Wealthiest Taxpayers Accounted for 7 Percent of Charitable Gifts: Gifts by the 400 wealthiest taxpayers in the U.S. accounted for about 7 percent of all charitable gifts reported on income tax returns for the year 2000, according to the NewTithing Group, a nonprofit donor education and research organization.
However, the San Francisco-based group said that the top 400 American tax filers could have donated an additional $19 billion between 1997 and 2000 without sacrificing their lifestyle by donating, rather than selling, long-term appreciated assets. Its report, which is available at
In 2000, the wealthiest 400 taxpayers donated a combined $10.1 billion to charity, compared to $4.4 billion, or 3.5 percent of all individual giving, in 1999, and $2.4 billion, or 2.4 percent, in 1997. Nearly all of the increase came from gifts of assets.
IRS and Treasury Target Roth IRA Abuses: The Treasury Department and the Internal Revenue Service have issued new guidance aimed at shutting down abuses involving indirect contributions to Roth IRAs.
The guidance, in IRS Notice 2004-8, addresses situations in which value is shifted into an individual’s Roth IRA through transactions involving entities owned by the individual. Notices are published in the Internal Revenue Bulletin.
For example, a business owned by the individual could sell its receivables for less than fair value to a shell corporation owned by the individual’s Roth IRA, a scheme that artificially shifts taxable income away from the individual’s business into the shelter of the Roth IRA structure.
The notice applies to any arrangement that has the effect of transferring value to a Roth IRA corporation comparable to a contribution to a Roth IRA. The IRS may assert that these are “prohibited transactions” under the code rules that disqualify the IRA or impose an excise tax on transactions between an IRA and the individual for whom the IRA is maintained or other disqualified persons with respect to the IRA. Such transactions and any transactions that are substantially similar are identified as “listed transactions,” subject to disclosure and to list keeping and registration requirements, the Treasury said.
Capital Professional Advisors Reaches $2 Billion Mark: Capital Professional Advisors Inc. said that it has reached $2 billion in assets under management. Capital, which was formed in September 2000, is jointly owned by its 15 founding accounting firms and Nationwide Financial Services Inc. Its current offerings include investment advisory, brokerage, insurance, trust services, and both qualified and nonqualified retirement plans.
At the time that the venture was formed, consolidators were taking the accounting profession by storm. The founding firms, which represent some of the nation’s largest, banded together in an effort to buck the consolidation trend and help middle-market firms expand into financial services while remaining independent. Capital’s member firms, which collectively represent $625 million in revenue, include top-ranked firms Clark, Schaefer, Hackett & Co.; Clifton Gunderson; Eide Bailly; Elliott Davis; LarsonAllen; and LeMaster & Daniels.
Employer-Sponsored Plans Are Top Source of Retirement Income: Six in 10 workers surveyed expect their savings in employer-sponsored retirement plans to be their single largest source of future retirement income, according to a study of plan participants by Prudential Financial Inc.
On average, participants expect retirement plans to account for 54 percent of their total retirement income, more than twice as much as they would expect from Social Security (26 percent), according to Prudential Financial’s retirement perceptions study. According to the survey, 48 percent characterized Social Security as a “minor component” or not important to their future retirement income. The majority of respondents (56 percent) use four or fewer investment options, while 19 percent don’t know how many options they put their money in within their plan. Sixteen percent use five or six options, while 10 percent use seven or more.
Prudential polled 1,000 full-time employed men and women ages 21 to 64 who currently participate in 401(k), 403(b), 457 or other plans offered by their employers.
