1. Couples Can
Maximize Social
Security Benefits
By Understanding
Spousal And
Survivor Benefits
2
Right Choices
CARY ROWELL’S
With Retirement
Accounts Can Make
FINANCIAL NEWS
Huge Difference
DIGEST
For Heirs
3
Spending: What
You Need To
Know About
Charitable Giving
4
MONEYLINE
Spending:
No-Haggle
Car Deals
Courtesy of W. Cary Rowell, LUTCF, MBA
I
f just the thought of doing battle with a new-car
dealer makes you want to take the bus, a buying
service may be for you, says Jessica Anderson, a
writer for Kiplinger’s. She checked out a few services
to see how good the deals are. Here are two:
The most popular is Zag (zag.com). Never heard
of it? That’s not surprising—it’s the company behind
the affinity buying services of American Express and
AAA, among others. The service has a free member-
ship perk and offers pre-negotiated prices on new cars
with participating dealers.
To be certified by Zag, dealers must agree to pass
on 100 percent of the cash incentives they get from
manufacturers—including dealer cash. Just choose
W. Cary Rowell, LUTCF, MBA the model, trim level and options. You’ll be offered the lowest prices
Financial Services Professional from three local dealers. You print a certificate with the price and take it
628 Chestnut Centre to the dealer.
Myrtle Beach, SC 29572 Authority Auto (authoritycbs.com) is considered the pinnacle of buying
services. They charge $595 to $1,195, based on the price of the car. But in
(843) 449-7805 addition to finding the car, the service negotiates each part of the transac-
wcrowell@ft.newyorklife.com tion, reviews the contract, and even delivers the vehicle to you.
www.caryrowell.nylagents.com
2. The gifting of stock held receive only your spouse’s
in private companies provides benefits and continue accru-
a bigger tax break now, says ing delayed retirement credits
business valuation expert on your own Social Security
Lance S. Hall. When you give record. You could then file for
nonpublic stock as a gift— your own benefits at a later date
say, to your children—the and receive a higher monthly
IRS typically allows you to benefit based on the effect of
discount the value of such delayed retirement credits.
stock by 30% to 35%. That’s However, you cannot elect to
because the IRS recog- receive spousal benefits below
nizes that it is harder to find
your FRA and later switch to
a buyer for private stock than
your own benefits.
publicly-traded stock. When
Spousal benefits are reduced
public markets are especially
if you file before your own
volatile, as they have been
FRA. For example, if your
lately, the discount is more
likely to be in the 40%-50%
FRA is 66, you could receive
range. That means that you 35 percent of your higher-earn-
can give away more shares ing spouse’s unreduced benefit
without being subject to the at age 62. The amount of the
benefit increases at later ages up to the maximum of 50
federal gift tax. Consult your
financial adviser. Couples Can percent at your FRA.
Reduced student loan
Maximize Social Q: What is the survivor benefit?
brings big tax bill. If a
lender allows a graduate to
Security Benefits A: When a spouse dies, the survivor is entitled to
receive the greater of his or her own benefit, or 100
pay less than the full amount
of a loan, that entire discount By Understanding percent of the spouse’s benefit, including any cost-of-
living increases earned along the way. If the higher-
is considered taxable income
by the IRS. Example: A lender Spousal And earning spouse delays filing until the FRA or beyond,
then the surviving spouse’s lifetime benefits will be
agreed to reduce a student’s
loan by $28,000—so the IRS Survivor Benefits increased substantially.
Maximizing the survivor benefit is an especially
said that the student had By Mark Miller, Tribune Media Services important consideration for women. Men not only tend
I
$28,000 in taxable income. A to be the higher wage earners but also tend to die at
court agreed with the IRS
get a huge number of questions from readers about younger ages than women. In many cases, this means
position. What to do: Discuss
Social Security’s spousal and survivor benefits. that a delayed filing by a man can be a critical way to
any loan forgiveness or other
Rightly so, because these very important features of boost lifetime retirement security for older women—a
changes in debt status with
Social Security can create powerful amplifying effects time of life when overall income can decline sharply.
a knowledgeable financial
that boost lifetime benefits significantly. Social Security provides 90 percent or more of
adviser. Be aware that
the discount is not consid- I’ll answer some of the most frequently-asked ques- income for 47 percent of all elderly unmarried women
ered taxable income if the tions. However, Social Security’s rules are complicated; who receive benefits.
graduate works in certain a visit to your local Social Security office is in order if
professions for set periods you’re planning to file for spousal or survivor benefits. Q: At what age should I apply for survivor
in specified areas (such as a benefits?
teacher in an inner city). Q: What is the spousal benefit, and when A: You can receive full survivor benefits when you
can I receive it? reach your own FRA (typically 66). You can receive
A: As a spouse, you are entitled to receive the survivor benefits as young as age 60, but the benefit
greater of your own benefit or half of your spouse’s will be reduced. According to the Center for Retirement
“The safest way benefit. And many of the rules on spousal benefits Research at Boston College, widow(er)s are guaranteed
to double your revolve around the full retirement age (FRA)—the age at least 71.5 percent of their deceased spouse’s FRA
money is to fold at which you can receive retirement benefits that aren’t benefit if they claim the survivor benefit before their
it over and put it reduced by early filing penalties. FRA, and at least 82.5 percent if they claim the survi-
If you have reached your FRA, you can choose to vor benefit after their FRA.
in your pocket.”
