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Subject: persfin-digest V4 #110
Date: Fri, 5 Dec 1997 11:48:39 -0500 (EST)
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persfin-digest Friday, December 5 1997 Volume 04 : Number 110
IN THIS ISSUE:
ADVERTISEMENT: LAN ACCESS TO MCI MAIL
Barry Kaye Plans?
Re: 403-B Plans and Other Questions
overseas Net access - Japan and Nepal?
403-B Plans and Other Questions
IRA conversion clarification
Re: Even more IRA questions - a minor clarification
Re: Roth IRA Conversion Question
Re: Buying Currency
voltage requirements in Tokyo?
Re: 403-B Plans and Other Questions
Roth IRA Conversion at Death?
Low minimum mutual funds
re: Mike Morehouse's Question - Invest in Education
Re: Roth IRA Conversion Question
Re: Mutual Funds and Brokers - Why No Mutual Fund Sale Fees?
Re: Roth IRA Conversion Question
Re: Tax Questions
Small business loan
Portable Retirement Plans (was Re: 403-B Plans...)
*SHORT-TERM* US Treasury bond fund versus Money Market fund?
RE: exchanging money in Japan?
Q. need info on taxes ... - Claim Parents as Dependents?
realized/unrealized values of fund shares?
4 year "spreadout" on 1998 Roth IRA conversions
Re: Portable Retirement Plans (was Re: 403-B Plans...)
Re: Tax Questions - two states
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Date: Fri, 5 Dec 1997 11:13:54 -0500 (EST)
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------------------------------
Date: Fri, 5 Dec 1997 11:15:38 -0500 (EST)
From: "Lester M. Levy, MD" <llevy@hoflink.com>
Subject: Barry Kaye Plans?
<<Barry Kaye has a nationally advertised insurance plan which somehow
"creates unusual wealth" for high networth individuals with wording
which suggests that his plan is somehow unique.
His latest full page ads aimed at individuals with net-worths of >$2M
(not me) somehow strains credibility. Some of his claims include
Tripling your net estate, Increasing the $10K tax free gift to $1M,
Buying life insurance paying nothing now and when you die and Selling
appreciated property without capital gains taxes.
I wonder whether he is selling seminars ($500 to insurance
professionals) and videos ($72) or whether he has some new idea.
>From the ads it appears that that the plan only works if your net worth
exceeds the estate deductable ($600K now increasing to $1M) or whether
it has some real value to with individuals with lower net-worth.
(Editor's Comment - Sounds like an extraordinary wealth building
opportunity for Barry Kaye. -IK)>>
Barry Kaye is indeed quite wealthy. He and his wife have their own doll
house museum on Wilshire blvd just across from the Los Angeles Museum of
Art. I attended a no fee seminar (and bought $50 worth of his books and
a video tape)... it was an interesting performance.
The essence of his plan is to buy single premium universal life
insurance using that part of your assets which consume the uniform
estate and gift tax credit equivalent (now $600,000 and going slowly up
to $1,000,000). The insurance is created under the ownership of the
beneficiary. Because of the uniform credit, there is no gift tax due on
this transfer (but the rest of the estate will be exposed to estate
tax). A husband and wife can buy second to die insurance using their
combined $1,200,000 exemption. If the insured are reasonably young,
under the projections for growth, it is anticipated that a premium of
$600,000 could buy about $2,000,000 face value of insurance, which would
pass free of estate and income taxes to the beneficiaries. So, by
expending the $600,000 before death, one can amass a substantial estate
passing without loss to the heirs. He uses similar technics for passing
property and businesses via trust.
By allowing the growth to occur outside the estate and tax-sheltered,
one saves substantially in taxes. Of course it is subject to the
vagaries of universal life insurance with the potential that projected
investment yields will not be realized. Also you may outlive the policy,
and then it goes down the drain, unless you paid more so the policy
lasts until age 100, when you are deemed to have died actuarily.
