Here are some Social Security numbers I recently ran across that I found interesting. The figures are from the current information available as of October, 2010: The average retired worker receives $1,172 in monthly Social Security retirement benefits, and the average couple receives $1,892. The average disabled worker receives $1,066 in Social Security disability benefits each month, and this amount increases to $1,803 for a disabled worker with a spouse and child. The average widow or widower receives a total of $1,106 in Social Security survivor benefits per month, whereas a younger widow or widower with two children receives an average monthly benefit of $2,391. Each month, over 34 million people receive Social Security retirement benefits, and over 4 million are receiving survivor’s benefits as a widow or widower. Over 8 million people are receiving disability benefits from the Social Security system each month, as well. Photo by Pink Sherbet […]
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SSA Revises Withdrawal Policy
On December 8, 2010, the Social Security Administration published a revision to their “withdrawal policy”. It’s important for you to know what has changed about this rule, especially if you have been counting on this in your planning for Social Security benefits. You can see the actual text of the SSA’s announcement 20 CFR Part 404 by clicking here. What’s Changing? Essentially SSA has decided that this rule, as it stood, represented a little too good of a deal, even though very few people ever took advantage of it. The rule, in brief, allowed an individual to begin taking retirement benefits at any age, and then at any point in the future the individual could pay back all of the benefits (without interest) and re-set his or her beginning date for receiving benefits. This strategy allowed the individual to receive benefits and invest them, then pay back the entire amount […]
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The F* Word Rocks
(*F is for Fiduciary) Much has been said and written in the past year about standards to which advisors are held. This has been primarily due to the recent passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which included a provision requiring the SEC to study the oversight of brokers and Registered Investment Advisers (RIAs). While there are many nuances to the oversight differential, it really boils down to one thing: RIAs are held to a fiduciary standard; brokers are held to a suitability standard. Briefly, a fiduciary advisor is required to act with undivided loyalty to the client, including disclosure of compensation methods and conflicts of interest. On the other hand, the broker’s suitability standard requires only that the broker’s recommendations are suitable for the client’s situation. Those two definitions are on opposite sides of quite a chasm, don’t you think? I think that the consumer […]
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Was BP Just Being Nice?
Remember back when the oil spill first started to get really ugly, and BP announced their efforts to start the cleanup, by whatever means were necessary? BP even went so far as to hire some 2,000 people to assist with the effort – 2,000 people who lived in the gulf coast area. BP also very publicly announced that they’d only consider people who had been out of work for 60 days or more – under the auspices that they were altruistically working to improve the lot of these folks who had been impacted by the economy, and further by the spill itself. I’m not going to address the spill or the cleanup, this has been discussed in many forums to great length. Regardless of the effort put in and the emotional ramifications of BP’s cleanup effort – I found it interesting that BP specifically indicated they’d only consider folks who […]
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2011 Retirement Plan Limits Published
The IRS has published the numbers for the annual contribution and income limits for retirement plans for 2011. You can find the highlights at the page Annual Limits for Retirement Plans – 2011. Essentially, very little changed from 2010 – IRA contribution limits are the same, as are 401(k), 403(b) and 457 plan contributions. The catch up provisions are the same for each type of plan as well. A few of the phase-out limits on MAGI were increased, but by negligible amounts. On the bright side, the Social Security taxation limit did not increase over 2010. Whee! Photo by Wikipedia
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The Legislation Page
If you haven’t done so recently, you should check out the Legislation page on this blog. I’ve recently updated the summaries listed here, plus this is where you’ll find the coming tax law changes that you should be aware of. You can check back here regularly to find out about major legislation affecting your financial future, including healthcare, retirement plans, jobs, and taxes. As always, if you have questions about any of the information listed, just let me know!
