Q. We are considering establishing revocable trust. Should I include co-holding accounts?
A. This is a question to discuss with an attorney with trust expertise. It has its advantages and disadvantages. For example, one advantage is that it avoids probate. However, there are drawbacks. For example, changing the terms of a trust once established is complicated and expensive. You need the advice of an experienced lawyer before including a joint account in a revocable trust.
Q. A recent column showed that if you have a money market account in a state that evaluates the state’s income tax on money market income, there are tax disadvantages. We understand that we are permitted to obtain credits for the amount of money market accounts that are invested in US government securities. Is that correct?
A. I ran a question from Ed Slott, a CPA and expert in this field. He agreed that you are permitted to receive credits in US government issued securities held in your money market account. Some financial institutions will notify investors at the end of the year of the percentage of securities in their money market portfolio issued by the US government. Other financial institutions such as Vanguard should not spell it out for shareholders. However, they maintain this information and provide it to the shareholders of the website. The bottom row means that if you live in a state that evaluates the state’s income tax on income from securities and have income from a financial market account, you need to provide this information to your financial institution and ask if you can minimize the state’s income tax.
Q. I am confused even if I had the advantage of contributing to charity, as I don’t need to take a minimum distribution from the IRA after reaching 70 1/2 using a qualified charitable distribution (QCD). I have read a variety of conclusions. Some sources show that there is no tax advantage. Your line showed you that there are tax benefits. Which is correct?
A. There are clear tax benefits. Ed Slot points out that contributing to a qualified charity via QCD can actually multiply the amount of QCD by the margin tax bracket, as it is permitted to reduce the adjusted income just by QCD contributions. The IRS agrees.
Q. In a recent column, I proposed that readers contact Congress representatives and pass laws that provide more revenue for Social Security. Isn’t it true that recent laws have not affected social security regulations?
A. That’s correct. However, the law passed at the end of 2024 increased the profits of Social Security beneficiaries by hundreds of millions of dollars a year to eliminate the Windfall Elimination Provision (WEP) and the government’s pension offset (GPO). The new law passed in 2025 did not provide additional benefits to Social Security participants, but the law did not provide the government with a new source of income related to Social Security. If there is no major change in social security regulations over the next few years, there is a high possibility that future social security benefits will need to be reduced.
Elliot Raphaelson welcomes your questions and comments at rapelliot@gmail.com.
Original issue: August 1, 2025, 5:11pm EDT