The alternative of gifting the $600,000 to the heirs, and letting them
grow the money should be compared... remembering that money in the
insurance plan grows tax-free... while money gifted to the heirs will be
exposed to taxation during growth. Can they do better (higher yields but
taxed)? Currently, I understand, universal life is project to yield
about 7.5%... can the heirs beat this after taxes? If you die early
with the insurance, the heirs get a bonanza, but it would have been
better to have paid yearly premiums for a lower aggregate investment...
if you live long, the time value of the money is wasted. I would like to
hear from the insurance pros, since I am considering it.
- --
-Lester M. Levy, MD llevy@hoflink.com
------------------------------
Date: Fri, 5 Dec 1997 11:16:46 -0500 (EST)
From: Jim Garcia <jimgarci@pacbell.net>
Subject: Re: 403-B Plans and Other Questions
> Dear Persfinners -
> I really need some advice on this one. I expect in the next
> several days to take new employment with a non-profit agency...
> The pension plan at this organization consists on a defined
> benefit plan which I will be eligible to join in Mar. 99.
> In order to participate, I will pay 5% of my earnings into
> the plan on an after tax basis only.
>
> There is no other retirement plan available through the
> organization. My basic question is this. What alternatives
> do I have to save more than 5% toward retirement?...
> Do I have any other pre-tax or tax deferred alternatives
> other than the std. IRA based on income deductibility limits.
> I have read in a Vanguard retirement planning publication
> that if I work for an eligible school or non-profit
> organization, I may be permitted to arrange for an
> individual 403B plan directly through an insurance company
> or mutual fund.... Does anyone know if this is so?
- --
There should be a benefits person in Personnel/Human Resources.
Ask them if you there's a 403B plan available. If so, can you
go with a mutual fund company instead of an insurance company
(usually better returns with lower fees).
Does the company contribute to the defined benefit (pension) plan
(if you leave before retirement, you'll only get your money back)?
I assume the company's not taking out that 5% until March '99.
If you don't have a 403B available and the company doesn't
contribute and you have a decent job, look elsewhere.
Jim Garcia jimgarci@pacbell.net
------------------------------
Date: Fri, 5 Dec 1997 11:17:37 -0500 (EST)
From: Ryo Imamura <imamura@elwha.evergreen.edu>
Subject: overseas Net access - Japan and Nepal?
I will be going to Japan and Nepal for long periods. Is there an
Internet provider that has local phone access in those countries? If so,
please provide info on how to download their software and/or their phone
numbers. Thanks.
Ryo Imamura
imamura@elwha.evergreen.edu
------------------------------
Date: Fri, 5 Dec 1997 11:19:21 -0500 (EST)
From: Steve Foulks <steve_foulks@up.bresnan.net>
Subject: 403-B Plans and Other Questions
It is not possible to make direct contributions to a 403(b). It must come
in the form of a salary reduction with your employer. I always encourage
people to urge there employer to set up such a plan. Generally is some
agent (mutual fund, insurance company, bank, etc) would be willing to set
it up for your employer for free to earn commissions from you. The only
cost to the employer would be a little training and a cutting the vendor a
check each payday.
>Does anyone know if this is so or how I would find out for
>sure? I'd like to put at least 15% on my income into
>retirement savings but I'd obviously like to do it on a
>pre-tax or tax deferred basis as much as possible. If I have
>to I'll do it post tax but I'd hope I would have other
>options.
I would obviously suggest an IRA, and the ROTH IRA is the best choice
assuming that your tax rate won't drop in retirement (after all who can the
future direction of tax rates). Depending how long you have to retirement,
$4,000 a year in an IRA should be sufficient to provide for your retirement.
But if it is not you could consider becoming an independent contractor and
sell your services to the non-profit. If you were careful in how you
structured your contract with the non-profit (so as not to become a de
facto employee) then you could easily met your 15% goal. There are pros
and cons associated with this idea, and your employer might not be flexible
enough to consider something like this.
There are a couple of tax shelters that most people don't think of that
could also be used
- - purchasing stock in growth companies that pay little in dividends
(Microsoft, Intel, Coke, etc.). You could sell these when you need cash
(assuming they haven't become good dividend payers), and pay low long term
capital gains rates. I use this method to supplement my traditional tax
sheltering.
-you can buy collectibles as investments, but this is very risky.
