Frank Deptola & Associates,LLC.Frank A. Deptola, MS Tax, MBACA Insurance License # 0F349922400 E. Katella Ave.Suite 800Anaheim, CA 92806714-348-8979714-349-9431frank.deptola@deptola.comwww.deptola.com

September 2018Infographic: Working in Retirement

Take Charge of Your Student DebtRepayment Plan

What are the new rules for 401(k) hardshipwithdrawals?

Should I enroll in a health savings account?

What to Do If Your Term Life Insurance Policy Is About to Expire

See disclaimer on final page

One advantage of term lifeinsurance is that it isgenerally the mostcost-effective way toachieve the maximum lifeinsurance protection youcan afford. Many peoplefirst purchase term life

insurance to protect their family's financialinterests after a significant life event, such asgetting married or the birth of a child.

You may have done the same for your familywhen you purchased your policy years ago.And chances are, other than paying thepremiums, you probably haven't given it muchthought since then. However, if your term lifeinsurance policy is set to expire in the nearfuture, it's important to explore your optionsnow before the coverage runs out.

Before you get started, you first need toreevaluate your life insurance needs anddetermine if anything has changed. Are yourchildren grown and have they graduated fromcollege? Do you have a mortgage? If you havefinancial obligations that you need to take careof, you may still need term life insurance. If youare nearing retirement and have fewer financialobligations than you did when you wereyounger, your need for a term life insurancepolicy may not be as great as it once was.

Purchasing a new policyIf you are in relatively good health and yourcurrent term life insurance policy is about to runout, you might consider purchasing a new termpolicy altogether. When applying for a new termlife insurance policy, you will generally need topass a medical exam. In addition, since you areolder now, your premiums may be higher thanthey were under your old policy. However, youmay not need as large a policy as you did whenyou first purchased term life insurance yearsago. It may pay to shop around and comparebecause premiums can vary among insurers.

Renewing your existing policyWhen the coverage period for your term lifeinsurance ends, you may have the option torenew the policy, depending on the specific

policy and limitations. Though you won't berequired to take a medical exam if you renewyour policy, the rate will generally increaseeach time it is renewed for an additional termbecause your age has increased (as has theinsurance company's risk of paying a deathbenefit). These increased premium costs cansometimes make renewing a term life insurancepolicy an expensive way to cover your lifeinsurance needs.

Converting your policy to permanentlife insuranceIf you have a convertible term life insurancepolicy, you may be able to convert it to apermanent life insurance policy, such as wholeor universal life insurance. Permanentinsurance continues throughout your life aslong as you pay the premiums. As with terminsurance, permanent insurance pays a deathbenefit to your beneficiary at your death, but italso contains a cash value account funded byyour premium dollars. When you convert yourpolicy, you won't need to prove your insurabilityby taking a medical exam. However, there isusually a conversion deadline, which is the dateby which you must convert, typically beforeyour term life insurance is set to expire.

The cost and availability of life insurancedepend on factors such as age, health, and thetype and amount of insurance purchased. Aswith most financial decisions, there areexpenses associated with the purchase of lifeinsurance. Policies commonly have mortalityand expense charges. In addition, if a policy issurrendered prematurely, there may besurrender charges and income tax implications.Any guarantees are contingent on theclaims-paying ability and financial strength ofthe issuing company.

The rules governing 1035 exchanges arecomplex and you may incur surrender chargesfrom your "old" life insurance policy. In addition,you may be subject to new sales and surrendercharges for the new policy.

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Infographic: Working in Retirement

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Take Charge of Your Student Debt Repayment PlanOutstanding student loan debt in the UnitedStates has tripled over the last decade,surpassing both auto and credit card debt totake second place behind housing debt as themost common type of household debt.1 Today,more than 44 million Americans collectivelyowe more than $1.4 trillion in student debt.2Here are some strategies to pay it off.

Look to your employer for helpThe first place to look for help is your employer.While only about 4% of employers offer studentdebt assistance as an employee benefit, it'spredicted that more employers will offer thisbenefit in the future to attract and retain talent.

Many employers are targeting a student debtassistance benefit of $100 per month.3 Thatdoesn't sound like much, but it adds up. Forexample, an employee with $31,000 in studentloans who is paying them off over 10 years at a6% interest rate would save about $3,000 ininterest and get out of debt two and a half yearsfaster.