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New Opportunities to “Roth”
Recently one of the tenets of the Small Business Jobs Act of 2010 came into effect, providing you with additional opportunities to set aside funds in a Roth account – not a Roth IRA, but rather a “designated Roth account”, often referred to as a Roth 401(k) or Roth 403(b). Designated Roth accounts are also often referred to as DRACs – just to keep the acronym train rolling. The way the new law works is that, if you have a 401(k) or 403(b) (the traditional kind), you can roll over or convert some of your funds to a DRAC while the account is still active – as long as your plan is set up to allow in-plan distributions of this variety. The eligible rollover distribution (ERD) must be made: after September 27, 2010; from a non-designated Roth account in the same plan, meaning your traditional 401(k) or 403(b); because of […]
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Expanded Adoption Credit Available for Tax Year 2010
The Affordable Care Act raises the maximum adoption credit to $13,170 per child, up from $12,150 in 2009. It also makes the credit refundable, meaning that eligible taxpayers can get it even if they owe no tax for that year. In general, the credit is based upon the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. Income limits and other special rules apply. In addition to filling our Form 8839, Qualified Adoption Expenses, eligible taxpayers must include with their 2010 tax returns one or more adoption-related documents, detailed in the guidance from the IRS. The documentation requirements, designed to ensure that taxpayers properly claim the credit, mean that taxpayers claiming the credit will have to file paper tax returns. Normally, it takes six to eight weeks to get a refund claimed on a complete and accurate paper return where […]
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Tax Scams You Need to Know About
Each year, the IRS produces a list of tax scams that they have uncovered – which they call the Dirty Dozen. Unfortunately, this Dirty Dozen doesn’t star Lee Marvin (or any of the others), and it’s nowhere near as much fun to help you while away a Sunday afternoon. No, these are illegal activities that you need to be aware of, because you can be caught off-guard by some of these, as they can be quite sophisticated, appearing to be legitimate and above-board. As with all situations, if it seems too good to be true, it probably is. The list below is copied in toto from IRS’ Notice IR-2010-32. Return Preparer Fraud Dishonest return preparers can cause trouble for taxpayers who fall victim to their ploys. Such preparers derive financial gain by skimming a portion of their clients’ refunds, charging inflated fees for return preparation services and attracting new clients […]
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The One Downside to the File and Suspend Tactic
Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. Some time ago I wrote about The File And Suspend Tactic for Social Security Benefits. Briefly, this is where you file for your Social Security benefit, most often at your Full Retirement Age (FRA), and then suspend payments, so that your spouse can begin taking the Spousal Benefit based upon your FRA benefit amount. You then delay receiving your benefit until age 70, maximizing your lifetime (and potentially your spouse’s Survivorship) benefits. There is one downside to the File and Suspend tactic, though: since you have filed, any […]
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Charitable Contributions From Your IRA – 2010 and Beyond
12/19/2010 – with the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, the provision for an IRA owner who is at least age 70½ to make a direct charitable contribution of up to $100,000 from his or her IRA has been extended through the end of 2011. Such a direct contribution can be used to satisfy the IRA owner’s Required Minimum Distribution. See the article Charitable Contributions from Your IRA in 2010 and 2011 for more details. Photo by mikebaird
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Hiring Incentives to Restore Employment Act (HIRE Act) of 2010
I’ve just released, in the Legislation section of this site, a review of the HIRE Act 2010’s primary provisions. The primary benefits of this Act are 1) the exemption from OASDI (Social Security) withholding tax for the remainder of 2010 for employers who hire folks who have been unemployed for 60 days prior to their hiring; plus 2) a tax credit for retaining those same employees for at least 52 consecutive weeks at the same level of pay or more. The Act also extended one of the expired provisions from last year – known as a Section 179 expense limit, which is a special method of accounting for otherwise depreciable items via direct expense in the first year. This provision simply extended the more liberal limit from the previous year. As always, consult your tax advisor for more information. Photo by jay
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The File and Suspend Tactic for Social Security Benefits
Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. This is another provision of the Social Security system that is filed under the “Little Known Facts” section – although it is becoming more known these days. How it works and what’s important about it is the subject of this article. How File and Suspend Works and Why It’s Important Any worker can establish a benefit amount by applying at any time after Full Retirement Age – but he or she doesn’t have to continue receiving that benefit. The worker can immediately suspend the receipt of benefits, so […]
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A Little-Known Social Security Spousal Benefit Option
Most everyone is familiar with the concept of Social Security Spousal Benefits – if not, click this link for a complete explanation. In this article, we’ll be discussing an option that is available to all married recipients of Social Security retirement benefits – but you might not have thought of it. For most all married couples, it makes the most sense for the spouse with the higher wage base – that is, the spouse that has earned the most money throughout his or her working career – to delay receiving Social Security retirement benefits as long as possible. As described in the article about credits for delaying Social Security benefits, each year that you delay receiving your Social Security retirement benefit past your full retirement age (FRA) can result in up to an 8% increase in your benefit amount. When delaying like this, it often also makes sense for the […]
