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Subject: persfin-digest V4 #134
Date: Sat, 14 Mar 1998 17:09:23 -0500 (EST)
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persfin-digest Saturday, March 14 1998 Volume 04 : Number 134
IN THIS ISSUE:
ADVERTISEMENT: domainTNG
PERSONAL FINANCE CHAT: MONDAY, MARCH 16, at 8:00 P.M. EST
Re: Mutual Fund Splits?
Re: 401k rollover options?
Mortgage using only one income?
How to do Asset Allocation?
Discounts? How 'bout lies
Re: Two mortgage payments vs. one?
Stock statistics?
Re: spousal Roth IRA?
Re: Mutual Fund Splits?
Re: Offset Capital Loss of Custodian Account Against My Cap Gain?
Re: spousal Roth IRA?
Re: 401k rollover options?
mutual fund splits - Happened at Franklin Templeton
RE: Philadelphia City tax Not Deductible - Denver's Experience
RE: Mutual Fund Splits?
Re: Mutual Funds Splits
Re: NY State Income Taxes On Income Earned in Florida?
FW: 401k rollover options?
$5.6 Million Gift to US Government
RE: 401k rollover options
Re: Two mortgage payments vs. one?
contractor vs. regular employee
(Fwd) 401k rollover options?
Retail POS systems
Forced 401(k) transfer due to company take-over?
Offer price on new residential construction
Purchasing Foreclosure Property
pre approved mortgage
re: real estate advice
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------------------------------
Date: Sat, 14 Mar 1998 16:40:07 -0500 (EST)
From: The Editor <ikrakow@shore.net>
Subject: PERSONAL FINANCE CHAT: MONDAY, MARCH 16, at 8:00 P.M. EST
Please join me in our Personal Finance Chat Room at:
http://pfinance.miningco.com/mpchat.htm
on Monday March 16th at 8:00 p.m., EST, for a "get acquainted" session.
Bring your questions and answers, and discover how easy it is to chat.
See you there!
Ira
------------------------------
Date: Sat, 14 Mar 1998 16:40:58 -0500 (EST)
From: Jim McGrath <jimm@hi.com>
Subject: Re: Mutual Fund Splits?
>I was wondering if anyone knows if mutual funds ever "split" their shares.
>
I've seen it happen a few times.
>I am noticing (for example) that the Vanguard Index 500 fund is almost
>$100 per share. Would it ever split or just keep going up in value? Do
>mutual funds care about their share price the way individual stocks do?
No. You can always buy partial shares in a mutual fund. Stocks split to
make it easier for individual investors to buy 100 share round lots.
Jim
------------------------------
Date: Sat, 14 Mar 1998 16:41:27 -0500 (EST)
From: Jim McGrath <jimm@hi.com>
Subject: Re: 401k rollover options?
> Bob,
> I would have to go with the 401(k) at your current company.
>There are many reasons why, but the first is the ability to have funds
>together where you can see the progress of your retirement account all
>in one report. Another reason is you have to keep up with your former
>employer to track what is going on with your 401(k). This includes
>notification of change of address.
I provided a different opinion in my posting. I agree that keeping your
funds in a single account is very convenient, but this can also be
accomplished in a brokerage IRA account. Using your a 401(k) for this
purpose may provide less flexibility in choice of funds. If you are happy
the funds choices available in the 401(k) there is probably no reason to
change.
> If you go into the IRA, you could not contribute any more money
>to it, since you cannot combine non-qualified money with qualified
>money. Therefore, go with the current company's plan.
Sorry, but you can. If you mix qualified and non-qualified money, it can
no longer be rolled into a future 401(k).
Jim
------------------------------
Date: Sat, 14 Mar 1998 16:42:04 -0500 (EST)
From: Constance Bailey <ccbailey@tima.com>
Subject: Mortgage using only one income?
My husband and I are considering buying a new home soon. Since I have
student loans (and low income) that will count against our qualifying
ratios, we've decided to apply for the mortgage using just his income.
