Wednesday, April 23, 2014

AARP reports on tax-lien debt collection companies; more on reverse mortgages

The AARP is reporting that some municipalities or counties sell delinquent property tax debts to debt-collection companies, which then charge exorbitant interest on the debts and often movers to foreclose on homes, often belonging to seniors and even often without mortgages.  The story by Bill Hogan is printed in the most recent AARP Bulletin and is here.  Many of these problems have occurred in New York State.
Arlington County,, VA, where I live, requires two equal payments on June 15 and Oct. 5, and will assess heavy penalties for even one day of lateness. 
AARP worked with the National Consumer Law Center on this report.  I found another interesting paper at the NCLC, “Subprime Revisited: How Reverse Mortgage Lenders Put Older Homeowners’ Equity at Risk”, link here
I would hate to have to make a living selling these products or collecting debts like this. 

Monday, April 14, 2014

ING sends statement explaining how "MAP-21" reduces pension funding short falls

ING sent to its retirees a handout that explains the significance of the Moving Ahead for Progress in the 21st Century Act, or MAP-21. The Act would allow pension plans to use a 25-year aged of interest rates (rather than a rolling 2-year average), which typically means now that plan liabilities (or funding shortfalls) may be lower and employer contributions may be lower.

The Goctrack reference (S1813) is here

Sunday, April 13, 2014

Many multi-employer pension plans are in serious trouble

The New York Times is reporting Sunday morning that many pooled multiemployer pension plans are on the brink of failure, according to a front page story by Mary Williams Walsh, here.  The pensions had once been thought safer than single plans because the employers have to cover each other.  Now, there is a push to have the PBGC, the Pension Benefit Guaranty Corporation, cover these. 
Larry Buchson has a YouTube video on the problem here.

The plans are supposed to have an anticutback rule, which allows companies to stop continuing contributions but not to reneg on benefits already performed. However plans can be cut for spouses of employees who died before retirement. 

Friday, April 11, 2014

Social Security, and some other agencies, recouping parents' and relatives old debts from current tax refunds!

Social Security has started garnishing tax refunds of taxpayers for relatives’ (usually parents but sometimes siblings or even step-siblings) overpayment debts. In some cases, other agencies are also taking refunds.   Mark Fisher has a front page story in the Washington Post on April 11, “Thousands losing tax refunds to parents’ decades-old debts” in print, but on line more specifically, “Social Security, Treasury target taxpayers for their parents’ decades-old debts”, link here.  The problem seems to have started in 2011 with the lifting of the statute of limitations at ten years on a farm bill.
Agencies are fingerpointing, saying they are doing what is required by law.  Social Security says it has a fiduciary duty to future beneficiaries to collect mainly overpayments it finds.  The news story talked about a Maryland woman who lost almost $3000 in refunds over a debt owed by her father to Social Security, after a complicated family history.  
Social Security seems to look for a descendant with the resources to pay the debt and whom it can find.
It does not seem to matter, in these garnishments, whether the taxpayer had actually inherited some of the relative’s estate.
This has led to litigation, explained in the article.
The Federal Trade Commission says that adult children are not responsible for debts owed by relatives or parents. (There is no federal “filial responsibility law”.)  But government debts, at least insofar as they can be recovered from tax refunds, seem to be an exception.  The FTC has a page here about the issue (link) with enough detail to need a future posting later, perhaps. 
However, if the current subject had set up a grantor trust with which to receive and manage an estate’s assets, then the person would be responsible for all old debts.  Grantor trusts can give enormous tax advantages in certain kinds of circumstances, like where there are uncovered medical or dental expenses, but can lead to higher reported income, and higher effective tax on social security benefits. The estate beneficiary should be as familiar as possible with the parents’ situation and finances before setting up such a trust.
Today, I got a bizarre email from Social Security inviting me to check my statement.  It appears legitimate, although I have to make sure it isn’t spam.  Maybe the email was motivated by this story. 

Update: April 12

The Post now reports (Mar Fisher, p. A4, Saturday) that Senators Barbara Boxer (D-CA) and Barbara Mikulski (D-MD) have asked the Social Security Administration to stop recoupments more than ten years old, and say that there is more evidence that people are even being chased for non-relatives. 

Tuesday, April 01, 2014

Should seniors live alone in big old houses?; Social Security started out racist

On the way to look at some places that may have been using music therapy, including for Alzheimer’s (Drama blog March 25, 2014), I drove past a variety of new senior apartments and communities in Loudoun County, VA, especially around Ashburn. 

I noticed a lot of attractive features of these newer communities.  All utilities completely underground, so as to reduce the risk of disruption due to storms.  Mid rise construction, meaning limited access and better security.  Some communities did look like the kinds of places you could live, go abroad a couple of months and not worry about anything. 

Let’s face it, houses are really for families, not for “retired” (and even “self-employed” older adults working remote from home).  Many more things can go wrong, and learning to deal with fixing infrastructure yourself is a virtue that families try to impart to older kids. 

I can recall, after Mother’s death, I put in an electronic ignition stove, because I didn’t want to have to deal with pilot lights (only had to set it once, back in 2004) or the possibility that gas could accumulate.  I don’t recall that my father ever made learn how to light it, which seems odd in retrospect.  Older urban homes, often dating to the 30s and 40s, are simply riskier.  They have problems that often aren’t talked about much (sometimes undetected lead or asbestos).  But they can put people up, especially after disasters.  I still wonder if preparedness to house people will become a national virtue some day.

One other item comes to mind.  I read somewhere (maybe in “Foreign Affairs”) that Social Security had at one time been a “racist” benefit, with occupations employing many blacks (especially migrants on farms) originally not included back in the 1930s.  That is indeed disturbing.