- - real estate is an excellent tax sheltered investment. It can provide tax
deductions now and capital gains later.
- - tax exempt municipals, savings bonds are great except they have pretty
low yields
Steven M. Foulks, CPA, CFP, PhD
Professor of Accounting & Finance
Northern Michigan University
<http://www.acs.nmu.edu/instruct/business/sfoulks/default.html/>
------------------------------
Date: Fri, 5 Dec 1997 11:20:09 -0500 (EST)
From: Steve Foulks <steve_foulks@up.bresnan.net>
Subject: IRA conversion clarification
There was a question a few issues ago, about how the taxes will be paid on
IRA rollovers into ROTH IRA's. The answer is that the income subject to
tax on the witdrawal can be divided by 4, and that amount added to INCOME
in years 1998 - 2001. Of course you don't have to do this, which would be
sensible if you happen to be in a low tax bracket in 1998.
You do NOT calculate the tax on all of the income subject to the tax in
1998, and pay 1/4 of this amount in 1998-2001.
------------------------------
Date: Fri, 5 Dec 1997 11:21:13 -0500 (EST)
From: Steve Foulks <steve_foulks@up.bresnan.net>
Subject: Re: Even more IRA questions - a minor clarification
>>For my wife's IRA, she is no longer hit with the 'Tainted Spouse' rule.
>>She can now contribute regardless of my 401K.
>
>She could *always* contribute regardless of your 401(k). The question
>was how much of the contribution was deductible.
>
>In any case, the "tainted spouse" rule is still in effect for Tax Year
>1997 (which includes IRA contributions made before 4/15/98 that are
>designated as a *1997* contribution)....
>Rich Carreiro
Actually ther is still a taint, even after 1997. No deduction will be
allowed if your combined AGI is more than $160,000. The deduction begins
to phase out when AGI reaches $150,000. There would be no such limit
without your 401(k) taint.
Steven M. Foulks, CPA, CFP, PhD
------------------------------
Date: Fri, 5 Dec 1997 11:22:30 -0500 (EST)
From: Steve Foulks <steve_foulks@up.bresnan.net>
Subject: Re: Roth IRA Conversion Question
>
>The rule for conversion from traditional IRA to Roth says that married
>people filing separately are not eligible for conversion. What year does
>it mean -- the filing status in 1996, or 1997 or 1998? We either filed
>jointly or separately over the years, depending on our financial situation
>of that year. We have not figured out which way to go for 1997 yet. Any
>info is greatly appreciated.
>Yan
The rule applies in the year that you convert.
Steven M. Foulks, CPA, CFP, PhD
------------------------------
Date: Fri, 5 Dec 1997 11:23:09 -0500 (EST)
From: "L. Chen" <am302@FreeNet.Buffalo.EDU>
Subject: Re: Buying Currency
> Since the South East Asian currencies have fallen significantly in
> recent times, is it a good idea to buy some of these currencies now as
> an investment?
Sender: owner-persfin-mod@shore.net
Precedence: bulk
Like stocks, just because it has gone down a lot DOES NOT mean it is
undervalue. May be they were overvalued before they fell -- their inflation
rates are much higher than U.S.
> Where can you buy them with the least overhead? If there is a place
> where we can buy it with minimal overhead charges, we can apply the
> principles of DRIP investing in buying currencies. I am sure these
> currencies will gain value in future. I would be interested in knowing
> the thoughts of fellow persfiners.
If you are thinking about buying the currency itself, there is no such thing
as "buying it with minimal overhead charges" -- esp. for small amounts. The
spread between bid and offered rates on these currencies could be 10-20%.
An indirect way to invest/speculate in these currencies is to buy the stocks
in those countries -- preferrably those with ADRs in the U.S. Or buy the
closed-end country/region funds -- a lot of them are selling at a discount to
NAV.
Chen
------------------------------
Date: Fri, 5 Dec 1997 11:24:03 -0500 (EST)
From: Ryo Imamura <imamura@elwha.evergreen.edu>
Subject: voltage requirements in Tokyo?