How will our joint debts (2 credit cards, 1 car loan) be counted? Will the
mortgage company count 1/2 of the payment as part of my husband's debt
load? Will they figure out what percentage of total income we each earn,
and allocate the debt load in that way?
Thanks a lot.
Constance Bailey
ccbailey@tima.com
------------------------------
Date: Sat, 14 Mar 1998 16:42:28 -0500 (EST)
From: Gary Lotto <garylotto@iname.com>
Subject: How to do Asset Allocation?
I have some money that I want to invest.. I already have a significant
portfolio; now I'm interested in achieving a low-risk allocation between
small, mid-size, and large-cap funds, between growth and value, between
stocks and bonds, fixed income and equities, etc.
How do I create an optimal allocation? What are the variables (I am not
risk averse, and not likely to need most of my investments for a long
time)? Once I know the variables, how can I use them to come up with an
allocation? Is there a book, journal, or web site(s) that can help me to
do this?
I would appreciate any leads you might offer. Thanks!
------------------------------
Date: Sat, 14 Mar 1998 16:47:22 -0500 (EST)
From: SMabel555 <SMabel555@aol.com>
Subject: Discounts? How 'bout lies
The conversation below sounds like the local furniture dealers:
"!!!No payments for 6 months!!!" But, when you talk with a salesman, they
always offer a discount if you pay cash... I hate BS like this.
SM
- ---------------------------------------------------
>>For sake of argument, let's assume that I've decided that it makes
>>economic sense to buy a new car. I'd much rather rent that money from the
>>dealer at 4.9% and invest the 20-30K.
>
> However, usually, to get a good price, you can't get the ultra
>low rate financing. In my case, when I bought a car, I got a 3-year
>loan from my credit union at 7% and got a low price for the car. Now,
>the interest on the 7% loan isn't tax deductible, and paying it off
------------------------------
Date: Sat, 14 Mar 1998 16:47:54 -0500 (EST)
From: specpub@annex.com
Subject: Re: Two mortgage payments vs. one?
>> I just received a letter from my mortgage company offering to enroll
>> me in a program where I would pay 1/2 of my mortgage payment on the
>> first of the month and the other 1/2 on the 15th of the month. They
>> claim that this will allow me to build equity at a much higher rate,
>> pay off the loan 9-10 years earlier, and pay about 1/4 less interest
>> over the long run. Enrollment includes a one time fee of about $300
>> and monthly fees of $5. Any comments?
>Yeah, one. DON'T SIGN UP FOR THE THING!!
>
>You can accomplish exactly the same thing by:
>(a) Making a monthly payment that is 13/12 times what the regular
> payment is, with the excess applied to principal, or
>(b) Make a 13th payment at the end of the year.
>
>Unless there are some weird clauses in your mortgage, you
>can do this trivially and without paying a dime and you'll
>get all the benefits of the plan your mortgage company is
>plugging.
>Rich Carreiro
I must be missing something here. Rich's example amounts to 13 full
mortgage payments per year, but the original example totals only 12 full
payments (made in 24 installments). If you accomplish the same thing
with either method, isn't a $300 signup and $5 monthly fees ($360 for
the first year, $60 annually thereafter) a better deal than making one
full extra mortgage payment per year?
Was something left out of the original scenario?
Mike Broadhurst
------------------------------
Date: Sat, 14 Mar 1998 16:48:46 -0500 (EST)
From: SMabel555 <SMabel555@aol.com>
Subject: Stock statistics?
I know there are tons of theories about how to analyze stocks, but am trying
to recall this one... I think its that P/E should equal growth rate; does this
sound right? Am I close to a basic investing principal? Is the growth
rate relating to market cap? Revenues?
------------------------------
Date: Sat, 14 Mar 1998 16:49:41 -0500 (EST)
From: Steve Foulks <steve_foulks@up.bresnan.net>
Subject: Re: spousal Roth IRA?
