In this issue

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review June 19, 2006 / 23 Sivan, 5766

Death in your financial plans

By Jan L. Warner & Jan Collins

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http://www.JewishWorldReview.com | Q: My wife and I plan to retire within the next five years. In addition to our home, which is paid for, we have IRAs, 401(k)s and CDs (certificates of deposit). We have been told by our financial adviser that we should invest everything in deferred tax-sheltered variable annuities because we are guaranteed not to lose our initial investments. We are both 56, our children are grown, we have saved for our retirement, and don't want to make a mistake.

A: First, understand that a deferred tax-sheltered annuity is actually little more than mutual funds being purchased and traded by an insurance company — generally with after-tax dollars — in a fashion that postpones income taxes on the earnings until you make withdrawals, at which time you are taxed at ordinary income rates. This financial product also includes a death benefit so that, at the death of the owner, the beneficiary will receive the higher of the account value or the death benefit, which is the original investment. Each of these components is accompanied by fees charged by the insurance company.

That said, your IRAs and 401(k)s are pre-tax accounts and are already "tax-sheltered" — meaning that you will not be taxed on the distributions until you begin making withdrawals. Because of the costs involved, we see no sound economic reason to purchase a "tax-deferred" annuity with "tax-deferred" dollars in an IRA or other pre-tax account other than to generate a sales commission and purchase the privilege of being charged additional fees.

As to your post-tax liquid funds — CDs, savings accounts and the like — you are currently taxed on the interest you earn based on the Form 1099 you received each year. While deferred tax-sheltered variable annuities may be good for some people, we suggest that you first have your financial adviser disclose to you 1) the ongoing fees, which tend to be high; 2) the limits on what you can withdraw during the first years of the investment without penalty; 3) the sales charges; and, probably most importantly, 4) the tax effect of having the low capital gains tax rates being transformed into high ordinary income tax rates when you make withdrawals.

Based on our research, it appears that the death benefit will cost you upwards of 1 percent per year, which may or may not be worth the "comfort level" of knowing you won't lose your investment. In addition, you will be charged other fees that have averaged at more than 2 percent per year. And, depending on the product you may purchase, the sales charge or commission will be passed on to you over a period of years.

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If, on the other hand, you invest in a quality mutual fund, you will save these fees and benefit from capital gains taxes on any profits your account may earn, rather than ordinary income from the annuity, which, in total, could be a healthy sum. And if you are concerned about death benefits, check the prices of some term life insurance. We suggest that you revisit these issues with your financial adviser — if you still trust him or her — so you can have full disclosure before you make your final decision.

Taking the NextStep: The repeal of the estate tax that — according to the malarkey spread by politicians — will save the average American death taxes, has stalled again. Folks, please understand that under current law, an unmarried individual must have more than $2 million in net assets at death to be required to file an estate tax return. Let no one kid you: The repeal of the estate tax is geared toward the approximately 1 percent of Americans who die each year, not the average farmer and small business owner.

Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.

JAN L. WARNER received his A.B. and J.D. degrees from the University of South Carolina and earned a Master of Legal Letters (L.L.M.) in Taxation from the Emory University School of Law in Atlanta, Georgia. He is a frequent lecturer at legal education and public information programs throughout the United States. His articles have been published in national and state legal publications. Jan Collins began co-authoring Flying SoloŽ in 1989. She has more than 27 years of experience as a journalist, writer, and editor. To comment or ask a question, please click here.


© 2006, Jan Warner