From: owner-persfin-digest@lists.xmission.com (persfin-digest) To: persfin-digest@lists.xmission.com Subject: persfin-digest V5 #15 Reply-To: persfin Sender: owner-persfin-digest@lists.xmission.com Errors-To: owner-persfin-digest@lists.xmission.com Precedence: bulk X-No-Archive: yes persfin-digest Sunday, May 17 1998 Volume 05 : Number 015 In this issue: Re: Traditional vs. Roth IRA Re: persfin-digest V5 #14 Messy posts Re: persfin-digest V5 #14 Messy posts Re: Traditional vs. Roth IRA Setting an interest rate for a private loan Re: persfin-digest V5 #14 Rental Condo Questions about SIMPLE IRA The messages posted to the Persfin-Digest are opinions and are not intended to substitute for qualified professional advice. Subscribers should seek the services of qualifed professionals for such advice. The publisher, Internet provider, and Digest contributors cannot be held responsible for any loss incurred as a result of the application of any of the information provided here. Copyright (c) 1998, Jeff Salisbury POSTED SUBSCRIPTION FEE: $20/year. Payment is optional. You will not be billed. The Digest is available to all subscribers, whether or not they pay. I do not discriminate either in favor of paying subscribers or against nonpaying subscribers. If you feel that the information presented here is worth the fee, and you feel comfortable paying it, send cash, check, or money order (U.S. funds), payable to "Jeff Salisbury", to: Jeff Salisbury 65 North 1300 East Logan, Utah 84321 Payment will be acknowledged by e-mail if you include an e-mail address. Subscribe: e-mail majordomo@xmission.com, text: subscribe persfin-digest Unsubscribe: e-mail majordomo@xmission.net, text: unsubscribe persfin-digest ---------------------------------------------------------------------- Date: Fri, 15 May 1998 16:44:50 -0500 From: nowak@comm.mot.com (Mark Nowak) Subject: Re: Traditional vs. Roth IRA >Date: Thu, 14 May 1998 17:06:35 -0400 >From: PowellFamily >Subject: Traditional vs. Roth IRA > >According to all the information sent to me, the only time a Roth IRA is >to your advantage is if you think your tax bracket will be the same or >higher when you retire. Not true. If you make enough such that you can't deduct deposits into traditonal IRAs, you pay taxes on those deposits (which you first earned). Therefore, in this case for either a traditional IRA or a Roth you end up paying taxes up front in the same tax bracket. >Personally, I am planning for a lower tax >bracket. At that time my house will be paid for, my children will no >longer be living with us, and I have built up most of my necessities >already. > >I want to use the rest to LIVE along the way. I want to enjoy nice >vacations with my children. > >Do I think it would be advisable to change over a traditional to a Roth >IRA so you can pay taxes today instead of defer them which is what made >sense of an IRA to begin with? No Way! In the case I mention you not only defer taxes you eliminate any future taxes while still paying the ones you'd have to in either type of IRA. >Sherri Personally, I hope to be earning more from my investments by the time I retire than even my salary just prior to my retirement will provide, so my tax bracket may (hopefully WILL be higher) when I retire. It's a dream I know, but mathematically it is possible. For example, if inflation stays at 2 or 3% and you invest $1 at a 6% rate, at some point in the future (maybe very far in the future), you will be making lots of money without even working. If you make enough such that you can save and invest aggressively while not cutting out things you enjoy, the Roth ends up being the best deal by far. Mark - - ------------------------------ Date: Fri, 15 May 1998 17:59:07 -0400 From: GeorgeS Subject: Re: persfin-digest V5 #14 Messy posts Ref 1: > Ref 2: >Everyone.. >Instead, I have implemented some new automatic filters which do not work. - - ------------------------------ Date: Fri, 15 May 1998 16:12:49 -0600 From: jeff@scrooge.csd.sdl.usu.edu (Jeff Salisbury) Subject: Re: persfin-digest V5 #14 Messy posts On May 15, 3:59pm, GeorgeS > Ref 1: > > > > Ref 2: > >Everyone.. > >Instead, I have implemented some new automatic filters > > which do not work. > > > >-- End