>From: "Dalmia, Bipin K." <<DALMIABK@phibred.com>
>Subject: spousal Roth IRA?
>hi: i see a lot of discussion on the roth ira. what are the requirements
>for a spousal roth IRA? my wife has no income (or maybe less than
>$2000). can i contribute $2000 towards a spousal IRA or is it limited by
>her earned income? also, does the spousal ira have to be a separate
>account or can it be in the same account as my roth?
There are no special rules for spousal ROTH IRA's. Just follow the
general spousal rules for IRA's maximium contributions. The maximum IRA
contribution is 100% of <underline>combined</underline> earned income up
to $4,000 (no more than $2,000 for each spouse).
Steven M. Foulks, CPA, CFP, PhD
Professor of Accounting & Finance
Northern Michigan University
<<http://www.acs.nmu.edu/instruct/business/sfoulks/default.html/>
------------------------------
Date: Sat, 14 Mar 1998 16:52:37 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Mutual Fund Splits?
>I was wondering if anyone knows if mutual funds ever "split" their shares.
Some do, some don't. In any case it is a total non-event for open-end
funds (the vast majority of all mutual funds) because
(1) You buy fractional shares calculated to 3 decimal places, so what's
the need for a split?
(2) Shares are created and destroyed as needed, so there's no way the
split would lead to a price increase in the fund shares -- so even
if the split for some odd reason made lots of people want to buy
the fund, that will have no direct effect on NAV.
I do note that the Benham Target Trust funds *reverse*-split their shares
so that NAV follows the price of the zero coupon bonds that the funds are
designed to act like.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sat, 14 Mar 1998 16:53:01 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Offset Capital Loss of Custodian Account Against My Cap Gain?
>My son is 10 years old and he had a custodian account in stock market.
>Can I apply his capital loss against my capital gain if
>he had a net capital loss? (I will claim him as my dependent, of course)
Well, if he was 14 or over the answer would definitely be no, since anyone
over 14 must file his/her own return.
Under 14 is more interesting. Since one has the option of taking the
under-14 minor's investment income on your own return, there's the chance
that you could take an investment loss on your return as well. However,
I'm willing to bet (though not sure) that the rules will say that you cannot
do so.
Your best bet would be to simply fill out the form (8814, I think -- check
the Form 1040 instructions to be sure) to put under-14 children's investment
income on your return. If it doesn't allow the loss to be put on your
return you have your answer.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sat, 14 Mar 1998 16:53:23 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: spousal Roth IRA?
>hi: i see a lot of discussion on the roth ira. what are the requirements
>for a spousal roth IRA? my wife has no income (or maybe less than
>$2000). can i contribute $2000 towards a spousal IRA or is it limited by
>her earned income? also, does the spousal ira have to be a separate
>account or can it be in the same account as my roth?
If you have at least $4000 of combined earned income, you can make
$2000 contributions to each person's IRA (total contributions to all
traditional and Roth IRA accounts can be no more than $2000 per person
per year). If you have less than $4000 of combined earned income,
your total contributions are limited to total earned income but can be
split between you however you like so long as neither spouse makes
over $2000 in total IRA contributions.
IRA = Individual Retirement Arrangement, so she has to have her own
accounts. It is not possible to have joint IRA accounts.
Finally, assuming you are filing jointly, your allowable *Roth IRA*
contributions gets phased out starting at an AGI of $150,000 (if you
file separately, it gets phased out at an AGI of $0 (no typo)).
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sat, 14 Mar 1998 16:53:50 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: 401k rollover options?
> If you go into the IRA, you could not contribute any more money
>to it, since you cannot combine non-qualified money with qualified
>money. Therefore, go with the current company's plan.
That is absolutely not true. You can most certainly contribute
"non-qualified" money to an IRA funded by a qualified plan rollover.