As I get ready to go to Tokyo, I am wondering if I can use my laptop
computer and electric toothbrush there. A friend told me that the current
in Tokyo is different from the rest of Japan and might present problems
with certain appliances. He said that an electric clock that he used in
Kobe was not usable in Tokyo. Anyone know the facts? Thanks.
Ryo Imamura
imamura@elwha.evergreen.edu
------------------------------
Date: Fri, 5 Dec 1997 11:24:59 -0500 (EST)
From: Steve Foulks <steve_foulks@up.bresnan.net>
Subject: Re: 403-B Plans and Other Questions
>From: Rich Carreiro <rlcarr@animato.pn.com>
>Subject: Re: 403-B Plans and Other Questions
>
>[Disclaimer: this is my opinion, not advice. I am not a professional.]
>
>>The pension plan at this organization consists on a defined
>>benefit plan which I will be eligible to join in Mar. 99.
>>In order to participate, I will pay 5% of my earnings into
>>the plan on an after tax basis only. The plan will pay me
>>a monthly benefit on retirement per the following formula
>>.02125% x average monthly salary x years of service.
>>
>There is no other retirement plan available through the
>organization. My basic question is this. What alternatives
>do I have to save more than 5% toward retirement? My wife
>
>In some sense saying that you are only saving 5% of salary toward
>retirement can be a flawed thing when talking about something like a
>defined benefit plan. Depending on how long you work for the
>organization and how long you live after retirement, the effective
>return on investment on that 5% of salary may be quite higher than
>what you may have gotten on your own, especially when viewed on a
>risk-adjusted basis (as the benefit is guaranteed both as to amount
>and as to length).
>This isn't to say that you shouldn't look to have other retirement
>savings, only that you may effectively be saving more than 5% of your
>salary (i.e. one might have to save 10% (picking that out of a hat) of
>their salary when self-invested to get the kind of benefit you'll be
>getting).
>
>>works for a company that has no retirement plan so I am
>>aware that I can put $2000 fully deductible for each of us
>>into an IRA for 1998. Because of our income levels, normally
>Not quite true. In 1998 her contribution will be fully deductible for
>her regardless of income because she has no retirement plan at her
>job....
This is NOT correct. The spousal deduction is not allowed in this case if
the combined AGI of the couple exceeds $160,000! She begins to lose her
deduction when AGI reaches $150,000.
------------------------------
Date: Fri, 5 Dec 1997 11:26:06 -0500 (EST)
From: PJD <carpe@bright.net>
Subject: Roth IRA Conversion at Death?
Can anyone comment on the income tax consequences of a Roth IRA held
upon death? The beneficiary of a regular IRA can avoid income taxes by
rolling the IRA over into his/her own IRA. But that beneficiary must
eventually begin making withdrawls at age 70 1/2 , and thus will
ultimately pay any income taxes due. As I understand it, Roth IRA
moneys do not have to be withdrawn beginning at age 70 1/2. Therefore,
it appears that one could continue rolling over Roth moneys from
generation to generation and deferring taxes indefinitely. Is this
true?
------------------------------
Date: Fri, 5 Dec 1997 11:26:37 -0500 (EST)
From: Jeff Morgan <Morgajs@parsec.com>
Subject: Low minimum mutual funds
>From time to time, folks will ask about low minimum mutual
funds. Janus, American Century, Strong and T. Rowe Price
(among others?) have been mentioned.
Here's one I ran into recently:
WestCore Funds
(800) 392-CORE (2673)
New account minimum is $1,000, waived if one starts an
automatic monthly investment program, the minimum for which
is $50 per fund.
They have equity and bond funds, and a Colorado state
tax-exempt muni fund.
No vested interest here, I don't work in the securities field
and I'm not a shareholder. Yet. Just passing it on.
- --
Jeff Morgan - morgajs@parsec.com
------------------------------
Date: Fri, 5 Dec 1997 11:29:03 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: re: Mike Morehouse's Question - Invest in Education
I am not a professional financial planner so what follows is just my
opinion. I will probably get a lot of different opinions on my proposal
but here goes anyway.
For one year instead of savings 15 percent of your income, save only 5
percent and spend the other 10 percent on a financial education. STUDY,
STUDY, STUDY and become an expert on some type of investment. You choose
the investment field that you think you will be comfortable with.