Understand all your repayment optionsUnfortunately, your student loans aren't goingaway. But you might be able to choose arepayment option that works best for you. Therepayment options available to you will dependon whether you have federal or private studentloans. Generally, the federal government offersa broader array of repayment options thanprivate lenders. The following payment optionsare for federal student loans. (If you haveprivate loans, check with your lender to seewhich options are available.)

Standard plan: You pay a certain amount eachmonth over a 10-year term. If your interest rateis fixed, you'll pay a fixed amount each month; ifyour interest rate is variable, your monthlypayment will change from year to year (but itwill be the same each month for the 12 monthsthat a certain interest rate is in effect).

Extended plan: You extend the time you haveto pay the loan, typically anywhere from 15 to30 years. Your monthly payment is lower than itwould be under a standard plan, but you'll paymore interest over the life of the loan becausethe repayment period is longer.

Example: You have $31,000 in student loanswith a 6% fixed interest rate. Under a standardplan, your monthly payment would be $344,and your total payment over the term of theloan would be $41,300, of which $10,300 (25%)is interest. Under an extended plan, if the termwere increased to 20 years, your monthlypayment would be $222, but your total paymentover the term of the loan would be $53,302, ofwhich $22,302 (42%) is interest.

Graduated plan: Payments start out low in theearly years of the loan, then increase in thelater years of the loan. With some graduatedrepayment plans, the initial lower paymentincludes both principal and interest, while underother plans the initial lower payment includesinterest only.

Income-driven repayment plan: Your monthlypayment is based on your income and familysize. The federal government offers fourincome-driven repayment plans for federalstudent loans only:

• Pay As You Earn (PAYE)• Revised Pay As You Earn (REPAYE)• Income-Based Repayment (IBR)• Income-Contingent Repayment (ICR)

You aren't automatically eligible for these plans;you need to fill out an application (and reapplyeach year). Depending on the plan, yourmonthly payment is set between 10% and 20%of your discretionary income, and anyremaining loan balance is forgiven at the end ofthe repayment period (generally 20 or 25 yearsdepending on the plan, but 10 years forborrowers in the Public Service LoanForgiveness Program). For more information onthe nuances of these plans or to apply for anincome-driven plan, visit the federal student aidwebsite at studentaid.ed.gov.

Can you refinance?Yes, but only with a new private loan. (There isa federal consolidation loan, but that isdifferent.) The main reason for trying torefinance your federal and/or private studentloans into a new private loan is to obtain alower interest rate. You'll need to shop aroundto see what's available.

Caution: If you refinance, your old loans will goaway and you will be bound by the terms andconditions of your new private loan. If you hadfederal student loans, this means you will loseany income-driven repayment options.

Watch out for repayment scamsBeware of scammers contacting you to say thata special federal loan assistance program canpermanently reduce your monthly paymentsand is available for an initial fee or ongoingmonthly payments. There is no fee to apply forany federal repayment plan.1 New York Federal Reserve, Quarterly Report onHousehold Debt and Credit, February 2018

2 CFPB, Innovation Highlights: Emerging StudentLoan Repayment Assistance Programs, August 2017

3 Society for Human Resource Management, October2, 2017

If you have federal studentloans, you aren'tautomatically eligible for anincome-driven repaymentplan — you have to fill out anapplication (and reapplyeach year).

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Frank Deptola &Associates, LLC.Frank A. Deptola, MS Tax, MBACA Insurance License # 0F349922400 E. Katella Ave.Suite 800Anaheim, CA 92806714-348-8979714-349-9431frank.deptola@deptola.comwww.deptola.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

Frank Deptola is a Registered Representative and anInvestment Adviser Representative with/and offerssecurities and advisory services through CommonwealthFinancial Network®, Member FINRA/SIPC, a RegisteredInvestment Adviser. Fixed insurance products andservices offered through Frank Deptola & Associates, LLCor CES Insurance Agency.

Based on 10 objective eligibility and evaluation criteria,including a minimum of 5 years as an active credentialedfinancial professional, favorable regulatory and complainthistory, accepts new clients, client retention rates, clientassets administered, education, and professionaldesignations. 2,469 Orange county area wealth managerswere considered for the award; 170 (7 percent ofcandidates) were named 2019 Five Star WealthManagers (The criteria provided reflects the most recentyear for which advisor received the award. The criteriaused, the number of wealth managers considered for theaward, and the percentage of those who receive theaward, may vary from year to year). These awards are notindicative of the wealth managers' future performance.Your experiences may vary. For more information, pleasevisit www.fivestarprofessional.com .