The problem is that if you do so you forever lose the ability to roll
the money back into a qualified plan. You may or may not care about
this.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sat, 14 Mar 1998 16:54:56 -0500 (EST)
From: Elizabeth Kennard <kennard.3@osu.edu>
Subject: mutual fund splits - Happened at Franklin Templeton
Don't think mutual funds "split" very often but it happened last year with
Franklin Templeton/Mutual Series funds. This was done when the prices were
closer to $50 than $100.
------------------------------
Date: Sat, 14 Mar 1998 16:56:01 -0500 (EST)
From: Jeff Morgan <Morgajs@parsec.com>
Subject: RE: Philadelphia City tax Not Deductible - Denver's Experience
For those of you living in the Denver Metro area, we have what's
euphemistically referred to as a "head tax" in some localities.
Working in the city of Denver entitles you to pay a flat $5.75
a month. I believe Greenwood and Littleton have a similar
"tax".
In spite of being referred to as a local tax, and showing up on
a W2 in the box titled "Local tax", it is *not* a tax, since it is
a flat rate, and not based on income earned. Accordingly, it
should not be claimed on schedule A. HR Block told me that
if it goes anywhere, it goes on a 2106 as an unreimbursed
employee expense.
Just info, not tax advice, because you didn't pay for it, right?!
Cheers.
- --
Jeff Morgan - morgajs@parsec.com
------------------------------
Date: Sat, 14 Mar 1998 16:57:31 -0500 (EST)
From: Jeff Morgan <Morgajs@parsec.com>
Subject: RE: Mutual Fund Splits?
>I am noticing (for example) that the Vanguard Index 500 fund is almost
>$100 per share. Would it ever split or just keep going up in value? Do
>mutual funds care about their share price the way individual stocks do?
Not to my knowledge. I've never seen it happen. To do so would
not be of much consequence, because purchases are usually
made by a set dollar amount, not by number of shares.
Buying fractional shares of a given mutual fund is the norm.
Cheers.
- --
Jeff Morgan - morgajs@parsec.com
------------------------------
Date: Sat, 14 Mar 1998 16:58:53 -0500 (EST)
From: Jim Garcia <jimgarci@pacbell.net>
Subject: Re: Mutual Funds Splits
> Subject: Mutual Fund Splits?
>
> >I was wondering if anyone knows if mutual funds ever "split" their shares.
> >I am noticing (for example) that the Vanguard Index 500 fund is almost
> >$100 per share. Would it ever split or just keep going up in value? Do
> >mutual funds care about their share price the way individual stocks do?
Last year I read about one company (don't tremember the name) that
did a split on their funds and would do it again because they said that
people would rather buy 5 shares with their $100 than buy 1 share. The
company was convinced that it helped business. Just psychology.
Since you buy shares by the dollar and not by the share, it doesn't make
any difference.
Jim Garcia
jimgarci@pacbell.net
------------------------------
Date: Sat, 14 Mar 1998 16:59:29 -0500 (EST)
From: "Phillip Jennings" <pjennings@pharm.utah.edu>
Subject: Re: NY State Income Taxes On Income Earned in Florida?
I don't know anything about New York, but in Utah there is a
"non-resident" form to do your state taxes for those who were
in-state residents for only a partial year. This form pro-rates your
state taxes only for the duration of the year you actually lived in
the state. I would check to see if there is something similar in NY.
Phillip Jennings
Salt Lake City, UT
------------------------------
Date: Sat, 14 Mar 1998 17:00:18 -0500 (EST)
From: Jason Kaufman <JHK@copper-mt.com>
Subject: FW: 401k rollover options?
This is a correction to my earlier post due to Rich Carreiro's e-mail
that is below:
Technically, you are right. However, since IRA's are not limited in
number, and the fact that he has a 401(k) plan, he more than likely
would not be eligible to deduct current contributions into the IRA.
And, if he ever wanted to put his IRA into a 401(k) as a rollover, if
he contributes to it in a non-qualified way, that option would not
work. I will post this response to all of the group. Thanks for the
information.