I think this investment in an education will return you more money for
retirement that any other investment you can make.
GOOD LUCK
BOB FORD
BOB_FORD@COMPUSERVE.COM
(editor's question - How about taking the H&R Block Tax Seminar? -IK)
------------------------------
Date: Fri, 5 Dec 1997 11:30:12 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Roth IRA Conversion Question
I had said:
>I've read in numerous places, what is spread out over four years is
>the excess tax liability from the conversion, NOT the taxable income
>from the conversion. So even in 1998, all income from the conversion
I may have spoken too soon. More research is underway :-)
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Fri, 5 Dec 1997 11:30:52 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Mutual Funds and Brokers - Why No Mutual Fund Sale Fees?
>When I read posts from people asking about brokerage fees on mutual funds I
>wonder why anyone would have mutual fund transactions through a broker. I
>have investments in about a dozen mutual funds and do not pay any fees to
>buy or sell. Is there some advantage to trading through a broker, or
>perhaps not all funds can be traded directly with the fund manager?
The main issue is convenience. You can have multiple funds from
multiple fund families and get a single statement, a single 1099 at
tax time, be able to switch investments with a single call or mouse
click instead of having to redeem out of one fund, wait for the money
to show up and send it to the other fund.
Another possibility is that funds held in brokerage accounts can be
margined. So one could take the risk of increased leverage in search
of higher gains. Alternatively, if one has a *temporary* cash flow
crunch, one could take a margin loan instead of having to liquidate
holdings.
As you note, these things have costs. Some people find the costs
worth it and some don't.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Fri, 5 Dec 1997 11:32:01 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Roth IRA Conversion Question
[Disclaimer: this is my opinion, not advice. I am not a professional.]
>The rule for conversion from traditional IRA to Roth says that married
>people filing separately are not eligible for conversion. What year does
That is correct
>it mean -- the filing status in 1996, or 1997 or 1998? We either filed
It means the filing status in the tax year of the conversion.
>jointly or separately over the years, depending on our financial situation
>of that year. We have not figured out which way to go for 1997 yet. Any
>info is greatly appreciated.
Tax Year 1997 is irrelevant because Roth IRAs do not exist until Tax
Year 1998. What will matter is your filing status for Tax Year 1998
(or whatever year you do the conversion in).
Another note regarding the "four-year spread out" in 1998 -- from what
I've read in numerous places, what is spread out over four years is
the excess tax liability from the conversion, NOT the taxable income
from the conversion. So even in 1998, all income from the conversion
will be taxed in the current year, but for 1998 only you'll get four
years to pay the extra tax.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Fri, 5 Dec 1997 11:33:16 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Tax Questions
[Disclaimer: this is my opinion, not advice. I am not a professional.]
It would probably be a good idea for you to consult with a tax pro,
especially on state issues.
That aside, I will first note that you and your spouse working (or
even living, as long as you are not legally separated) in different
states is irrelevant for federal tax purposes. It will be very
relevant for state tax purposes :-)
Also, don't get to wound up over this living in a different state than
where you work. Basically what happens is that the state in which you
work will force your employer to withhold taxes for that state. You
will then file a non-resident tax return in that state and pay (or get
a refund for) the difference between what was withheld and what you
ultimately owed to the state where you worked. Next, you'll file a
resident tax return in the state where you live. It will include the
income you earned in your out of state job. However, you'll get some
sort of credit for the tax you paid to the non-resident state. In
general, things will work out so that you'll pay the higher of the two
possible income taxes, but you won't pay both. Oh yeah -- if your company
can withhold for two separate states, you may want them to withhold some
for your home state so that you don't get hit with an underwithholding
penalty from your home state.
>If I buy a house in a different state than where I get my W2 form, can I
>deduct the loan interest and other relevant home related deductions?
Assuming the house in question is your primary residence, yes, you can
deduct the loan interest and property tax [that's about it for
home-related deductions] on your federal return. If your state of
residence allows such deductions you can obviously take them. It will
be doubtful if the state where you work will allow them.
