- quote -

Curious! In my experience, no load funds (the typical C
share) can frequently cost more than a loaded fund (A
share). The internal fees and expenses are usually higher
enough on the C share that if you hold it more than 3 years
the C share actually costs more than buying the A share up
front.

Additionally, today's VAs offer multiple riders that can
insure the portfolio against loss - so the actual net risk
to the investor is ZERO. Yes, there are fees and costs
associated with these riders, but in the end does it matter
what the costs are if you get all your money back from VA
when an identical investment in MFs has dropped? I will
admit that VAs are not for everybody, but neither are Mutual
Funds, or stocks, or bonds, or tangibles like gold.

I checked VFINX and it does have a very low expense ratio.
It hasn't done too well over the last three years - the
three year average is -10.22% return (-9.06 in 2000, -12.02
in 2001, & -22.15 in 2002), but this looks like the only
dark mark on this particular fund and it did happen during a
particularly harsh Bear market. For the rolling year ending
09/30/03 it did return 24.23% and the 20-year average is
12.15. The down side to this investment is that during a
Bear market it doesn't do well, however if he investor stays
invested they should fair well over the long term, providing
they can ride it out.

Considering all of this, I don't consider this investment
suitable for everyone. I wouldn't consider this for the
average retiree who is interested in protecting capital and
is using the capital to generate income. The big hit of a
Bear market can be devastating on this kind of investor.

Of course, my recommendations for a retiree would not
necessarily be suitable for the young, aggressive investor.
Which is why an investment portfolio should be tailored for
the individual investor.

Gene E. Utterback, EA

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:
- quote -

Who's Dave? Sorry, Dieter.

I think the "50 and over" defintion would be in the quite
recent amendment to the Code allowing the "catch-up"
retirement contributions. I don't recognize the Rev Rul
you're describing. However, I do satisfy the definiton of
"over 50" whichever way it's defined...!

--LoTax

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LoTax wrote:
- quote -

1) Who's Dave?

2) "Over age 50" includes age "50 years, 1 day." Isn't
this one of those definitions that was BEFORE that
rev. ruling that declared someone of age "X" on the
anniversary of his birthday - i.e. it counts as of
the day AFTER a taxpayer's birthday?

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:

- quote -

I'm sure Dave meant to write "...and that's with the
50-and-over $500 catch-up (by those 50 years old and
older)."

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- quote -

Unfortunately, with an annuity you face ordinary income tax
(versus capital gains). Of course, depending on the
assumptions, you can make that go away. <grin
That additional tax cost, plus the higher internal insurance
and investment costs of an annuity (compare most annuity
funds to an index fund) make me prefer a no-load index fund.
Plus, there's the annuity's liquidity issue and lack of a
basis step up.

Anyway, I prefer a plain vanilla blue chip index fund such
as VFINX. With the low current yield and virtually no
capital gains distributions (I can't remember the last one),
it's practically tax deferred anyway.

-HW "Skip" Weldon
Columbia, SC

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David Viles wrote:

- quote -

Under the current law, there is only one way to legally
contribute more than $3k (or the future years' regular
limit), and that's with the over-age-50 $500 catch-up (by
those over 50 years old). Otherwise, the excess
contribution excise tax kicks in.

Consider a SEP-IRA if you are self-employed. That has a
higher limit, but requires a net profit.

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"David Viles" <dvilesNOSPAM[at]bellsouth.net> wrote:

- quote -

You can invest in an annuity, I don't think there's a limit
(or if there is, it's very high). The costs are a little
higher than ordinary mutual funds (to pay for the life
insurance component that guarantees certain benefits to
beneficiaries if you die early), but the earnings are
tax-deferred like retirement plans.

- quote -

Now I think you're confusing "defer" with "deduct". You
defer taxes on earnings in a retirement plan. You deduct
the original contributions from your income in the year that
you contribute them.

Anyway, $3,000 is the maximum you can currently contribute
in one year to an IRA. You may be able to deduct some or
all of it, depending on whether you're covered by a
retirement plan at work and your income.

--
Barry Margolin, barmar[at]alum.mit.edu
Level(3) Communications, Woburn, MA

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Look into variable annuities.

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I have no work retirement plan, and have contributed to a
conventional IRA for 6 years now. Is it possible to contribute
more than $3000 to any other type of tax deferred plan? Can I
contribute more if I don't defer the part over $3000.

By the way, I've got a Roth in the works for 2004. Also, I know
the limits move to $4000 in 2004-2006, then $5000 after that.

Thanks,

David Viles

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