Jason
------------------------------
Date: Sat, 14 Mar 1998 17:00:54 -0500 (EST)
From: Rick Gleason <spyneyes@ix.netcom.com>
Subject: $5.6 Million Gift to US Government
Thought you'd find this interesting:
Stanley S. Newberg fled persecution as a Jew and came to America. He did
well: when he died at age 81, his estate was valued at $8.4 million. He
was also grateful to the country that took him in: his will left $5.6
million in cash to the U.S. Government. Based on 1994 spending rates,
the money will last just under two minutes. (AP)
- --
Best Regards,
Rick
------------------------------
Date: Sat, 14 Mar 1998 17:01:35 -0500 (EST)
From: Jeff Morgan <Morgajs@parsec.com>
Subject: RE: 401k rollover options
>From: Jason Kaufman <JHK@copper-mt.com>
>
>(Re a rollover from 401(k) to IRA.)
><...>
> If you go into the IRA, you could not contribute any more money
>to it, since you cannot combine non-qualified money with qualified
>money. <...>
Sure, you can. By doing so, though, you forfeit the privilege
of rolling the IRA to a subsequent employer's 401(k) plan,
should that employer accept such transfers. This may or may
not be an important consideration. It wasn't for me.
For ease of management, and because I change jobs a lot as a
consultant, my one ordinary IRA consists of: deductible contributions,
nondeductible contributions, a pension plan lump sum distribution,
a 403(b) distribution, and two 401(k) distributions. The annual
8606 is all the extra paperwork I've had to do so far.
Two other reasons to leave funds in a 401(k):
The 401(k) may offer access to well performing funds that are
otherwise closed to investors.
Assets in a 401(k) are safer from attachment by creditors (divorce,
lawsuit, bankruptcy, etc.) than are assets in an IRA.
Cheers.
- --
Jeff Morgan - morgajs@parsec.com
------------------------------
Date: Sat, 14 Mar 1998 17:02:28 -0500 (EST)
From: "J.D. Baldwin" <baldwin@netcom.com>
Subject: Re: Two mortgage payments vs. one?
Rich Carreiro <rlcarr@animato.pn.com> writes:
> > I just received a letter from my mortgage company offering to enroll
> > me in a program where I would pay 1/2 of my mortgage payment on the
> > first of the month and the other 1/2 on the 15th of the month. They
> > claim that this will allow me to build equity at a much higher rate,
> > pay off the loan 9-10 years earlier, and pay about 1/4 less interest
> > over the long run. Enrollment includes a one time fee of about $300
> > and monthly fees of $5. Any comments?
>
> Yeah, one. DON'T SIGN UP FOR THE THING!!
>
> You can accomplish exactly the same thing by:
>
> (a) Making a monthly payment that is 13/12 times what the regular
> payment is, with the excess applied to principal, or
> (b) Make a 13th payment at the end of the year.
Well, . . . no. I agree that this is a major rip-off, and his
mortgage company is behaving unconscionably in attempting to charge a
fee for this ($300 up front, indeed!), but your suggestion is not
"exactly the same thing," as it requires a much greater out-of-pocket
expense on his part. (And yields a substantially larger benefit.)
I am not saying that your suggestion is a bad idea -- in fact, I do
exactly this, myself -- but paying twice monthly instead of once
monthly can be a slight money saver in and of itself. In this case,
the fees cost more than the savings.
This can actually be a fairly complicated decision. I just spent
about half an hour doing a spreadsheet on the matter (copies freely
mailed to anyone who likes -- format is Excel 5). There are a lot of
variables. Herewith a few numbers to convince the skeptics:
SCENARIO: $150,000 principal, 360 months to pay, 7% interest rate,
15% tax bracket:
Once-per-month payment: $997.95
Twice-per-month payment: $498.98
Up front fee (for 2 pmts. only): $300
Monthly fee (for 2 pmts. only): $5
ONE PAYMENT PER TWO PAYMENTS PER
MONTH MONTH "SAVINGS"
TOTAL PAID $359,263 $360,835 -$1,572
TOTAL PAID
AFTER TAX $327,874 $329,524 -$1,650
PRESENT VAL $150,000 [Duh!] $151,047 -$1,047
PRESENT VAL $134,101 $135,158 -$1,057
AFTER TAX
["Present value" is computed using the mortgage rate of 7% as a
discount rate.]