of excerpt from owner-persfin@lists.xmission.com George, In fact, it does work. -- it prevented your message from being sent to the group until I approved it. The reason you saw this undesirable stuff in some of the the messages in V5 #14, is that these messages were posted before the filters were implemented. The amount of this stuff getting through in all future digests should be drastically reduced. If something does get through, I'll adjust the filters as needed... Regards, Jeff - - ------------------------------ Date: Fri, 15 May 1998 17:00:20 -0600 From: jeff@scrooge.csd.sdl.usu.edu (Jeff Salisbury) Subject: Re: Traditional vs. Roth IRA On May 14, 5:06pm, PowellFamily wrote: > Subject: Traditional vs. Roth IRA > > Personally, I am planning for a lower tax > bracket. At that time my house will be paid for, my children will no > longer be living with us, and I have built up most of my necessities > already. Sherri, If your house will be paid for and your children will be gone, that would tend to push you into a higher tax bracket and argue for a Roth. > > Do I think it would be advisable to change over a traditional to a Roth > IRA so you can pay taxes today instead of defer them which is what made > sense of an IRA to begin with? No Way! Also, there are other considerations with the Roth besides the higher/lower tax bracket reasoning: 1. You could look at it from a tax-diversification standpoint. Maybe you will be in a lower tax bracket -- maybe you won't. Also, maybe tax rates in the future will be higher -- maybe lower. If you put some retirement funds in both a traditional and Roth, you have "diversified" your taxes. 2. If you are currently in the lowest marginal tax bracket (15%), you don't have anywhere to go but up. In other words, switching to a Roth won't possibly hurt you (assuming tax rates stay the same). 3. Roths are generally more favorable for estate planning purposes. For example, if you expect to have more $ in your retirement accounts than you will spend in your lifetime, and you want to pass it on to your heirs, it may be wise to consider a Roth. With a Roth you will not be forced to take mandatory distributions at age 70 1/2. Have argued for Roths, let me say they seem to go against a tax philosophy I generally follow: Delay, delay, delay... Then, defer, defer, defer... Then, avoid, avoid, avoid... And the way you win the tax game, is to die before you pay them... Under some circumstances, the Roth is an exception to this tax philosophy. I for one plan to convert a portion of my IRA's to a Roth... > > Sherri > > - - >-- End of excerpt from PowellFamily - - ------------------------------ Date: Fri, 15 May 1998 17:12:15 +0000 From: "Abbott" Subject: Setting an interest rate for a private loan Hi Sandi, > She and my step-dad make "hard money" loans as a way to > supplement their retirement income. Recently, a lawyer told > them that the written agreement they had with one of their > less-than-stable borrowers was illegal, since the agreed-upon > interest rate of 18% (for a private, unsecured personal note) > was usurious. > > However, he did NOT tell them what was considered a fair > and legal amount. > > Any ideas where to find out? This is in California. Sorry, not a clue. What I would like to hear is why this is usurious, when many credit card companies charge even higher rates! Those are also unsecured "loans" to individuals. What could the difference possibly be? I do know that in Colorado, it is some where around 30% to be usurious, and that can be with security! Very confusing stuff isn't it. Joell labbott at mho dot net "Life is what happens to you While you're making other plans"JLennon - - ------------------------------ Date: Fri, 15 May 1998 21:19:17 -0400 From: Kent Shaw Subject: Re: persfin-digest V5 #14 >Date: Thu, 14 May 1998 08:54:57 -0400 >From: "Martin S. Turnauer" >Subject: buying rental condo > >I would like to findout what kind of experiences people on the list have >had owning a rental condo at a beach area. > >What kind of problems are encountered when you rent a property via an agency? > >Can this business be profitable? > >Thanks > I own a unit in Ocean City, MD. Has worked out ok so far. Some damage but don't expect to