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Jewish World Review Sept. 11, 2000 / 10 Elul, 5760

Bruce Williams

Bruce Williams
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Consumer Reports

Must I pay for my gifted child's college tuition? -- DEAR BRUCE: My daughter is gifted. She is very bright and has been an honor student all the way through school. Now that she is one year from graduating from high school, she is in the process of picking a college. The problem is that she has her heart set on an Ivy League school. One year's tuition would exhaust my entire life savings. I know I can take the money out of my retirement plan for education, and I want the best for my daughter, whom I raised by myself, but is it reasonable to expect me to sacrifice any possibility of a decent retirement in this effort? Maybe it's a moral question, but I'm not sure what to do, and it's really getting me down. -- R.E., via e-mail

DEAR R.E.: In my opinion, it is absolute insanity for parents to impoverish themselves for a kid's college education. If the youngster wants to go to a particular school badly enough, she'll find a way. I understand that your daughter has a good mind; there are many, many scholarships that she can apply for. You might contact the loan officers at the college now and find out what you can do to obtain financing, grants, etc. It's my view that a parents have a responsibility to give their kids good moral values and a solid foundation of ethics. In no way do you owe your youngster a college education. If she can't go to the Ivy League school, that may be unfortunate, but there are certainly many institutions which are a whole lot less expensive.

I would never suggest to you or anyone that you should deplete your retirement money so that your youngster can have an easy ride in college. There are hundreds of thousands of people who have put themselves through school, and there is no reason why your daughter can't be added to that list.

DEAR BRUCE: After 13 years, I have changed employers. For 12 of those 13 years I contributed to my 401(k), and there is a substantial amount of money there. Now I'm faced with a decision about whether I should take it out and pay some bills, roll it over into an IRA or a Roth IRA, or leave it where it is. I am very happy with its performance up until now. I am 32 years old, and my new job promises to pay better -- and of course in a short time I will be eligible to contribute to the retirement plan here as well. -- C.D., via e-mail

DEAR C.D.: If it ain't broke, don't fix it. Since it is doing well, why not just leave it where it is as long as you have that option? Otherwise, you could roll it over into a traditional IRA, and you do have an option of rolling it into a Roth -- but then you would have to pay the taxes that are due, which could be substantial. It may very well kick you into a higher tax bracket.

There is yet another possibility -- that you could transfer into a Roth that portion of the money which will not put you into a higher tax bracket. This of course is dependent on your being in one of the lower brackets. If you are earning a great deal of money, then the overwhelming likelihood is that you would be better advised to leave it where it is or in the traditional IRA. If you are more comfortable in calling your own shots, by all means move it over. You realize, too, that there is nothing to prevent you from investing the money in that self-directed IRA in exactly that same fashion as it is being invested by your 401(k) custodian now. You've got lots of options, but the one that you should never consider is taking the money out to pay bills. You will pay huge penalties in real dollars now, taxes now, but, most important, you give up a shelter for the next 30 years. The value of that is incalculable.

DEAR BRUCE: Our piece of property, about 10 acres, was cut out of a very large farm. The property itself is technically landlocked. However, we have an easement across the property in the front out to the road that is ours in perpetuity and can be passed along to any future owners. That has worked out very well until recently, when the property in front was sold. The guy who bought the house says that land is his, and he can do as he wants with it, including blocking it off. If it's blocked off, we have no way to reach our home. What shall we do? -- A.A., via e-mail

DEAR A.A.: Immediately contact your attorney, and have him advise this miscreant of your rights. You might even send him a copy of the description of the easement. While there may be restrictions on you such as paving, the easement clearly allows you ingress and egress. You may as well cut this right off at the pass. What he thinks is now a liberty will next become a right in his mind. Step on him quick.

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).