Note that this "deal" ends up costing you money in every sense. But
it's still not quite this simple. You could get a slight advantage by
the fact that you *do* build equity a little more quickly this way.
This can be important if you're paying PMI based on the amount of
equity you have in the house. In the current scenario, the effect is
pretty much negligible:
ONE PAYMENT PER TWO PAYMENTS PER
MONTH MONTH
PRINCIPAL AMT $146,983 $146,989
AFTER 24 MOS.
PRINCIPAL AMT $141,371 $141,386
AFTER 60 MOS.
PRINCIPAL AMT $ 86,444 $ 86,493
AFTER 240 MOS.
Big deal, right? Here are the numbers, again, *without* the fees:
SCENARIO: $150,000 principal, 360 months to pay, 7% interest rate,
15% tax bracket:
Once-per-month payment: $997.95
Twice-per-month payment: $498.98
No up front or monthly fees.
ONE PAYMENT PER TWO PAYMENTS PER
MONTH MONTH SAVINGS
TOTAL PAID $359,263 $358,740 $523
TOTAL PAID
AFTER TAX $327,874 $327,429 $445
PRESENT VAL $150,000 $150,000 $ 0
PRESENT VAL $134,101 $134,110 -$ 9
AFTER TAX
Personally, even if your bank offers you this deal with no fee, I'd
turn it down. The extra postage, extra checks, extra time involved
and the substantially increased probability of forgetting to make a
payment and incurring a hefty late fee more that wipe out the tiny
benefit of this payment scheme.
By means of comparison, paying an extra $100 in principal every month
will have the following consequences:
1. You will pay the mortgage off more than six years earlier.
2. After 240 months, the principal remaining will be $34,753 -- less
than half the $86,444 of the "standard" payback scenario. You will
reach 20% equity (assuming a 5% equity to start with) nearly four
years earlier, eliminating thousands of dollars in PMI payments.
3. You will save nearly $60,000 in interest over the life of the loan
(this is a real savings of about $50,000 even after correcting for the
tax benefit).
4. The present value after tax figure for this scheme is $136,613.
Unfortunately, it requires that you have $100 extra per month in
disposable income. Also, it's most definitely *not* smart to do this
if you have to carry 15%, 20% or whatever of consumer debt any longer
in order to accomplish it. Pay the high-rate loans off first, then
attack your mortgage.
I hope this hasn't been so boring as to be useless. I'd also
appreciate any corrections anyone has. I'm about as far from a
financial expert as you're likey to find, but I do love a good
spreadsheet, and I find PV/NPV to be an extremely powerful decision
aid.
- --
J.D. Baldwin
------------------------------
Date: Sat, 14 Mar 1998 17:03:13 -0500 (EST)
From: "Mike O'Connor" <mikeo@dibaind.com>
Subject: contractor vs. regular employee
Hello persfiners,
I will be graduating from college in May with a degree in computer
science. I am 27 years old and I have accumulated about $25,000 in
student loans, with an interest rate of about 7.8%. My goals are ot get
the loans paid off . I have gotten job offers in the $48,000 range that
I am considering, but I also have come across contracting opportunities
that pay in the $35-$40 an hour range. What I am wondering is which
would be the better choice financially? I am not too concerned about
benefits becasue I do not have a family nor do I intend to anytime soon.
Also, if I do work as a contractor, will I be able to deduct expenses
(such as a car payment) from my taxes?
Thanks in advance,
Mike O'Connor
------------------------------
Date: Sat, 14 Mar 1998 17:04:10 -0500 (EST)
From: "Ravinder Bhumbla" <rbhumbla@ford.com>
Subject: (Fwd) 401k rollover options?