>If husband and wife work in two states does it really matter how we file
>taxes (federal as well as state)
It doesn't matter federally. The feds don't care what states you work
in. However, there may be state tax issues that may give you an
incentive to file one way or another federally. The only answer that
can really be given is to do your federal taxes both married filing
separately and married filing jointly and go with whichever (once you
take into account how the federal filing choice affects state taxes)
gives you the lowest combined federal and state tax bill.
>If declare a different state than where I get my W2 form as my home state
>(how do you do that?) can I file state taxes only for that state or should
>I file state taxes for both states.?
You don't have much choice in the matter. In general, where your
primary residence is is your home state. If you live in a state more
than 183 days of a year, vote in a state, have most of your consumer
relations (banks, shopping, etc) in a state, or otherwise act in a way
which shows you consider a state to be your home, you are a resident
of that state for tax purposes. You will definitely have to file a
resident return in that state.
In general, if you are a resident of one state you are not a resident
of another, though it is conceivable (but not likely) that both states
would consider you a resident (this is probably most likely in the
year you move from one to another). In that case, you'd probably have
to file resident returns in both states.
>If there is a very large gap between the earnings of spouses and they live
>in different states, what is the best tax strategy?
Well, the bulk of the taxes you pay are federal taxes, so state stuff
isn't as important (though it shouldn't be ignored) In general, when
there is a large income disparity, filing jointly is the way to go.
Sometimes, if one spouse has a lots of itemized deductions it can be
advantageous to file separately. There's no hard and fast rule to
tell, though. Work the numbers both ways (taking into account how
filing jointly and separately on the state level affects the numbers
as well) and go with whatever gives you the lowest overall taxes.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Fri, 5 Dec 1997 11:34:44 -0500 (EST)
From: "L. Mccullough" <loulou@u.washington.edu>
Subject: Small business loan
Does anyone know the best way to go about finding information about
obtaining a small business loan?
My son, who is recently out of the service, has an opportunity to go into
business for himself, but will probably need to get a loan to get on his
feet. I can help him some, but he really needs to do this himself and has
some backing from a company he is currently employed by (in another part
of the country).
I don't even know where to start. I guess a local bank????? Would the VA
have any sort of program for an ex-navy person?
Would appreciate any advice, suggestions. Thanks!
Linda McCullough
The bluest skies are in Seattle
------------------------------
Date: Fri, 5 Dec 1997 11:35:42 -0500 (EST)
From: "Victor Daniel a.k.a the MacNut" <macnut@pop-server.netaxs.com>
Subject: Portable Retirement Plans (was Re: 403-B Plans...)
>In some sense saying that you are only saving 5% of salary toward
>retirement can be a flawed thing when talking about something like a
>defined benefit plan. Depending on how long you work for the
>organization and how long you live after retirement, the effective
>return on investment on that 5%....
That phrase "depending on how long you work for the organization" got me
thinking (usually not a good thing :-) about how portable an employer's
retirement plan may be. Let's face it folks, the vast majority of us are
not going to spend our entire working life at one organization; most of us
will work for as many as four or five different employers before retirement.
With the above statement in mind, I was wondering what alternatives exist
for transferring retirement plans from one employer to another? What are
the best ways to take your pension, 401k, 403B or whatever retirement fund
from one employer to another, one retirement plan to another, with the
least fuss n' muss, and the least loss of capital and/or return?
The MacNut
| Victor Daniel a.k.a The MacNut Home page in progress at: |
| macnut@netaxs.com http://www.netaxs.com/~macnut |
| vdaniel@achtung.eng.temple.edu vdaniel@thunder.ocis.temple.edu |
------------------------------
Date: Fri, 5 Dec 1997 11:38:35 -0500 (EST)
From: "Rao, Bharat" <bharat@scr.siemens.com>
Subject: *SHORT-TERM* US Treasury bond fund versus Money Market fund?
The typical "smart" thing to do is to put short-term money in a
money-market fund (rather than passbook savings account). However, it
occured to me why not put the <relatively> short-term $$ in a SHORT-TERM
US Treasury bond fund, which would invest in US bonds maturing in 1-3
years.
What (if anything) is wrong with the following logic?
Money market funds pretty much have zero principle risk, both in the
short and long term. Hence its good to stick short-term $$ there.
