, for its employee healthcare needs. Aetna offers a wide range of health plans designed to fit the diverse needs of Nokia's workforce across various locations. Potential Healthcare Cost Increases in 2026 As we approach 2026, healthcare costs are projected to rise significantly, influenced by multiple factors impacting the Affordable Care Act (ACA) marketplace. Insurance premiums are expected to escalate by an average of 18% nationally, with some states witnessing hikes over 60%. A critical driver behind this surge is the potential expiration of federal premium subsidies, which currently shield many consumers from high out-of-pocket expenses. Without these subsidies, the affordability of healthcare will be compromised for millions, forcing consumers to reconsider their coverage options and financial strategies in anticipation of these price increases. Click here to learn more
If you own and administer a family business, a family limited partnership (FLP) or family limited liability company (FLLC) may play a crucial role in your estate plan. According to a recent study published by the American Bar Association in 2022, family limited partnerships (FLPs) can be a useful tool for wealth transfer planning for retirees and high net worth individuals. FLPs allow family members to pool their assets and transfer them to the next generation while maintaining control over the assets during their lifetime. This can result in significant tax savings and asset protection benefits for retirees and their families. FLPs can also be used to facilitate the transition of ownership and control of family businesses to the next generation while minimizing estate and gift taxes.
What is an FLP/FLLC?
Our Nokia clients frequently inquire about FLPs and FLLCs. A FLP is a unique type of limited partnership in which family members function as general and limited partners. A FLLC is a corporation owned by family members, who may or may not act as administrators. With an FLP, the business is managed by general partners. Limited partners have neither a vote nor a say in day-to-day operations, but they have limited liability; they are not responsible for the FLP's obligations in excess of their capital contributions. Even if they function as managers, all family members with a FLLC have limited liability (as with any corporate entity).
Note: The rest of this discussion will refer to an FLP; however, the underlying principles apply to FLLCs as well.
A typical limited partnership consists of a general partner with experience and limited partners with capital. However, in the family context, the senior generation typically begins as both the general and limited partners. The older generation then transfers the limited partnership interests to the junior generation. The general partners may transfer up to 99% of the business to the limited partners while retaining no more than 1%. This can be an excellent solution for our Nokia clients who wish to transfer ownership of their business to their children but wish to retain control until their children gain experience and become capable of managing the business independently.
Asset Protection
A FLP can provide limited partners with some level of asset protection. A court order (called a charging order) is typically required for a creditor to reach a limited partnership interest, and even then, the FLP is only required to pay the creditor instead of the partner until the debt is paid. In this instance, the creditor does not serve as a replacement partner. He or she must wait until the general partner decides (which could take a very long time) to distribute income. Additionally, FLP assets are protected from divorce-related loss. However, the general partner does not receive the same protection and is personally liable for the FLP's debts and liabilities.
Income Tax Considerations
A FLP is a pass-through entity for purposes of income taxation. This means that the IRS does not recognize an FLP as a taxpayer (as it does for a corporation), and that the FLP's income is passed through to the partners. Therefore, you can transfer business income and prospective appreciation of business assets to family members in a lower tax bracket. The entire family can benefit from tax savings. From 2018 to 2025, an individual taxpayer may deduct 20% of domestic qualified business income (excluding compensation) from an FLP, subject to various limits.
Tip: The partners must report the income earned by the FLP on their personal income tax returns and are responsible for payment of any tax owed. Income is allocated to each partner based on his or her share of the contributed capital (i.e., pro-rata share).
Gift and Estate Tax Considerations
Utilizing the annual gift tax exclusion and applicable gift and estate tax exclusion amounts: Gifts of interests in an FLP are subject to federal (and potentially state) gift tax. Nonetheless, you can reduce or eradicate your actual gift tax liability by transferring FLP interests in amounts exempt from gift tax under the annual gift tax exclusion ($15,000 per recipient in 2019 and 2020). In addition, each taxpayer has a federal gift and estate tax applicable exclusion amount equal to the basic exclusion amount of $11,580,000 (in 2020, $11,400,000 in 2019) plus any unused spousal exclusion amount, so transfers that do not qualify for the annual gift tax exclusion are exempt from gift tax up to the extent of your available applicable exclusion amount. Both the annual exclusion and the baseline exclusion amount are inflation-indexed and may increase in the future.