I feel that if you are otherwise satisfied with your previous employer's
plan (in terms of administration and choice of investment), it makes
maximum sense to leave the money with the previous employer.
Here are my reasons:
1. Self-directed Traditional IRA:
Pros:
- ---
* Gives you maximum investment choice and control.
* Possible to take money out if you are willing to pay the tax and 10% penalty.
Cons:
- ----
* Cannot take a loan from it (something that is usually available if you have
your 401k with the *current* employer)
* If you have previous non-deductible contributions to any IRA account (even if
the rollover is not co-mingled), you cannot roll over just the non-deductible
contributions to a Roth IRA since non-deductible contributions have to come out
proportionally.
2. 401k with current employer:
Pros:
- ----
* Can take a loan.
Cons:
- ----
* Loss of control and reduced investment choices (compared to an IRA)
* Cannot take the money out even if you are willing to pay the tax/penalty
except in unusual circumstances like extreme financial hardship, medical
expenses.
3. Roll over to Roth IRA via traditional IRA:
Pros:
- ----
* Same investment choices and control as traditional IRA.
* Allows additional contribution to a tax-sheltered investment by paying taxes
from outside money.
* You *may* be able to access your contributions 5 years after rollover without
any penalty (depends on the anticipated Technical Corrections bill)
Cons:
- ----
* You have to pay tax on the amount now (although a 1998 rollover would spread
it over four years).
* You give up current tax savings in anticipation of future tax savings though
there is no guarantee the rules will remain the same by the time you retire -
to those who say "grandfather clause", I say "Universal Sales Tax, penalty on
excess distributions, etc."!
Leaving it with your previous employer gives you the option to go for any of
the above choices if you later decide that that is what you want to do. But,
if you make any other choice right now, the choice could be irreversible.
I liked the Roth IRA rollover option (especially as you can make additional
contribution by paying taxes with outside money) but am reluctant to give up
current tax advantages for future gains. Future Congresses would definitely
want to find ways to get their hands on money that they were cheated out of by
the current Congress. I'm hedging my bets by contributing separately (the
annual $2000) to my Roth IRA.
------------------------------
Date: Sat, 14 Mar 1998 17:04:47 -0500 (EST)
From: Steven Grad <sgrad@unix.asb.com>
Subject: Retail POS systems
I am looking for a good POS system with backroom support. I am currently
running a POS system made by Kodak some years ago, and is no longer
supported. I will have a year 2000 problem soon.
I need a program which can handle inventory, reorders, accounts rec. and be
able to print barcodes, ring up sales, etc. Is anyone using such a program
or can recommend a first rate program that will not break the bank!
I have been looking into several but none seem to be able to do it.
If this is not the correct place to post my question, and suggestions as to
a better place will be appreciated.
Thanks
Steve
------------------------------
Date: Sat, 14 Mar 1998 17:05:23 -0500 (EST)
From: HLO2-1/H12 225-4218 <horton@pasta.enet.dec.com>
Subject: Forced 401(k) transfer due to company take-over?
Hello, everyone!
The piece of Digital that I work for (Digital Semiconductor)
is soon to be taken over by Intel. Lately the Intel HR people
have been coming through telling us all about compensation, benefits,
vacation, and all that other HR stuff.
We have been told that our balances now with Digital's 401(k) plan
MUST be rolled over into Intel's 401(k). The Intel HR folks cite
some rule about "same job, same desk" employment changes; that is,
if you change employer only because of a corporate take-over or
corporate spin-off, and your job stays the same, you have no choice
but to roll your 401(k) balance into the new employer's plan
(if he has one).
Has anyone heard of such a rule? Am I indeed required to roll
my 401(k) balance (with my old employer) into the new employer's
401(k)? If so, what's the reasoning for such a rule?
Frankly, I am not impressed by the choice of mutual funds in the
Intel 401(k) plan. And besides, I'd rather roll my 401(k) balance
out into an IRA and enjoy the greater flexibility.
