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======================== THE MOTLEY FOOL ======================== PERSONAL FINANCE Wednesday, November 21, 2001 ================================================================= IN THIS ISSUE - ASK THE FOOL: How to "Unconvert" an IRA http://www.fool.com/m.asp?i=542162 - RETIREMENT: Social Security Benefits and Income Taxes http://www.fool.com/m.asp?i=542163 - YOUR MONEY: Year-End Tax Advice http://www.fool.com/m.asp?i=542164 - LBYM Tip of the Week: Savings Tricks for Dog Owners http://www.fool.com/m.asp?i=542165 ================================================================= SPONSORED BY: ShareBuilder Buy stocks for just $4! Make dollar-based investments in the stocks and index shares you choose for just $4 per transaction. Or, pay $12 per month for unlimited stock buys. http://www.lnksrv.com/m.asp?i=542166 ================================================================= ASK THE FOOL Q. Last January I converted my traditional IRA to a Roth IRA. It seemed like a good idea at the time because the account had dropped pretty dramatically since the previous year, so the taxes looked like a bargain. Now the account has dropped another 25%. I'm going to be paying taxes on money that has disappeared! Can I do anything about this? -- Jumped the Gun A. Best laid plans go oft awry, eh? I'm sure you weren't the only one who took advantage of what seemed to be a market bottom last winter to convert your traditional IRA to a Roth. It seemed like a good move, given what we knew at the time. By converting in January, you gave yourself 16 months to prepare to pay the taxes that would be due on the conversion, and you picked a time when the value of your account appeared to be relatively low. So much for good planning. Relax, Jumped -- Uncle Sam in his infinite wisdom has given you an out, but not an easy one. You can unconvert your Roth (it's called a recharacterization in IRS-speak) and -- poof! -- those taxes that would have been due next April will vanish. But then you are left with a traditional IRA instead of a Roth, which wasn't your goal. So the next question is, can you convert IRA Deux back to a Roth and lock in the lower valuation? Well, yes... and no. Full Answer: http://www.fool.com/m.asp?i=542167 ----------------------------------------------------------------- RETIREMENT SOCIAL SECURITY BENEFITS AND INCOME TAXES Each year many Social Security benefit recipients are surprised to learn that part of those payments may be considered as taxable income. Worse, they fail to file quarterly estimated income taxes on their Social Security benefits. As a result, they could end up having to pay both the unexpected added income tax plus a penalty. David Braze explains how to be prepared. Full Story: http://www.fool.com/m.asp?i=542168 ----------------------------------------------------------------- YOUR MONEY YEAR-END TAX ADVICE Do you expect to make more money next year than this year? That's good news, but what will happen to your tax burden if you are bumped into a higher tax bracket in 2002? Your best bet is to start planning your tax strategy now. If you think you may be in a higher tax bracket in 2002, you may want to try shifting some of your income into the 2001 calendar year with these tips: - Year-End Bonuses: If your employer generally pays bonuses after the end of the current year, you might try to negotiate to have your bonus paid to you before the end of 2001. - Retirement Plan Distribution: If you are taking money from a retirement plan, consider taking your withdrawals before the end of this year, rather than waiting until next year. Even if you have no immediate use for the money, paying tax in 2001 and simply putting the money in the bank (or other investments) may be a smarter way to go. - Roth IRA Conversion: If you convert a regular IRA to a Roth IRA, you'll be required to report taxable income in the year of the conversion. So you might want to increase your 2001 income by making a Roth IRA conversion prior to the end of the year. - Investments: Review your portfolio now. Try to determine your gains and losses for the year. See if there are stocks, bonds, or mutual funds you might want to sell. You might want to take some additional short-term stock gains in 2001. For more info on year-end tax strategies, visit our tax area and read our articles on the subject. http://www.fool.com/m.asp?i=542169 http://www.fool.com/m.asp?i=542170 ----------------------------------------------------------------- LIVING BELOW YOUR MEANS - TIP OF THE WEEK SAVINGS TRICKS FOR DOG OWNERS Those cute little bundles of fluff can take a bite out of your wallet. Here are seven ways to be a good pet parent and still be financially Foolish: - Adopt from a shelter. A purebred, pet-store puppy can cost anywhere from $500 to several thousand dollars. Why not look into adopting an animal from the Humane Society or a local animal shelter? The costs are minimal and you get the added bonus of knowing that you may have saved a life. Check with your American Society for the Prevention of Cruelty to Animals (ASPCA) for a list of shelters in your area. - Spay or neuter your dog. OK, so don't tell her beforehand, but your little Fifi LaRue will thank you for it later. Many shelters will waive spaying or neutering fees in order to encourage pet population control. - Get your dog vaccinated. Think preventative maintenance. Those heart worm pills are much cheaper than actually treating heart worm. - Train your puppy. A puppy kindergarten class can cost as little as $25. The cost of repairing furniture that has been gnawed on, ruined shoes, and your frittered patience can be much higher. - Choose the right vet. Instead of paying four first-visit fees, find the right vet right away. Ask your friends and neighbors if they can recommend someone. Call around and ask what the cost of an initial visit would be. - Be creative with pet toys. The ones at the pet store often look appealing with their glitzy packaging. But sometimes the best toys are free or cost next to nothing, like grungy tennis balls and old stuffed animals. - Brush their teeth. I know, "You want me to do what?" But a University of Minnesota study showed that 80% of dogs and 70% of cats have a gum disease by age 3. Vets recommend brushing your pet's pearly whites several times a week. See the "You can pay me now, or you can pay me later" theory above. Visit our Pet Lovers discussion board to share your own tricks. http://www.fool.com/m.asp?i=542171 ================================================================= SPONSORED BY: ShareBuilder Buy stocks for just $4! Make dollar-based investments in the stocks and index shares you choose for just $4 per transaction. Or, pay $12 per month for unlimited stock buys. http://www.lnksrv.com/m.asp?i=542172 ================================================================= My Portfolio: http://www.fool.com/m.asp?i=542173 My Discussion Boards: http://www.fool.com/m.asp?i=542174 WANNA TAKE THE SHORTCUT? Check out our new Crash Courses, the fastest way to get your finances in order. Get results in less than an hour, for just $10. Try one today! http://www.fool.com/m.asp?i=542175 PERKS FOR FOOLS ONLY Get free stuff and special offers, just for you! http://www.fool.com/m.asp?i=542176 CUSTOMER SERVICE Ask our staff for help with email delivery problems. http://www.fool.com/m.asp?i=542177 UNSUBSCRIBE Here's how to unsubscribe or change your settings. http://www.fool.com/community/freemail/freemaillogin.asp?email=rshapiro@enron.com _____________________________________________________ Copyright © 1995-2001 The Motley Fool. All rights reserved. Legal Information: http://www.fool.com/m.asp?i=542178 MsgId: msg-23591-2001-11-21_11-50-37-4263706_25_Plain_MessageAddress.msg-11:52:08(11-21-2001) X-Version: mailer-sender-master,v 1.84 X-Version: mailer-sender-daemon,v 1.84 Message-Recipient: rshapiro@enron.com
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