Pick a time to bal­ance ac­counts

Austin American-Statesman - - BUSINESS - Scott Burns is a na­tion­ally syn­di­cated colum­nist. Send ques­tions to busi­ness@states­man.com.


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.

ByJoseph Pisani

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.

Bring proof

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.

Save re­ceipts

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.

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