- -Jerry (now a Digit, soon to be an Idjit)
------------------------------
Date: Sat, 14 Mar 1998 17:05:53 -0500 (EST)
From: Jerry Derfler <niffer@cjnetworks.com>
Subject: Offer price on new residential construction
I have purchased and sold several "used" homes and understand the
mechanics of list price, offer and counter offer.
How much wiggle room does a residential builder have to accept my offer
of less than full price for his cost to began construction on a new home
for me? Price quoted by builder is near $120,000.
Thanks in advance.
------------------------------
Date: Sat, 14 Mar 1998 17:06:29 -0500 (EST)
From: "Anderson, Alfred I." <anderson@mayo.edu>
Subject: Purchasing Foreclosure Property
I'm looking for ways to purchase single-family homes for rental purposes and
the following idea came to mind. Can you help me find flaws in this approach?
Find property being foreclosed. Look for property in a good neighborhood where
the amount due on the mortgage is in a "reasonable" range. If the house looks
good from the outside, send the owner a letter with the following terms:
I'd purchase at $2,000 over the mortgage balance due (they'd pay the balance
and deliver a warranty deed to me after I had a title search run).
I'd rent the house back to them for a monthly rent to cover my actual costs
plus a small percentage. My "profit" would be the depreciation on my taxes.
As long as they are renting the house from me, they could buy the house
back from me for my actual investment + 10%. If they leave the house, they
forefit their right to buy the house back. They would rent on a lease
with a first months rent and security deposit paid in advance (thus the
$2,000).
Can anyone identify problems with this approach? It looks like a win-win for
both parties.
Alfred
***************************************************************
* Alfred Anderson OV ID: AP00085 Internet: anderson@mayo.edu *
* Mayo Foundation (507)284-9123 Pager: 4-6014 *
***************************************************************
------------------------------
Date: Sat, 14 Mar 1998 17:07:12 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: pre approved mortgage
>Subject: Pre-approved mortgage?
>I am trying to do some advanced planning and need help. I will be
>purchasing a house in Florida during the next two years and think it might
>be a good idea to check out the amount of down payment I will need.
>Can anyone tell me:
>1) Are there fees one must pay in order to get pre-approved financing?
Some mortgage companies will charge fees to pre approve you, some won't
>2) Generally, how long is a pre-approval good?
If you lock in an interest rate, usually 60 days max. If you do not lock
in an interest rate, check with the mortgage company. If your income
ratios are better than the minimum required to repay the loan, you could
get a longer time.
>Thanks,
>Jerry
GOOD LUCK
BOB FORD
------------------------------
Date: Sat, 14 Mar 1998 17:08:24 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: re: real estate advice
>From: "Mark Jay Kaplan" <mkaplan@execpc.com>
>snip
>We currently are thinking about 3 options.
>#1 4 bedroom great fixer-upper with possibilities for improvement. Price
>$150,000 on a 3 year land contract at 8%, only $2000 downpayment.We
>figure we can pay the $1500 a month payment and decorate/improve along
>the way. No major work needed now.
Unless you are a real estate professional, you should not buy on a land
contract unless you have good (expensive) legal advice in every step of
the sale.
Use either a mortgage or a trust deed to buy the property.
When you use a land contract, you do not buy the property. You just agree
with the seller that at some time in the future and if some conditions are
met the seller will deed the property to you. If you make any improvement
to the property, you are improving the seller's property. Listed below
are just a few problems with a land contract. A real estate attorney can
tell you many more.
1. How do you get title to the property if the sellers dies?
2. If you fail to meet the seller's conditions, you probably will loose any
equity you have built up in the property. That means that could make all
of the payments on the house until the last one and you still would not
have any equity.
3. What happens if the seller is bankrupt? He probably can not give you a
deed.
GOOD LUCK
BOB FORD
------------------------------
End of persfin-digest V4 #134
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