Jewish World Review March 6, 2000 / 29 Adar I, 5760
Too rich for a Roth IRA?
DEAR BRUCE: I'm 33 and my wife is 31, and our combined annual income is $103,000. We are both interested in starting Roth IRA accounts, but we are not sure if our incomes are too high. -- A.H. Dayton, Ohio
DEAR A.H.: To get the full benefit of a Roth IRA, as joint filers, you and your wife's adjusted gross income must be $150,000 or less.
DEAR BRUCE: My wife and I own two homes, one in California and the other in Nevada. The Nevada property was a recent acquisition. We plan to spend about half of our time in each location. For tax purposes, we would like to establish the Nevada property as our primary residence. What do we need to do to achieve this? -- A.R. (e-mail)
DEAR A.R.: You know that California is going to want you to continue to pay their income tax since Nevada has none.
I too maintain a couple of homes, and what I did was to move everything to one house. I pay my bills from here, I vote from that address, my dog has a collar issued by the appropriate authorities in the area. My driver's license, my library card and my cars are also registered there.
If you did the same, even if you don't spend 12 months of the year in Nevada, it would be pretty hard to argue that it is not your permanent address.
You should also have a full wardrobe in the house. Under no circumstances can you lease the house out or even give it to friends for extended periods of time. In short, give all of the appearances of a lived-in home.
There is nothing that says you must live there year-round to collect. You get to choose where you consider yourself to be at home. In fact, one of our former presidents used a hotel in Houston, Texas, for his permanent address.
DEAR BRUCE: My wife and I are teachers and have accumulated about $210,000 in our retirement fund, but we have tried to stay very safe and have earned only 4 percent to 7 percent. I am 52 and my wife is 49 and we would like to retire around 60.
We recently moved $150,000 of these funds into a mutual fund. The investments were made with a large national company through an agent that I have known forever. He is an honest, hardworking fellow, and I trust him.
Was this a good idea? -- S.M. Eureka, Calif.
DEAR S.M.: I think that it was a good idea that was well overdue. Assuming you have an adviser who knows the marketplace, he certainly will have no difficulty in achieving a far greater return for you than the pittance you had been receiving. It's just a shame that you didn't make this decision three or four years ago, but then, hindsight is 20/20.
I would consider putting all my money into something a tad risky because the reward could be so much
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
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01/06/00: Check references before hiring an advisor
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12/27/99: Checking up on investment handlers
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08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...