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Coming Soon: No Change For the Financial Services Consumer If FatCats Get Their Way
We talked about this issue of the accountability standards for financial professionals some time ago (click here to get the background). Unfortunately, it seems that the big money and best interests of the large brokerages, banks, and insurance companies is turning the tide against the proposed fiduciary standard for all financial professionals. The fiduciary standard has long been sought after by consumer advocates, as the great majority of financial professionals are held to a much lower standard of care – one that often leaves the consumer of financial services exposed to higher costs and a low likelihood of advice being in his or her best interests. Last year, proposals were offered in Congress to require the fiduciary standard of all regulated financial professionals – which is a step in the right direction. However, intense lobbying efforts by the fatcats, the heavyweights of the financial services industry (think banks, brokerages, and […]
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Understanding the 2010 Estate Tax Repeal
The start of a new year often signals a time for change–especially when it comes to taxes, and 2010 has brought some major changes. As of January 1, the federal estate and generation-skipping transfer (GST) taxes are repealed, and the step-up in basis rule is modified for 2010. While it’s possible (and some believe very likely) that Congress will reinstate these taxes, until that time, it’s important to understand these significant federal tax law changes and how they might affect you. Federal estate tax repeal In 2009, the top estate tax rate was 45%, and estates received an exclusion of $3.5 million, (meaning that up to $3.5 million of assets were exempt from estate tax). However, as part of the tax cuts initiated in 2001, the estate tax is repealed for 2010 but is scheduled to return in 2011, albeit with a reduced $1 million exclusion and an increased top […]
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2010 IRA MAGI Limits for a Filing Status of Married Filing Separately
2010 IRA MAGI Limits for a Filing Status of Married Filing Separately Note: for the purposes of IRA MAGI qualification, a person filing as Married Filing Separately, who did not live with his or her spouse during the tax year, is considered Single and will use the information on that page to determine eligibility. For a Traditional IRA (Filing Status Married Filing Separately): If you are not covered by a retirement plan at your job and your spouse is not covered by a retirement plan, there is no MAGI limitation on your deductible contributions. If you are covered by a retirement plan at your job and your MAGI is less than $10,000, you are entitled to a partial deduction, reduced by 50% for every dollar (or 60% if over age 50), and rounded up to the nearest $10. If the amount works out to less than $200, you are allowed […]
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2010 IRA MAGI Limits for IRAs – Single or Head of Household
2010 IRA MAGI Limits for a Filing Status of Single or Head of Household Note: for the purposes of IRA MAGI qualification, a person filing as Married Filing Separately, who did not live with his or her spouse during the tax year, is considered Single and will use the information on this page to determine eligibility. For a Traditional IRA (Filing Status Single or Head of Household): If you are not covered by a retirement plan at your job, there is no MAGI limitation on your deductible contributions. If you are covered by a retirement plan at work, if your MAGI is $56,000 or less, there is also no limitation on your deductible contributions to a traditional IRA. If you are covered by a retirement plan at your job and your MAGI is more than $56,000 but less than $66,000, you are entitled to a partial deduction, reduced […]
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2010 Year MAGI Limits for IRAs – Married Filing Jointly or Qualifying Widow(er)
2010 IRA MAGI Limits for a Filing Status of Married Filing Jointly or Qualifying Widow(er) Note: for the purposes of IRA MAGI qualification, a person filing as Married Filing Separately, who did not live with his or her spouse during the tax year, is considered Single and will use the information on that page to determine eligibility. For a Traditional IRA (Filing Status Married Filing Jointly or Qualifying Widow(er)): If you are not covered by a retirement plan at your job and your spouse is not covered by a retirement plan, there is no MAGI limitation on your deductible contributions. If you are covered by a retirement plan at work, and your MAGI is $89,000 or less, there is also no limitation on your deductible contributions to a traditional IRA. If you are covered by a retirement plan at your job and your MAGI is more than $89,000 but less […]
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Review of 2009 Stats
Ed. Note: taking a breather from our normal business of posting retirement, tax and other personal financial planning topics to report on the blog itself and the statistics we’ve seen in this, the 6th year of publication for the blog. We’ll be back to our regular programming with the next entry. – jb Over the past year, this blog has undergone a few major changes… I upgraded the format to WordPress; then added the IRA Owner’s Manual, reorganizing all those IRA posts into a coherent manual; a summary, chapter by chapter, of the seminal book “The Richest Man In Babylon”; plus I started writing more – generally adding a new post every other day. Planned for 2010: more of all the yummy income tax, IRA, and other retirement-related and investment/financial planning articles that you’ve come to expect; likely a Social Security Owner’s Manual and a 401(k) Owner’s Manual (along the […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.