Using value reductions: You may be able to deduct the value of the donated FLP interests. This is because limited partners have very limited rights, including the incapacity to transfer an interest, withdraw from the FLP, and participate in management. These restrictions can cause a business's value to be substantially less than the value of its underlying assets. These discounts can be substantial, accumulating up to 35% off. Minority interest (lack of control) and absence of marketability discounts are among the available discounts.
Removing appreciation in the future from your estate: In general, business assets appreciate (increase in value) over time. By distributing your assets among family members (via the FLP), the current value is frozen and any future appreciation is excluded from your estate. You may be required to pay gift tax now, but the amount will be less than if the tax were calculated on a higher future value.
FLPs Must Comply With State Law and IRS Requirements
A FLP is subject to stricter regulations than other business entities. To establish a valid FLP in the eyes of the state and the IRS, care must be taken. A FLP will only be recognized if it was created for a legitimate business purpose. If the IRS or state determines that the FLP was formed solely to avoid taxes, the FLP form will be discarded.
Among the specific reasons for creating an FLP are:
To adopt a succession plan for the family
To facilitate senior citizens' annual gift-giving
To reduce income, gift, and estate tax liabilities
To safeguard assets against prospective creditors
To prevent successors from wasting assets.
To combine assets within a single entity.
To maintain the business within the family
To decrease estate and probate costs
A FLP may also own a closely held business (other than a corporation that has elected to be taxed as a 'S' corporation), real estate, marketable securities, and virtually any other investment asset. Homes, cottages, and other assets for personal use are typically unsuitable for an FLP.
Featured Video
Articles you may find interesting:
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
Tips For Forming And Maintaining A Valid FLP:
Create the FLP for one or more substantial nontax reasons, such as asset protection.
Keep accurate records
Develop the FLP while you are in excellent health.
Observe all legal requirements when forming the FLP and running the business.
Employ a third-party evaluator to assess the value of assets entering the FLP.
Transfer legal ownership of assets to the FLP
Put only business assets into the FLP; personal assets should not be included.
If you include personal assets, such as your residence, in your FLP, you must pay fair market rent for their use.
Don't combine FLP and personal assets; keep them distinct.
Never use FLP assets for your own benefit.
Maintain sufficient assets outside the FLP to cover personal expenses.
Distribute income to companions pro rata
Conclusion
A family limited partnership can be compared to a well-constructed retirement plan. Just as a retirement plan can help individuals protect and grow their assets for the future, a family limited partnership can help families preserve their wealth and pass it on to future generations. Like a retirement plan, a family limited partnership requires careful planning and management to ensure its success. It's essential to have a solid strategy in place to maximize the benefits and minimize potential risks. By working with experienced professionals and staying vigilant, families can enjoy the long-term benefits of a well-constructed family limited partnership, just as they can with a thoughtful retirement plan.
What unique features and benefits does the Nokia Retirement Income Plan offer to its participants, and how can these benefits be maximized by current employees of Nokia of America Corporation? Additionally, what resources are available for employees to educate themselves about the various aspects of the plan, including eligibility, distribution options, and potential tax implications?
The Nokia Retirement Income Plan offers participants a defined benefit plan designed to provide financial security through retirement by supplementing Social Security and other retirement savings. Benefits can be maximized through strategies like ensuring accurate service records, understanding distribution options such as lump-sum payments or annuities, and consulting financial advisors to align these benefits with long-term retirement goals(Nokia of America Corpor…).
How does participation in the Nokia Retirement Income Plan facilitate financial security in retirement for employees, specifically in terms of pension benefit calculations and options such as lump-sum distributions or annuities? Moreover, what are some strategies that Nokia of America Corporation employees can employ to ensure they are fully prepared to utilize their retirement benefits as they transition towards retirement?
Participation in the Nokia Retirement Income Plan ensures financial security in retirement through pension benefit calculations based on service years and salary history. Employees can choose from options like lump-sum distributions or lifetime annuities. By carefully selecting a distribution option and incorporating it into a broader retirement strategy, employees can optimize financial outcomes(Nokia of America Corpor…).
With respect to changes in personal circumstances, such as marriage or divorce, what provisions does the Nokia Retirement Income Plan have to protect the benefits of employees from Nokia of America Corporation? How can employees navigate the complexities of Qualified Domestic Relations Orders (QDROs) within the context of their pension benefits, and what resources are available to assist them in this process?