The accompanying pages have been developed by anindependent third party. Commonwealth FinancialNetwork is not responsible for their content and does notguarantee their accuracy or completeness, and theyshould not be relied upon as such. These materials aregeneral in nature and do not address your specificsituation. For your specific investment needs, pleasediscuss your individual circumstances with yourrepresentative. Commonwealth does not provide tax orlegal advice, and nothing in the accompanying pagesshould be construed as specific tax or legal advice.Securities and advisory services offered throughCommonwealth Financial Network ® , MemberFINRA/SIPC, a Registered Investment Adviser.

Should I enroll in a health savings account?A health savings account(HSA) is a tax-advantagedaccount that you can establishand contribute to if you areenrolled in a high-deductible

health plan (HDHP). Because you shoulder agreater portion of your health-care costs, you'llusually pay a much lower premium for anHDHP than you would pay for traditional healthinsurance. This allows you to contribute thepremium dollars you're saving to your HSA.Then, when you need medical care, you canwithdraw HSA funds to cover your expenses, oropt to pay your costs out-of-pocket if you wantto save your account funds. An HSA can be apowerful savings tool, especially if your healthexpenses are relatively low, since you may beable to build up a significant balance in yourHSA over time. Before you enroll in an HSA,ask yourself the following questions:

What will your annual out-of-pocket costs beunder the HDHP you're considering? Estimatethese based on your current health expenses.The lower your costs, the easier it may be toaccumulate HSA funds.

How much can you afford to contribute to yourHSA every year? Contributing as much as you

can on a regular basis is key to building acushion against future expenses. For 2018, youcan contribute up to $3,450 for individualcoverage and $6,900 for family coverage.

Will your employer contribute to your HSA?Employer contributions can help offset theincreased financial risk that you're assuming byenrolling in an HDHP rather than traditionalemployer-sponsored health insurance.

Are you willing to take on more responsibility foryour own health care? For example, to achievethe maximum cost savings, you may need toresearch costs and negotiate fees with healthproviders when paying out-of-pocket.

How does the coverage provided by the HDHPcompare with your current health plan? Don'tsacrifice coverage to save money. Read allplan materials to make sure you understandbenefits, exclusions, and all costs.

What tax savings might you expect? HSA fundscan be withdrawn free of federal income taxand penalties provided the money is spent onqualified health-care expenses. Depending onthe state, HSA contributions and earnings mayor may not be subject to state taxes. Consultyour tax adviser for more information.

What are the new rules for 401(k) hardshipwithdrawals?The Bipartisan Budget Actpassed in early 2018 relaxedsome of the rules governinghardship withdrawals from

401(k)s and similar plans. Not all plans offerhardship withdrawals, but the ones that do willbe required to comply for plan years beginningin 2019.

In order to take a hardship withdrawal from a401(k) or similar plan, a plan participant mustdemonstrate an "immediate and heavy financialneed," as defined by the IRS. (For details, visitthe IRS website and search for RetirementTopics - Hardship Distributions.) The amount ofthe withdrawal cannot exceed the amountnecessary to satisfy the need, including anytaxes due.1

Current (pre-2019) rulesTo determine if a hardship withdrawal isqualified, an employer may rely on anemployee's written statement that the needcannot be met using other financial resources(e.g., insurance, liquidation of other assets,commercial loans). In many cases, anemployee may also be required to take a planloan first.

Withdrawal proceeds can generally come onlyfrom the participant's own elective deferrals, aswell as nonelective (i.e., profit-sharing)contributions, regular matching contributions,and possibly certain pre-1989 amounts.

Finally, individuals who take a hardshipwithdrawal are prohibited from makingcontributions to the plan — and thereforereceiving any related matching contributions —for six months.

New rulesFor plan years beginning after December 31,2018, the following changes will take effect:

1. Participants will no longer be required toexhaust plan loan options first.

2. Withdrawal amounts can also come fromearnings on participant deferrals, as well asqualified nonelective and matchingcontributions and earnings.

3. Participants will no longer be barred fromcontributing to the plan for six months.1 Hardship withdrawals are subject to regular incometax and a possible 10% early-distribution penalty tax.

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