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# Taking advantage of various strategies for your nest egg
- URL: https://www.smdp.com/taking-advantage-of-various-strategies-for-your-nest-egg/
- Published: 2007-10-10T15:00:00.000Z
- Updated: 2026-10-25T01:06:00.000Z
- Author: Guest Author
- Tags: Opinion, Santa Monica, #archive-import

*By Brian Hepp Market Matters*

WHILE TAX TIME SEEMS FAR AWAY AT THIS POINT, it’s never too early to start planning for that inevitable annual ritual. And even though the tax laws for 2007 seem relatively unchanged from a year ago, smart investors will see that many changes from the far-reaching tax legislation of 2001 are starting to come into play this year and next. In addition to the basic annual deadlines associated with taxes and investments, there are several specific things investors need to watch out for in both 2007 and 2008\. Following are some tax-saving tips you may be able to take advantage of.

THE ‘KIDDIE TAX’ IS GROWING For those with dependent children, or with children or grandchildren nearing college age, it’s important to be aware that Congress is expanding the reach of the so-called “kiddie tax” rules. For 2007, these rules state that any unearned income in excess of $1,700 for a child who has not reached age 18 (increased in 2006 from age 14) and has at least one living parent at the end of the tax year is taxed at the child’s rate or parents’ top marginal rate, whichever is higher. Effective with the 2008 tax year, the kiddie tax rules will apply until the child turns age 19, and if the child continues to be a full-time student, the rules will generally apply until he or she reaches age 24\. While this is all rapidly approaching, the fact that these additional rules do not come into play until 2008 means there are plenty of planning opportunities available for 2007.

GIFTING APPRECIATED ASSETS Because of the zero percent federal tax rate on eligible dividends and long-term capital gains for taxpayers in the 10 percent and 15 percent tax brackets from 2008 through 2010, investors should think about gifting appreciated securities to adult children or grandchildren. During those years, that child or grandchild could sell the securities and potentially incur no capital gains tax. But remember key facts: when you gift appreciated securities, the recipient takes on both your cost basis and holding period; also, pay particular attention to changing kiddie tax rules noted above.

ROLL QUALIFIED PLAN ASSETS DIRECTLY INTO A ROTH IRA If you would like to move money from an employer-sponsored plan, such as a 401(k), to a Roth IRA, there’s good news for you in 2008\. If you qualify, you will have the opportunity to move such funds directly to a Roth IRA without first rolling them into a traditional IRA and then converting that IRA to a Roth (the process currently in place for 2007).

IRA CONTRIBUTION, ELIGIBILITY AND DEDUCTIBILITY In past years, it was easy to put IRA contributions on “auto pilot,” so to speak, knowing how much you could contribute each year, the amount that was deductible and whether you were eligible to contribute to a Roth IRA. But beginning in 2008, these limits will be inflation adjusted — perhaps even annually — so you’ll need to review your individual IRA situation at least annually to keep up with the most current contribution limits and eligibility provisions.

These are just a few of the things that investors need to keep an eye out for when it comes to tax planning.

BRIAN HEPP is a financial consultant and (310) 453-0077 or at

*Originally published in the Santa Monica Daily Press print edition on October 10, 2007.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/101007.pdf?ref=smdp.com)