We've received a lot of email inquiries on recent legislation regarding Health Savings Accounts (HSA).  Make sure to read some of the recent posts on our site but here's another quick recap:

HSA contribution limits did change in 2007.

• $2,850 for individual coverage
• $5,650 for family coverage
• If you're above age 55 an additional $800 catch-up provision

The recent law also allows a one time 'rollover" or contribution from an IRA to a HSA account.  The contribution must be made in a direct trustee-to-trustee transfer.  (Your IRA provider needs to send the money directly.)  The transfer is limited to the maximum HSA contribution for the year and is not allowed as a deduction.

I just learned from this recent article the one-time funding from an IRA account is called a qualified health savings account funding distribution, or QHSAFD.   Financial planner Natalie Choate provides a detailed look at this one time IRA transfer at CBSMarketWatch.

You can always expect more mail in late January. 

Most financial institutions are required to start sending year-end statements and tax documents.  Your IRA custodian will be sending out form 5498 listing your IRA balance and contributions.  You may receive a1099-R if you took a distribution from your IRA  or employer plan.  And, if you receive Social Security, you'll be receiving the SSA-1099.  Here's an explanation of the the SSA-1099.

The 1099 Benefit Statement, mailed in January, reports the amount of benefits a person has received in the past year; these statements are sent only to individuals who received Social Security benefits in the previous year — so you will receive one this month only if you were paid Social Security benefits in 2006.

Beneficiaries will need this statement to complete their federal return and to find out whether their benefits are subject to income tax. Generally, you have to pay taxes on your Social Security benefits if your total annual income is more than $25,000, or $32,000 for a couple. Fewer than a third of beneficiaries pay taxes on their benefits.

Your 401k statement will provide more information and it will be mailed out more frequently.  

USAToday explains changes to 401k statements.

A little-noticed provision of the new pension law requires that traditional 401(k) account statements include, starting in 2007, advice about the need to diversify your portfolio and avoid loading up on your company's stock.

Employers and financial providers also will have to send 401(k) statements to employees every quarter, rather than annually, as some companies had done.

The first drawing is on January 15.  Send us an e-mail!!!

Employee's in state government, health and education have less saved for retirement.  I'm surprised- but a recent study by Fidelity Investments of 403b, and 457 plans they manage indicates average savings are lagging 401k participants.

That means the workers need to save more on their own, yet the average balance in workers' defined contribution plans -- such as 403b plans, which take their name from a section of the federal tax code -- is $48,000. That's 23 percent less than the average $62,000 saved by workers in the corporate sector, the study said.

Here's a list of web seminars on Medicare topics:

Thursday Jan 11,   Understanding Your Medicare Health Options

Thursday Feb 8,     Part D Appeals

Thursday Mar 8,     Home Health Care

Thursday April 12,  Durable Medical Equipment

The Medicare Rights Center provides web sessions each month.  Medicare basics seminar link.

We always mention web sites that help you crunch your "retirement number".   Tools that help you determine just how much you'll need to save for retirement are being developed by several mutual fund companies and financial providers right now.  

 Here's one more approach, see how you score on the T. Rowe Price retirement report card.

T. Rowe Price offers these savings benchmarks to help understand where savers stand today:

Give yourself an A if you're at retirement and have 11 times income in your savings account; it will replace 52 percent of your current salary in retirement (Social Security and any employer pensions would be on top of that). Give yourself a B if you've got 10 times' final pay, which will replace 47 percent of income. Anything less and you're probably looking at a different lifestyle in retirement.

If retirement is 10 years out, give yourself an A if you've got six times salary, which will mean you're on track to replace 47 percent of final pay. Give yourself a B if you have five times (41 percent replacement); C for three times (28 percent); and a D for one time your salary (15 percent). For anything less, give yourself an F.

Looks like the PBGC, the federal government agency that insures pensions became the trustee of the Delta plan on December 31.  The PBGC took over 94 pension plans last year including plans at Aloha Airlines, Oneida, and Plymouth Rubber Company.

Pension benefits are owed to more than 13,000 active and retired pilots. A separate plan, the Delta Air Lines Retirement Plan, is still run by Delta for its ground employees and flight attendants.

The plan, which ended on Sept. 2, has $1.7 billion in assets to cover more than $4.7 billion in benefit liabilities for pilots at Atlanta-based Delta, the largest U.S. airline in bankruptcy, the Pension Benefit Guaranty Corp. said today in a statement.

Bloomberg provides an update on Delta pension plan.

Get a jump on the new year!....go ahead and make a 2007 contribution into an IRA.   The contribution limits for IRA's are $4,000 if you're under age 50 and $5,000 if you are above age 50.  It's the same as last year and remember, you have until April 15th to make your 2006 contribution.   Check your recent IRA statement and see if it lists your contribution amounts or call your IRA custodian.

Contribution limits have changed slightly for 401k, 403b and 457 plans.  The maximum amount you can contribute increases to $15,500 from $15,000 in 2006.  If you're 50 or older by the end of the year you're allowed to contribute an extra $5,000 (called a catch-up) for a total of $20,500.

Repeat after me:  max out your 401k...max out your IRA!

Happy New Years Everyone!

Santa left extra copies of the new Ben Stein book "Yes, You Can Still Retire Comfortably", under the tree last week. (No, I didn't get a plasma tv.)   So, if your New Year's resolution is to get on track with retirement or focus on financial planning....send us an e-mail.   We'll give away copies of this book each month starting January 15th.

We would love to hear your comments or suggestions too!

Here's a quick recap of markets in 2006:

For 2006, the Dow average climbed 16.3 percent for the biggest gain among the three major U.S. gauges. The S&P 500 was next with a 13.6 percent jump, while the Nasdaq had the smallest advance, rising 9.5 percent.

Congress will probably put 401k fees under scrutiny in 2007.

Conversations with key Capitol Hill staff and lobbyists in the last days of the 109th session suggest that at least three retirement issues are likely to surface on the Congressional agenda between now and the rush to the 2008 elections. They are: requiring more disclosure of the fees you pay for your 401(k) investments, requiring the federal government to negotiate Medicare Part D prescription prices, and reforming Social Security.

BusinessWeek.com provides a summary.