make a lot of money. Tax rules are rather restrictive on losses unless you are engaged in Real Estate. Luckily, my wife is! - - ------------------------------ Date: Fri, 15 May 1998 23:00:23 -0400 (EDT) From: BobWo Subject: Rental Condo Martin S. Turnauer recently wrote: > I would like to findout what kind of experiences people on the list have > had owning a rental condo at a beach area. > What kind of problems are encountered when you rent a property via an > agency? Can this business be profitable? Aloha Martin, We own a lovely one bedroom/ one bath condo in Kihei, Maui. we occupy the condo ourselves for 4 months a year and rent it out the rest of the time for $60 a night plus tax in the summer and $80 a night plus tax in the winter. We have owned the condo for a little three years. We are very pleased with it so far. We rent it out ourselves, and we also have a local rental agent/property manager. We really have not encountered any rental problems. We didn't realize that we would really enjoy comng back to our own unit as much as we do. The condo is not realy profitable, but we do cover all of our costs and have a little left over, but that is without any debt service. E-mail if you would like to discuss further. Bob - - ------------------------------ Date: Sun, 17 May 1998 16:32:04 -0500 (CDT) From: T Koyn Subject: Questions about SIMPLE IRA A friend is considering setting up a SIMPLE IRA for a sole proprietorship sideline business and we have a few questions about the SIMPLE IRA and the other alternatives: 1. If the sole proprietorship shows a profit of say, $3000.00 for the year, can the entire $3000.00 be put aside (since it is less than the $6000 SIMPLE limit)? Or how much can be put aside? 2. Does one pay self employment taxes on the money put in a SIMPLE IRA? What about the alternatives SEP IRA? Keogh? 401K? Profit sharing plan? Money purchase plan? Do any of these save on self employment taxes? 3. With a SIMPLE and sole proprietorship, how do "employer contributions" work? If profit is $3000.00, what is maximum that can be put aside? $3000.00? $3000.00 + 3% match = $3090.00? If profit is $10,000, would max be $6000.00 (the yearly employee contribution limit) + 3% match = $6180.00? 4. Can use of a SIMPLE be combined with a traditional IRA or ROTH IRA? Would the total that can be set aside then be limited to the lesser of $6000.00 + employer match + $2000.00 and total earned income? 5. What are the tax reporting requirements for a SIMPLE? Where on the tax forms is contribution entered? Any additional forms to be filed when starting, terminating, or maintaining the plan? 6. I understand that employees who have received $5,000 pay two years must be included in the plan. Is there a minimum profit level before the sole proprietor may include him/herself? Does one have to earn $5,000 profit to use the SIMPLE? 7. Can a sole proprietor change to another type of plan for a later year, e.g. a profit sharing/money purchase plan? This would be more appropriate if profits increase. Could they change back to the SIMPLE if profits later decline, making the SIMPLE more attractive again? The SIMPLE is good for low profit situations because it does not specify a 15-25% percentage of earnings limit. 8. For a sole proprietorship, when during the year must the plan be started? When must the year's contribution be sent in by? Can the contribution be sent until April 15, so that the actual profit could be calculated to ensure the contribution does not exceed the profit? 9. If a person later starts a second business or takes a job that also uses a SIMPLE, can both business/work activitives use SIMPLE and would the limit on contributions then be $6000.00 for both combined, or is $6000.00 limit per business or job? If you know the answers to any or all of these questions, I would appreciate it greatly if you could share your knowledge with the group and send me an email copy. Thanks in advance for any help you provide. koyn@anet-stl.com - - ------------------------------ End of persfin-digest V5 #15 **************************** - To unsubscribe to persfin-digest, send an email to "majordomo@xmission.com" with "unsubscribe persfin-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.