In a short-term US Treasury bond fund, however, there is some short-term
fluctuation of principle if interest rates change. But from my
understanding the principle should *eventually* be 100% safe over a
slightly longer term.
I.E., each bond will ultimately (and ultimately would be in a mean
time of 1.5-2 years) be redeemed for its face value. And, even in the
short-term principle should fluctuate only slightly due to the short
duration of the bonds.
So it seems to me that one should consider getting the extra 1-1.5% of
yield of the bond fund, assuming I'm right about the very low risk. Of
course, you probably don't want to treat a US Treasury bond fund as your
primary checking account -- you would be in some danger of principal risk,
by taking out $$ all the time. But most people's short-term fund (mine at
least) is about 1/2 weighted towards emergencies -- i.e., liquid cash you
don't intend to draw, but need to have around on rare occasions as a
buffer.
So, it seems to me to be relatively safe to put at least 1/2 (or whatever
your typically unused part) of your short term cash in a US Treasury bond
fund. And if my assumption that the principle is safe over a 1-3 period
is true, you will get 1 to 1.5% extra interest for what seems to be
virtually no risk.
So, is there a flaw in the above reasoning?
Bharat
R. Bharat Rao, E-mail:bharat@scr.siemens.com [PGP WELCOME]
Adaptive Information & Signal Processing, Siemens Corporate Research
US Mail: 755 College Road East, Princeton, NJ 08540
------------------------------
Date: Fri, 5 Dec 1997 11:39:49 -0500 (EST)
From: "Schafer, Rick" <schaferr@eng1.otis.com>
Subject: RE: exchanging money in Japan?
When traveling to Japan I always change my dollars to yen at the
airport. I think they give the best rate. If I run out of yen I will
get a cash advance at the hotel desk (usually Tokyo Hilton) but they do
have a service charge, 400 yen on a 10000 yen advance, not sure if that
was a fixed rate or a percent. When leaving Japan after checking in at
the airport and after doing all my shopping & eating I change my yen
back to $ also at the airport (except for coins for the kids). Don't
forget there is an exit tax -- 2000 yen last I looked -- which you must
pay or you won't get to the gate. Some hotels will handle this for you
& include it on your bill - no extra charge.
I did try an ATM once & it didn't recongnize my card. I didn't pursue
it.
BTW, a trip to Japan is a great way to rack up frequent flyer miles, not
only from the airline but from your charge card company! For $40/yr
Diner's club will give you 1 mile/$! A business class ticket is about
$4500, hotel $200/nite, coupla cash advances... So if you put your
flight tickets & hotel & meals (gotta love those 3500 yen breakfasts!)
on it you can really cash in!
Rick Schafer
------------------------------
Date: Fri, 5 Dec 1997 11:40:59 -0500 (EST)
From: jay@one-o.com (Jay)
Subject: Q. need info on taxes ... - Claim Parents as Dependents?
Dear all, I am looking for some tax information. My parents were here for
the visit for the better part of the year. I was just wondering how can I
claim them as dependents. They are not US citizens but I remember someone
mentioning in the past about it. In case anybody knows or has done it
before, if he can drop a line, will be appreciated. My email
address is jay@one-o.com.
Thanks so much.
------------------------------
Date: Fri, 5 Dec 1997 11:41:52 -0500 (EST)
From: jdennis@po3.nsknet.or.jp (John D. Dennis)
Subject: realized/unrealized values of fund shares?
I was looking up the recording dates for some funds and along the way got
to a page that listed the anticipated per share gains. Funny, but I've
never come across anything that gives the details about this. The info was
presetented this way:
Net Realized Gain NRG as % of NAV Unrealized gain
2.20 7 8.67
1.17 3 14.97
1.05 4 5.09
.44 2 4.60
Could anyone give a brief rundown of what these figures mean (esp. for
potential buyers)?
Thanks,
jdd
------------------------------
Date: Fri, 5 Dec 1997 11:42:42 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: 4 year "spreadout" on 1998 Roth IRA conversions
I had earlier postited that it was the tax and not the income
that was spread out on 1998 Roth IRA conversions. I was wrong.
