Posts filed under “Think Tank”
IRA Contributions Held Up by Washington Turkeys
David R. Kotok
Cumberland Advisors November 26, 2014
The spirit of Thanksgiving notwithstanding, our dysfunctional federal government is in the throes of turmoil. President Obama and Senate Majority Leader (soon to be minority leader) Harry Reid are embroiled in an outright war. In the House, a renegade from the Tea Party is derailing attempts of the Boehner-led middle to achieve some reasonable year-end activity. In the old, new, “wannabe,” and “gonnabe” Senate, all are trying to maneuver while they use the lame-duck session for many decorations on their personal Christmas trees.
There is a mess in Washington, DC. Add to that mess the victims of current policy affecting every US charity. The special tax-extender provision that allows Americans with IRAs (only IRAs and not 401ks) to give money to charities expired on December 31, 2013. Right now, that provision is not in the US tax code.
Universities, hospitals, supportive charities, and every other correct and properly filed charitable source waits while Congress makes a mess.
If you are 70½ years old or older and have an IRA, you were allowed to give up to $100,000 per year to a charity. You could reduce your required minimum distribution by the amounts of the gifts. The gifts that you gave from your IRA to charities were not tax deductible. You did not have to take the distribution as taxable income. The whole transaction was a wash under the old law.
This wonderful provision that helped to fund charitable activity throughout the US, in every Congressional district and in every state, expired, and the House, Senate, and president have not found a way to restore it for all Americans who would like to do charitable acts.
Here we are at Thanksgiving time, with a few weeks left in the year. It’s the season of the spirit of giving and support, yet we have no provision in the law to make sizable, needful charitable gifts possible.
Every person over age 70½ who has an IRA and is seeking to do charitable acts should consult a tax advisor on how to handle this matter.
The lame-duck idiots could pass the tax-extender provision tomorrow. In the Senate, the majority wanted to, and Senator Harry Reid held it up. The House came together in a bipartisan bill and passed a version of this tax extender. The president will not permit it or make a deal. Everyone is in a shooting war with each other.
What should we do? It’s simple. Call your Congressional Representative’s and Senator’s offices and voice your concern in no uncertain terms. Do it every day. If you see them at a holiday event, confront them. Tell everyone around them that they are holding up charitable giving to local charities. Make every Congressman and Senator have to experience public pain every time you see them. I have already done this and will continue to do this.
The provision has not passed the Congress or been signed by the president. We will keep readers advised if there is a change.
In the meantime, let me wish all a happy Thanksgiving. If I could make one Thanksgiving wish, it would be that this season could be a happier and less anxious one for those in need whom charities all across the US seek to serve. This holiday season they do their work with one hand tied behind their backs, metaphorically speaking, as generosity is held hostage by selfish bull-headedness and dysfunction in DC. Let’s work together to change that, and now.
David R. Kotok, Chairman and Chief Investment Officer
Category: Think Tank
3-Star General Who Helped Lead War On Terror: We’ve Lost the Wars In Iraq and Afghanistan “That Would Be Four Times Biting That Poison Apple: Vietnam, Afghanistan, Iraq and Then Iraq Again” 3-star General Daniel Bolger helped to lead the wars in Iraq and Afghanistan. The first sentence of his new book - Why We Lost:…Read More
Gauging the Impact of the Small Business Lending Fund Kristle Cortés and Sara Millington Economic Trends, 11.25.14 ~~~~ The Small Business Lending Fund (SBLF) was created in 2010 to encourage small business lending by providing capital to qualified community banks. The Treasury provides banks with capital by purchasing Tier 1-qualifying preferred stock or…Read More
The Effect of Oil Price Declines on Consumer Prices Ben Craig and Sara Millington 11.19.14 Oil prices have declined significantly in recent weeks, reaching levels not seen in several years. At the same time, the year-over-year percent change in the most widely known measure of inflation, the Consumer Price Index (CPI), came…Read More
The Risks to the Inflation Outlook Vasco Cúrdia FRBSF Economic Letter 2014-34 November 17, 2014 Although inflation is currently low, some commentators fear that continued highly accommodative monetary policy may lead to a surge in inflation. However, projections that account for the different policy tools used by the Federal Reserve suggest…Read More
Stocks Headed Higher David R. Kotok November 17, 2014 We open this commentary with a link to the October 31 policy statement of the Government Pension Investment Fund of Japan. Any serious investor who has not read it is invited to go to this link right now. Simply put, one of the G4…Read More
Inflation Experience and Inflation Expectations: Dispersion and Disagreement Within Demographic Groups
2015 Is Shaping Up to Be a “Turkey” of a Year for the U.S. Economy and Stock Market Paul L. Kasriel November 17, 2014 On November 24, 2013, I penned a piece entitled “Unless the Fed Goes Cold Turkey on Us, Expect a Bountiful Economic Harvest for Thanksgiving 2014”. In it I argued that…Read More
Category: Think Tank