Personal Wealth Law News

A limited opportunity for making charitable gifts was added to the law in 2006 and will expire at the end of 2007. Under this provision, which is contained in Section 408(d)(8) of the Internal Revenue Code, individuals who have reached age 70 1/2 can distribute up to $100,000 per year, for each of 2006 and 2007, to charitable organizations. The organizations must be public charities (other than donor-advised funds and supporting organizations) or private operating or pass-through foundations. Distributions can be made from any type of IRA, other than a SEP-IRA or a SIMPLE IRA, and must be made directly to the organization. The amount distributed will not be included in the income of the donor, and no charitable deduction will be permitted for the distribution. Further details on how this provision works are included in IRS Notice 2007-7, 2007-5 IRB 395.

Legislation has been introduced to make these kinds of giving opportunities permanent, in the proposed Public Good IRA Rollover Act (you have to admire the people who think up these names). Extensive tax legislation is about to be introduced in Congress, and this proposal might be included in it. 

Comments Off

Each year, at about this time, the Internal Revenue Service and Social Security Administration issue numbers for various transactions and planning for 2008. Here are a handful of those numbers:

Social Security wage base for 2008: $102,000, up from $97,500 in 2007.

Cost of living Social Sceurity benefit increase: 2.3%

Maximum Social Security benefit at full retirement: $2,185 per month, up from $2,116.

Maximum contribution to defined contribution retirement plans: $46,000 per year, up from $45,000.

Maximum 401(k) deferral amount: unchanged at $15,500 per year.

Fringe benefit exclusion for commuting costs: $115; for parking, $220.

Annual gift tax exclusion: unchanged at $12,000.

These and many other numbers will be included in our benefits card, which will be issued shortly. If you would like to receive that card, at no cost, please send an e-mail to rlouis@saul.com.

Comments Off

For many of us, it’s difficult to imagine that having money is a problem. Most of us work diligently to acquire wealth, and don’t shrink from having more. But the experience of lawyers and other advisers to those who have been successful financially demonstrates that wealth can be both a blessing and a curse to families. A recent talk in Philadelphia by Charles W. Collier, the senior philanthropic advisor at Harvard University, was very enlightening on this subject. Without offering solutions, because no solution can cover every situation, Mr. Collier showed by illustration and interactive discussion how wealth can have a positive effect on families. His book, titled Wealth in Families, repays reading by families who enjoy comfortable financial circumstances. It’s available through Amazon.

No Comments »

A previous post made reference to a clearly written discussion of funding problems with Social Security and the pros and cons of various solutions to the problems, which discussion can be found at www.bc.edc/crr. One of the solutions suggested was to raise the retirement age for receiving full benefits.  It appears that a delay of only a few years would provide substantial relief for the funding pinch. Rather than just pushing people into starting benefits later, why not give them an incentive to do so? Suppose people were encouraged to work longer and defer the commencement of benefits by having lower income taxes on amounts they earned after age 65? If income taxes on the first $50,000 of income were 10% and the next $100,000 were taxed at 15%, people might have an incentive to delay the start of benefits. There might also be lower Social Security taxes after age 65, but the combination of continuing to pay in and delaying the payment of benefits could be a factor in helping to preserve Social Security. There would have to be some increase in benefits as a result of the delay, but there could still be a net benefit to the Social Security system. This proposal could also alleviate concerns about too many skilled workers in the Baby Boom generation retiring within a few years.

No Comments »

An important theme of these blog entries is the subject of retirement, and it’s impossible not to see the widespread discussion of retirement issues in news media and in advertisements from businesses that provide services and products related to retirement.  There are also scholarly publications and web sites reviewing retirement issues. One of these that repays some study is a web site of the Center for Retirement Research at Boston College. The web site address is www.bc.edu/crr. Among the topics discussed there is the future of Social Security, and the site offers a colorful pamphlet setting forth the problems and possible solutions in non-technical terms. There are also some helpful stories collected at www.cnn.com. Merely reading these entries is not a substitute for your own planning, but they illustrate some of the concerns shared by those nearing retirement and some possible solutions. 

No Comments »