Did you elect to take Social Security benefits before your full retirement age? If you did and are now looking for extra income, there may be an answer. Once you reach full retirement age, you can pay back the money you have received and reapply for full retirement benefits.Although you can collect Social Security benefits between age 62 and your full retirement age, if you do, your benefits will be lower. For example, if you were born in 1944 and decide to retire and start collecting social security benefits at age 62, four years before your full retirement age of 66, your total benefit reduction is 25 percent. If your full benefit was to be $1,000 a month, your reduced benefit will be $750.

A little-known provision of Social Security allows you to withdraw your application for early benefits and reapply for your full benefits. The catch is that you must be able to pay back all the money you received so far. However, because you do not have to pay any interest on the benefits you received, if you can find the money to repay the benefits, it may be worth it. You could think of it as an interest-free loan.

If this is something you’re interested in exploring, you should contact your financial advisor and/or your CPA to determine if this option might make sense for your specific situation.

An 88-year-old California widow is challenging an attempt by her continuing care retirement community (CCRC) to move her from her private apartment to an assisted living unit. If she is successful, the outcome could set a legal precedent for more than 5 million Americans living in retirement communities, CCRCs, and assisted living facilities.

In 1991, Sally Herriot and her husband, John, paid a $180,000 non-refundable entrance fee to Channing House, a Palo Alto that offers residents a continuum of care, from independent living to skilled nursing units. As is typical of CCRC contracts, the Herriot’s admission agreement gave Channing House’s administrators the right to determine the appropriate level of care for the couple and the authority to move either of them into an assisted living unit or a skilled nursing facility if and when it determined they needed more care.

Mr. Herriot died in 2005. Last year, Channing House notified Mrs. Herriot — who uses a walker, needs help getting dressed and has problems with her eyes — of their intention to move her from her spacious ninth-floor apartment with a covered balcony to a much smaller, hospital-like assisted-living unit where she would share a room but also be served by a trained nursing staff. Mrs. Herriot resisted, saying that with the help of the round-the-clock private aides she hires herself, she has everything she needs and does not require a higher level of care.

Mrs. Herriot’s attorneys, Michael Allen and Susan Silverstein (who is with AARP), filed a lawsuit alleging that by forcing Mrs. Herriot to move, Channing House is violating anti-discrimination housing and disability laws. Channing House’s executive director, Carl Braginsky, counters that decisions to move residents from one level of care to another are made only after careful consideration and consultation with medical staff. Paul Gordon, one of Channing House’s attorneys, rejected as “insulting and misleading” Mrs. Herriot’s attorneys’ assertions that such decisions are motivated by the opportunity for financial gain, such as from the sale of Mrs. Herriot’s now greatly-appreciated apartment.

The result of the case could have lasting repercussions on how America’s burgeoning population of seniors is allowed to age. “If Sally Herriot can be forced to move, then it undermines the whole concept of aging in place,” her attorney Michael Allen told the San Francisco Chronicle.

Lawyers on both sides are scheduled to begin mediation in April, and considering that CCRCs are in the business of marketing peace of mind, Channing House may have additional incentives to avoid a trial.

For those wishing to make charitable donations from their IRA accounts, dealing with the resulting tax issues just got a lot easier. In August, Congress passed, and President Bush signed, the Pension Protection Act of 2006. Touted as the most significant overhaul of the pension system in the past 30 years, one provision of the law changes how charitable donations are taxed.

Previously, those wishing to make charitable donations using money in their IRA accounts were required to withdraw funds from their IRA and pay income tax on the withdrawal before they could take a charitable donation deduction on their annual tax returns. But under the new law, so long as the donation is transferred directly from an IRA or rollover IRA account to an eligible public charity, the donor doesn’t have to pay any income tax on the withdrawal at all. As far as the federal government is concerned, money donated to the charity simply is not income. (But note that the transfer is no longer eligible for the charitable tax deduction, either.)

It remains to be seen, however, whether such withdrawals for charitable purposes will count toward an individual’s minimum IRA distribution requirements for the year. If the qualifying donations do not count toward the distribution amounts, then donors will be required to withdraw more funds from their IRA accounts, and these funds will be subject to income tax. Unfortunately, the law is not clear on this issue.

Other requirements of the new charitable donation rule are clearer. They include:

- The donor must be 70 ½ years old.
- There is a $100,000 annual limit on donations.
- The donations may only be made from an IRA or rollover IRA account. Donations from other   retirement accounts, such as a 401(k), do not qualify.
- The organization receiving the donation must be a qualifying public charity. Donations to private foundations, supporting organizations, trusts established for both charitable and non-charitable purposes, or other funds over which the donor may have some advisory control do not qualify.
- The transfer must be made directly from the IRA account to the qualifying organization. This is ordinarily done by instructing the brokerage firm holding the IRA to make the transfer. If the donor receives the funds from the IRA and then donates them to charity, they will be subject to the income tax.

IRA holders can take advantage of the charitable donations provision until it expires on December 31, 2007.