Pick a time to balance accounts
over a year ago, I took over managing my accounts from our financial planner. I switched the accounts to Vanguard and read a couple of the books you have recommended. My question for you regards the rebalancing of the accounts. When the annual rebalancing is done, as has been recommended, do I concern myself whether the market is high or low? — S.F., Houston
Rebalancing should not be a source of hand-wringing. Remember, we don’t know the future — so speculating about the best moment to rebalance is not a fruitful use of your time. A less wearing path is to set some time of year, such as anytime in the first quarter, for when you rebalance. Set a date that suits you. And then, if the allocations have moved enough to get your attention, rebalance. If the change is small, don’t bother.
Why is the first quarter a good time? Two reasons. First, you are starting a new year and may want to make some cash distributions, even if you have not reached the age of required minimum distributions. If you have reached that age, the need for a distribution is a good time to rebalance.
I am 65 and my wife is 67. We are retired. I have a 401(k) with my past employer worth about $618,000. I want to be able to access some money each year for personal reasons, not to exceed 3 percent of the total investment. I understand that at age 70, if I am in an IRA, that one must make required minimum distributions. The 401(k) is invested in two bond funds. We also have a reserve account with about $30,000 in it.
Our combined Social Security benefits will be about $40,000 next year. I also have a defined-benefit pension of $43,500 a year, with a 100 percent survivor benefit to my wife if something happens to me first. So our total income is about $83,000 — without touching the $618,000 in the 401(k).
Question is: Should I roll over my 401(k) to a Roth or a traditional IRA? — B.K., Austin
Converting to a Roth is a non-starter for you unless you do it in small segments over a number of years, pushing the edge of the 15 percent tax bracket. Since a couple filing jointly can have a taxable income up to $70,700 in 2012 and remain within the 15 percent tax bracket, and you also have at least $19,500 in exemptions and the standard deduction — not to mention some of your Social Security benefits not being subject to taxation — you should make sufficient withdrawals from your tax-deferred accounts so you can put as much as possible into Roth accounts without triggering a 25 percent tax rate.
The tax brackets, exemptions and deductions are adjusted for inflation each year, so you should have some flexibility going forward. Also, the required minimum distribution schedule isn’t harsh: In your first year it is 3.65 percent..
I suggest visiting with your accountant so you’ll have the guidance of a professional. The main thought is that converting to a Roth isn’t worthwhile if you have to pay at a higher tax rate to do it.
This holiday season, the hottest trend among retailers isn’t found on a store shelf.
It’s taking place at the cash register.
Major retailers, from Best Buy to Toys R Us, are promising to match their competitors’ prices. Generally, customers just need to bring in an advertisement or printout to prove that the same item is available elsewhere at a lower price. In some cases, shoppers can come back with a receipt and get a refund for the difference if the price of an item they bought fell.
Best Buy Co. Inc., Target Inc., Wal-Mart Stores Inc. and Sears Inc. offer price matching to customers all year round. But what’s different now is that Best Buy and Target are matching online retailers such as Amazon.com for the first time. That’s a big deal, since online prices tend to be lower than those at stores.
Shoppers will be able to save some money, but they’re going to have to read a lot of fine print to do so.
“Price matching sounds good, but there are so many exclusions, it sometimes isn’t as good as it sounds,” said Edgar Dworsky, founder of ConsumerWorld.org, which tracks deals for shoppers.
For instance, Target limits the number of online retailers that it will price match against to five. Best Buy has selected 20, and said it will match online prices until Dec. 24.
Toys R Us is offering price matching for the first time and will only match prices that customers find in other brickand-mortar stores. Walmart also matches against in-store prices.
Even the most experienced bargain hunters can get tripped up by all the rules. Here are some ways to get the most out of price matching offers:
Know the policy
If you want to take advantage of a price match offer, read the store’s policy closely. You can find the guidelines on the store’s website. Print out the policy and bring it with you. Having a hard copy will be helpful if you need to argue your case.
Always bring the advertisement or the printed web page for the item you want to price match. Walmart doesn’t require bringing the ad because it says cashiers have access to all local advertisements. But Dworsky recommends bringing ads in anyway. If there’s any confusion, you’ll be better prepared to make your case no matter where you shop.
Some retailers will give you money back if you see a lower price after you buy an item. Keep your receipts and, particularly for big-ticket items, continue to look for lower prices.
Use customer service desk
Many retailers have hired cashiers specifically for the holiday rush, so the new employees may not be upto-speed on the store’s price matching policy. Heather Wheeler, who runs savings website TheKrazyCouponLady.com, recommends handling the transaction at the customer service desk.
Look beyond retailers
You can also price match depending on how you pay. EBay Inc.’s payment processer, PayPal, promises to match a lower price if you’ve already made a purchase using the service. That includes airline tickets. PayPal will match the prices of retailers that don’t let customers use PayPal, however. Just fill out a form and upload a receipt when you find a lower price. PayPal will give you back up to $1,000 for all purchases made until Dec. 31.
You should also ask your credit card company to see if it offers price matching. It’s rare, but a few cards do.
Sale signs at a Target store entice Black Friday shoppers last month. Big retailers are engaging in a price war this holiday season, and shoppers can score some good deals if they know how to navigate them.