09/08/00: We got bitten on purchase of dog
09/06/00: Pools can soak you
08/28/00: When the insurance company has an 'out'
08/25/00: When to buy a home
08/24/00: More 'interest' to live on
08/22/00: Paying for private school
08/18/00: Don't make huge down payments
08/16/00: IRAs for people with pensions
08/15/00: She doesn't deserve a break
08/11/00: Her shopping will ruin us
Yes, a contract means something
08/10/00: Her shopping will ruin us
08/09/00: A $1,500 car ... for $3,000
08/04/00: Time to take on the airlines
08/02/00: How can I retire at 62?
08/01/00: Cash in your savings bonds
07/28/00: Hold onto a mortgage under 7 percent
07/26/00: I want my partner to buy me out
07/25/00: Negotiate with your neighbor
07/21/00: How can I finally start saving soundly?
07/20/00: Where's my prize?
07/18/00: Getting out of an upside-down loan
07/13/00: Death is no escape
07/12/00: Multiplying dollars
07/10/00: Making sense of retirement investing
07/07/00: 'Bankruptcy does follow us around'
07/06/00: In which state should I file my income tax?
07/03/00: When to diversify assets
06/30/00: I'm buying my dad's house
06/29/00: How social security seniors should invest
06/27/00: Waiting before re-establishing credit
06/21/00: Insuring an older car
06/19/00: Take the money and run!
06/16/00: Utility company incursion
06/15/00: Insurance settlement is no bargain
06/13/00: A straightforward form of bankruptcy
06/08/00: In the computer's clutches
06/07/00: The trouble with tenants
06/05/00: Do I really need title insurance?
06/01/00: The truth about nursing home insurance
05/30/00: Keep mother-daughter loan simple
05/25/00: CDs for security, not investment
05/24/00: Battling with collection agency
05/22/00: Are callable CDs a waste of time?
05/18/00: Building a college fund
05/16/00: Even death brings no relief
05/15/00: House is 'worth' what's offered
05/12/00: Borrow from Mom and Dad?
05/11/00: Your heirs, your choice
05/09/00: Mutual-fund investigations
05/05/00: Credit cards vs. debit cards
05/04/00: Lawyer are good for something
05/03/00: The binding nature of contracts
05/02/00: You know you are in trouble when ...
05/01/00: Can primary residence be rented out?
04/28/00: A full refund after five years?
04/25/00: Get a homeowner's title policy!
04/24/00: Beware of errors in your favor
04/18/00: $10,000 limit on gifts
04/17/00: Invest or repay student loans?
04/13/00: Beware of Internet auctions
04/11/00: Six percent is a pittance
04/10/00: Married couples should share windfall
04/07/00: How not to blow an inheritance
04/06/00: Get genetic screening for Tay-Sachs
04/05/00: Beating the look-back period
04/04/00: Providing for retirement
04/03/00: Readers disagree on time shares
03/30/00: The road back to good credit
03/29/00: Pre-tax dollars in IRA taxed later
03/27/00: Gambling on business ventures
03/22/00: Old cars as hobby, not investment
03/20/00: Tax on foreign gifts?
03/16/00: How to buy government bonds
03/13/00: Buying treasury instruments
03/09/00: Subcontractors must pay S.S.
03/08/00: Real-estate lawyers are essential
03/07/00: Don't expect compensation for ideas
03/06/00: Too rich for a Roth IRA?
03/01/00: Is time-sharing a scam?
02/29/00: Paying for nursing-home care
02/28/00: Rely on a real-estate lawyer
02/23/00: Keeping child's money safe from divorce
02/16/00: Just how important is a 401(k)?
02/14/00: Shaky partnership buying house
02/11/00: Protection by residential zoning
02/09/00: Benefiting from a reverse mortgage
02/07/00: Ensure your insurability
02/04/00: Absurd community zoning laws
02/02/00: Money or securities?
02/01/00: Can we KO a custodian?
01/31/00: Why sell a home you love?
01/26/00: Everyone needs a will
01/25/00: Will splitting stocks affect rollover?
01/24/00: Should early retirees contribute to SEP?
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