Answering Listener Questions about Security Theft, Double-Dipping Donations, and Tariff Checks for Seniors
When was the last time you checked your penny jar?
If it's looking a little emptier than usual, that might be because we're in the middle of a penny shortage!
The U.S. Mint has ceased production of the penny because the cost of making one ($0.0369) is now almost four times what it’s worth as legal tender.
While this is yet another step towards a more digital, cashless economy, you might want to take a look at that jar before you bring it down to the bank. Having fewer pennies in circulation could drive up the value of some rare pennies, like the $2.4 million 1943-D Lincoln Wheat Cent!
With more and more of our financial lives moving online, it’s becoming more and more important to stay vigilant against potential scams and stay current on the rules.
As we discuss on today’s show, one wrong click could share valuable information with a crook or trigger some unintended tax consequences – especially if you’re managing your money solo.
1. "I discovered that nine securities valued at about $120,000 had been transferred out of my wife's Roth IRA at Vanguard about four days earlier without our authorization. These transfers were made to an account managed by Merrill. The firms investigated and our securities were returned, but we still don't entirely understand how this happened and whether Merrill took the proper precautions."
This question comes from a New York Times article that was forwarded to us by a Keen Wealth client who was interested in our take on the situation, and the broader cybersecurity issues for all investors.
While we don't know the exact details, I'd suspect that a fraudster stole this Vanguard client's identity (name, address, date of birth, Social Security number) and used it to open a brokerage account at Merrill. Then, taking advantage of the Automated Customer Account Transfer (ACAT) service, the fraudster requested a transfer to the new Merrill account. The system must have seen matching owner credentials and executed the transfer without flagging it for anything suspicious.
Cybercrimes like this are rare. There are multiple steps involved, and several things need to line up perfectly for the crook. Anyone who is following cybersecurity basics (using passphrases instead of simple passwords, deleting suspicious texts and emails instead of clicking on them, etc.) probably has a good baseline of defense around their investment accounts.
But I do think this story highlights the difference between investing solo via a custodian and working with a fiduciary advisor.
According to the Times, the victim was a DIY investor. Maybe they made automatic deposits into their accounts every month. Maybe those accounts had some sophisticated AI managing trades. Maybe the accounts were even building wealth and helping that person secure retirement.
What those accounts and the victim didn't have was a human advisor who knew the person, who had worked with them on a comprehensive plan, and who would have noticed $120,000 in securities on the move.
At Keen Wealth, we monitor client accounts daily. If we did see a transfer request that we didn't initiate, we would pick up the phone and confirm any activity that's out of the ordinary. We've gone so far as to initiate wellness checks with local authorities on clients we haven't been able to reach. That's how well we know our clients. That's how seriously we take their cybersecurity. And that's how much we care about their personal and financial well-being.
2. "I use qualified charitable deductions (QCDs). I write checks from my IRA to reduce my taxable federal income. Some of these checks go to qualified state charities that offer state income tax credits. Is this correct to use on my tax return? Or am I possibly double-dipping?"
The IRS has rules around "economic benefits" received in exchange for any charitable donation.
Let's say you are attending a charity gala. You buy a $200 ticket for dinner, and you also donate $500 to the host charity via a check. You can deduct the $500, because you didn't receive anything back for your donation. You can't deduct your $200 ticket because you received a meal.
According to the IRS's rules, if a state tax credit exceeds 15% of the donation value, it is considered an economic benefit that reduces your federal deduction. Since a QCD needs to be a fully deductible donation, receiving a state tax credit could technically disqualify the QCD.
To avoid double-dipping and maximize potential benefits from charitable giving, seniors 70 ½ and older who are eligible for QCDs might work with their advisor on two separate strategies:
For Federal Tax Deductions: Use your IRA for standard QCDs to charities that do not offer state tax credits.
For State Tax Credits: Instead of using a QCD, donate appreciated stock from a brokerage account or cash.
3. "I have seen people posting about a $2,000 check that seniors might be getting. Is there anything out there about potential checks?"
President Trump has floated the idea of sending $2,000 "tariff dividend" checks to Americans sometime this year. But there aren't any specifics about the proposal, and it's highly unlikely that President Trump would be able to send out checks without Congressional action.
These $2,000 checks would, in theory, go to all eligible Americans, not just seniors. So, the fact that this listener has seen posts about "checks for seniors" raises a red flag. If anyone contacts you or an older loved one about needing to "register" for their “senior check,” you're dealing with a scammer.
It's also possible that some folks are confusing the tariff dividend checks with two new government programs that are real.
The first is a $6,000 "Senior Bonus" tax deduction.
The second is Trump Accounts for children born between 2025 and 2028, which are supposed to launch in July. We're still waiting on the details, but eligible parents can register for more information on the program's government website.
Thanks so much to our listeners who sent in today’s questions. If you have a topic you’d like us to discuss on a future episode, or if you want to learn more about Keen Wealth’s comprehensive planning process, click here to get in touch with my team.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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