— Kim Hubbard
3. many reasons why you might want to consider doing
Right Choices this: eligible withdrawals are tax-free to you and your
A new Morningstar
ratings program is
beneficiaries; there are no required minimum distribu-
With Retirement tions after you reach 70 1/2; and you can continue to
forward-looking. These
ratings will supplement
make Roth IRA contributions after 70 1/2 if you have
Accounts Can
Morningstar’s star ratings,
earned income. which measure past per-
There are some disadvantages to converting: You
Make Huge
formance. The new system
have to pay income tax on the amount withdrawn from gives a rating of AAA, AA, A,
your traditional retirement accounts at your tax rate that neutral or negative, based on
Difference year. A large conversion can push you into a higher tax various factors not included
in the star ratings—such as
bracket. If you don’t have the funds to pay with assets
For Heirs outside of your retirement accounts, you will be forced
the record and tenure asset
managers, and the culture
to diminish your retirement accounts to pay the taxes.
By Elliott Raphaelson, Tribune Media Services and resources of a parent
Finally, the increased income may have a negative
M
company.
effect on the taxability of your Social Security benefits
any working people spend most of their and on tax deductions.
Apparently mobile
lives saving for retirement in individual Nonetheless, converting traditional retirement assets
banking worries
retirement accounts, 401(k) plans and to a Roth IRA could be a real boon to your beneficia-
smartphone users.
other retirement arrangements. It is very important to ries, especially children and grandchildren, who would Apparently mobile banking
be able to stretch tax-free distri- worries smartphone users.
butions over their life expectan- Smartphone use grew by 42%
cies. Also, paying taxes now on from 2010 to March 2011, but
traditional IRA or 401(k) funds the number of people using
eliminates any uncertainty related the phones for banking has
to future tax rates. You can do a remained virtually unchanged
partial conversion; you do not have according the publication,
to convert everything at once. Bottom Line Journal. To
Slott also points out the impor- stay secure when using
tance of selecting an attorney with mobile banking consider
expertise in estate planning and using antivirus software. Get
retirement accounts. apps from the app store, not
You should not wait until 70 through e-mail links. Don’t
1/2 to make these choices. Do your send banking user names and
financial and estate planning well passwords by text or e-mail.
in advance. The tax laws and estate Avoid transactions when you
planning options are complex. are on a public WiFi network.
consider all implications, including taxes, when you Proper planning will save you and your beneficiaries a
make decisions regarding withdrawals and beneficiary great deal of money. Did you know that the IRS
designations. Here are a few recommendations from Ed has raised standard mileage
Slott, author of “Stay Rick For Life”: rates for the second half of
2011—to 55.5 cents a mile for
n Make sure you fill out the beneficiary form for all
business-related driving? It
your retirement accounts, and keep it up to date. This
also raised the rate for driving
designation will override any provision in your will.
for medical purposes or a
n Choose your beneficiaries with care. Slott empha-
job-required move—to 23.5
sizes the value of stretching out the required distribu-
cents a mile.
tion as long as possible, consistent with your choice
of beneficiaries. For example, suppose a person died
leaving a $2 million dollar retirement account to a son,
aged 40, with a life expectancy of 43.6 years. If the son
made the minimum withdrawal of 2.3 percent a year,
and the account earned 8 percent a year, the account
“A good plan today
would be worth almost $16 million in 44 years. is better than a great
n Determine whether it pays to convert some of
“The moment you reach the future, it’s already the past. plan tomorrow.”
So why should I set money aside to spend yesterday?”
your retirement assets into a Roth IRA. There are — George S. Patton
4. CARY ROWELL’S
FINANCIAL NEWS
DIGEST
628 Chestnut Centre
Myrtle Beach, SC 29572
Cary Rowell is a Registered Representative offering services through NYLIFE Securities LLC., Member FINRA/SPIC. A Licensed Insurance Agency. 200 Meeting Street, Suite 306, Charleston, SC 29401
This publication is provided to our readers as an informational source only. The ideas, opinions and concepts expressed here should not be construed as specific
tax, legal, financial or investment advice. You should consult your professional advisers regarding your particular situation. SMRU 461076
searchable database of those documents.
Spending: What You Let the pros do it. There are also several organizations that
will do the background checking for you, among them the Better
Need To Know About Business Bureau (bbb.org/charity) and Charity Navigator (charitynav-
igator.org). GiveWell (givewell.org) has evaluated fewer charities, but
Charitable Giving it provides an extensive analysis of each one. Donating to internation-
al charities can get tricky
By Michael Stratford, Kiplinger’s
(and you won’t reap any
tax benefits), so stick
W
with U.S.-based charities
atch out for scams. The high-profile nature of some with an international
disasters makes them prime opportunities for con art- scope.
ists. Be especially alert for sound-alike names, newly Claim a tax
formed sites, and forwarded emails claiming to be from disaster break. To deduct your
victims. Think twice before donating money over the phone, and be donation, you must
wary of outlandish claims. It’s disingenuous for a charity to say that itemize your deductions.
100 percent of your donation will go to the victims, because even a Then confirm that you
credit card transaction carries some administrative cost, says Bennett are giving to a qualified
Weiner, chief operating officer of the BBB Wise Giving Alliance. organization (you can
Do a little sleuthing. If you feel strongly about where your search for the charity at
donation should go, earmark the money and ask the charity what irs.gov/app/pub-78). Once you make the donation, keep a record. For
happens once the specific need is met. Alternatively, consider making contributions of $250 or more, you’ll need written acknowledgment.
an unrestricted gift and let the professionals prioritize the projects that You must actually pay your pledge before the end of the year for the
need funding. To see how well the charity is allocating its money, donation to count in that tax year; checks and charges to a credit card
check its IRS Form 990 filings—GuideStar (guidestar.org) has a count even if they don’t clear until after December 31.