The Nokia Retirement Income Plan protects benefits in cases of personal changes such as marriage or divorce through provisions like the Qualified Domestic Relations Order (QDRO). Employees can consult the Nokia Benefits Resource Center for assistance in navigating QDROs to ensure a fair division of benefits. Guidance is available for understanding the QDRO requirements and how they apply to their pension(Nokia of America Corpor…).
What steps must employees take to initiate the commencement of their benefits from the Nokia Retirement Income Plan once they reach retirement age? Furthermore, what are the important considerations employees need to keep in mind regarding the selection of a payment form and any potential impact this may have on their overall financial strategy during retirement?
To initiate pension benefits under the Nokia Retirement Income Plan, employees must submit a claim when they reach retirement age. They should consider factors such as payment form options (lump sum or annuity) and the impact on long-term financial plans. Choosing the appropriate payment form is critical to maximizing retirement income(Nokia of America Corpor…).
How can employees of Nokia of America Corporation ensure their beneficiaries are properly designated under the Nokia Retirement Income Plan, and what implications does this designation have for benefit distribution in the event of their death? Additionally, what steps should employees take to update their beneficiary designations in light of significant life events?
Employees can ensure their beneficiaries are properly designated by updating their beneficiary forms through the Nokia Benefits Resource Center. Proper designation affects how benefits are distributed in the event of their death, and it is crucial to update designations after life events like marriage, divorce, or the birth of a child(Nokia of America Corpor…).
In terms of compliance with federal regulations, how does the Nokia Retirement Income Plan adhere to ERISA guidelines concerning employee benefits, and what rights do employees of Nokia of America Corporation possess under these regulations? Also, how can employees exercise their rights effectively if they encounter issues regarding their pension benefits?
The Nokia Retirement Income Plan complies with the Employee Retirement Income Security Act (ERISA), giving employees the right to receive information about their benefits and hold fiduciaries accountable. If employees face issues with their pension, they can exercise their rights through claims and appeals, with recourse available through legal action if necessary(Nokia of America Corpor…).
How does the Nokia of America Corporation support employees who might be eligible for a disability pension under the Nokia Retirement Income Plan, and what specific eligibility criteria must be met? Additionally, what resources are available to assist employees in understanding this facet of their retirement benefits?
Employees eligible for a disability pension under the Nokia Retirement Income Plan must meet specific criteria, such as proving permanent disability before reaching retirement age. Resources like the Nokia Benefits Resource Center can provide guidance on the eligibility process and required documentation(Nokia of America Corpor…).
What specific actions should an employee of Nokia of America Corporation take when applying for a pension benefit under the Nokia Retirement Income Plan, and what documentation is typically required to streamline this process? Furthermore, in the event of a claim denial, what recourse do employees have to challenge the decision through the plan's appeal process?
When applying for pension benefits, employees should provide documentation such as proof of age and employment history. In case of a denial, they have the right to appeal through the Employee Benefits Committee. If necessary, employees can further appeal to federal courts under ERISA(Nokia of America Corpor…).
How does the pension benefit guarantee from the Pension Benefit Guaranty Corporation (PBGC) apply to employees of Nokia of America Corporation, and what are the limitations of this guarantee in protecting retirement benefits? Additionally, how can understanding these protections help employees make informed decisions regarding their retirement planning?
The Pension Benefit Guaranty Corporation (PBGC) guarantees benefits under the Nokia Retirement Income Plan in case the plan terminates. However, there are limitations, such as caps on benefit amounts. Understanding these protections helps employees make informed decisions about their retirement planning(Nokia of America Corpor…).
How can employees contact the Nokia Benefits Resource Center to gain more information about their benefits and the specific resources available under the Nokia Retirement Income Plan? What are the recommended communication channels and hours for reaching out to ensure timely and effective assistance?
Employees can contact the Nokia Benefits Resource Center through the Your Benefits Resources (YBR) website or by calling the designated phone line. It is recommended to use these channels during business hours (9:00 a.m. to 5:00 p.m. ET) for timely assistance with pension-related questions(Nokia of America Corpor…).
-2.png?width=300&height=200&name=office-builing-main-lobby%20(52)-2.png)
.webp?width=300&height=200&name=office-builing-main-lobby%20(27).webp)
-2.png)
.webp)