Thanks to the great guys on misc.taxes.moderated I now know for
sure:
>Section 408A(d)(3)(A)(iii) says:
>in the case of a distribution before January 1, 1999, any amount required
>to be included in gross income by reason of this paragraph shall be so
>included ratably over the 4-taxable year period beginning with the
>taxable year in which the payment or distribution is made.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Fri, 5 Dec 1997 11:43:41 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Portable Retirement Plans (was Re: 403-B Plans...)
>With the above statement in mind, I was wondering what alternatives exist
>for transferring retirement plans from one employer to another? What are
>the best ways to take your pension, 401k, 403B or whatever retirement fund
>from one employer to another, one retirement plan to another, with the
>least fuss n' muss, and the least loss of capital and/or return?
Well, for defined *contribution* plans (401(k), 403(b), etc.) there is
really not much hassle. You can always roll them out to a *regular*
(i.e. not Roth) IRA and not have to pay any tax. And if you never add
any contributory money to that IRA account, you can roll the money
back into a new employer's plan (assuming the plan allows it -- it
doesn't have to).
If you do this, make sure the transfer is either a direct
custodian-to-custodian rollover or if any checks are cut, make sure
they are made out to the custodian and NOT you. If the money goes to
you, 20% will be withheld for taxes and you have 60 days to roll the
*pre-witholding* amount into another plan or IRA. Any part of the
pre-withholding amount not rolled in is considered a distribution and
subject to income (and penalty tax if you are too young). If you do
roll in the pre-withholding amount, you get that 20% back when you
file your income tax return for the year (or can get it back gradually
by reducing your paycheck withholdings).
Also, if your plan balance is over $5000, I believe you can simply
leave it in your former employer's plan.
Defined contribution plans are trickier. In many places you have the
choice of a taking a lump sum or simply waiting until retirement age
and taking whatever piddly benefit arises from the few years you spent
with that employer. In any case, I *believe* that when you take the
lump sum, the part of the sum from your after-tax pension
contributions is yours free and clear -- no taxes, no penalties, no
need to roll it over into an IRA (in fact you can't). The part of the
sum attributable to earnings in the pension plan can be rolled into an
IRA and will be taxed if it isn't. But check with a pro and the relevant
IRS publications.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Fri, 5 Dec 1997 11:44:43 -0500 (EST)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: Tax Questions - two states
>
>If I buy a house in a different state than where I get my W2 form, can I
>deduct the loan interest and other relevant home related deductions?
>
>If husband and wife work in two states does it really matter how we file
>taxes (federal as well as state)
>
>If declare a different state than where I get my W2 form as my home state
>(how do you do that?) can I file state taxes only for that state or should
>I file state taxes for both states.?
>
>If there is a very large gap between the earnings of spouses and they live
>in different states, what is the best tax strategy?
>
The bottom line is it depends on the two states in question
I live in California but I work part time in Arizona. California taxes me
on income from what ever source. Arizona taxes me on income earned in
Arizona. I escape double taxation because Arizona allows me a credit for
taxes paid on Arizona income to California. Because California has higher
tax rates than Arizona I essentially pay no taxes to AZ (but I have to file
because my AZ employer witholds for AZ and I want the refund)
Professional athletes (with big salaries) are often required to pay income
taxes in every state where they perform. They also have to pay city
income taxes if they play in Philadelphia, New York and other cities with
income taxes.
After reading the AZ and CA tax forms I have concluded that the answers may
be different depending on the pairs of states involved.
Residency is also dependent on what state you are in. For instance CA
requires a Drivers license when you become a resident and taking a job in
CA makes you a resident. AZ taxes snowbirds if they earn money from AZ
corporations
As to filing jointly or separately - many states require you to file
identically to your Federal form. More specifically CA requires you to
start with your Federal AGI before making adjustments - (CA does not tax
income from T Bills, Unemployemnt Insurance or Social Insurance etc).
Married filing separately is almost always more expensive taxwise than
married filing separately.
My only suggestion is you pick up the forms from the various states and
work through the numbers
Avrum Lapin
Upland., CA
------------------------------
End of persfin-digest V4 #110
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