Accredited Investment Fiduciary Analyst™

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One Opinion on the AIFA

[By Dr. Ron Miller; CFP®, AIFA®]

There are over 5,000,000 fiduciaries around the country responsible for other people’s money and sitting on boards and investment committees. Many have had no formal training on their duties and responsibilities as fiduciaries.

The AIF™ and AIFA™

The AIF and the AIFA designations deal mainly with reviewing the fiduciary issues of the investment process, especially for Trusts, pension plans and Institutional money. For example:

  • Is the money being managed according to the basic documents (Investment Policy Statements, etc)?
  • Are fees reasonable?
  • Are the investments being monitored on a regular basis?
  • What are the criteria for the fund or manager being put on a watch list or removed? 
  • Are there any conflicts of interest or self-dealings?
  • Are the fiduciaries to the portfolios aware of their responsibilities?

AIF and AIFA™ Designation

The AIF designation is designed to give investment stewards formal training on the fiduciary issues. The AIFA designation goes a step further and permits the designee to formally certify that the organization he is hired to monitor is following the fiduciary investment process with no deficiencies or areas for improvement.

More info: www.Fi360.com

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Hospital Stock Appreciation Rights

The SARs Alternative to Stock Transfer

LaVerne L. Dotson; JD, CPA

An alternative to the actual transfer of corporate securities or shares to a doctor, nurse or other hospital employee is the issuance of so-called stock appreciation rights (SARs).

A Contractual Agreement

SARs are a contractual arrangement that, when exercised, entitles an employee to receive, in either stock, cash, or a combination of the two, an amount equal to the appreciation in the employer’s stock subsequent to the date the SARs were granted (or related to such appreciation, if the SARs are valued higher than the FMV of the stock when the SARs were granted).

Tax Consequences

The grant of SARs does not constitute the constructive receipt of income even though the option is immediately exercisable, because the exercise of the option means that the grantee will not get the benefit of additional appreciation of the stock on which the value of the SARs is based.

Any declarable income with SARs occurs at the sale, not acquisition.

Income received from the exercise of SARs is ordinary, and is equal to the amount of cash received or the value of the appreciated stock received. This amount will generally be reportable in the income of the employee in the year of receipt; however, if the SARs are exercised for stock and the stock is subject to a substantial risk of forfeiture, it will be subject to tax when the substantial risk of forfeiture lapses pursuant to IRC Code § 83, discussed in the Executive-Post previously.

Hospital or Medical Employer Deduction

When the SARs are exercised, a deduction is available to the hospital or medical corporate employer.

Assessment

The income from the SARs is also subject to withholding and employment taxes on the employer and employee. As a practical matter, if the individual is an employee at the time the tax is determined, there will often be very little additional payroll taxes to pay, because he or she will already have exceeded the Social Security taxable wage base.

Conclusion

Does the above information agree with your experience with SARs; please comment and opine?

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Financial Planning: http://www.jbpub.com/catalog/0763745790

Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Administrative Terms: www.HealthDictionarySeries.com

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