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By Rosemary White, August 26, 2010 9:01 pm

You probably don’t have to worry about whether or not the money you contribute to your 401(k) gets into your account.  You may have to be thinking about the fees you’re paying (I discussed that last time).  But there have been increasing numbers of employers who have pilfered employee money before it’s gotten invested.  I know times are tough, but do these people think they won’t be caught or that the employees aren’t eventually going to notice? 

The federal agency responsible for monitoring this activity is the U.S. Labor Department’s Employee Benefit Security Administration.  They’ve really had their hands full in the last few years.  One recent case involved Eric C. Mitchell & Associates, Inc. in Bedford, New Hampshire.  Seems the plan’s trustee, Eric C. Mitchell, directed more than $20,000 of employee contributions into the company’s accounts for regular business operations.  Then there is Explore General which snatched $70,000 in employee contributions and $100,000 in employer matches. 

To protect yourself, monitor your account statements (on paper and online) to guarantee that your dough is getting to your account.  If you think your employer is having money trouble, be especially vigilant in your review.  Companies have 7 days to deposit the employee contributions.  If they seem to be consistently late, don’t hesitate to call the Labor Department:  1-866-444-3272.  Until next time, heres to good planning!

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By Rosemary White, August 24, 2010 2:26 pm

That probably seems like an odd question.  But if you contribute to a 401(k) plan at work, then you’re going to want to know about the new regulations issued recently by the U.S. Department of Labor.  In a move that’s good news for employees, these new rules will require 401(k) service providers to disclose all the fees that are deducted from a participant’s account.  In addition, service providers that are paid $1,000 or more must document the direct and indirect compensation they receive.  You may be surprised at what you see. 

Direct compensation is paid directly from the 401(k) plan; indirect compensation comes from sources other than the plan sponsor (your employer) and goes to the 401(k) record-keeper, investment manager, etc., for things like sales charges, redemption fees, surrender charges, etc.  There are a number of moving parts to every 401(k).  Each gets its cut.  More than 50 million Americans are saving for retirement in a 401(k) plan.  These plans vastly outnumber the number of pension plans (defined benefit).

And that 1%?  The Government Accountability Office reports that a 1% difference in 401(k) fees can cut your retirement assets by almost 20%.   Fees do matter.  And on July 16, 2011, you’ll be able to see just how much your employer’s plan costs.  In the meantime, find out what the expenses are for the funds you’re currently holding in your account.  If it’s not on your statement, call the fund company and ask for a prospectus.  That’ll tell you everything you need to know.  Good luck.  Until next time, here’s to good planning!

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By Rosemary White, August 20, 2010 4:32 am

So a friend emailed me last week about how to get copies of her credit report.  It’s been a while since I’ve blogged about this (and a while since I’ve gotten my own reports from the three credit reporting agencies) so I thought I’d mention it again.  Just something to take care of before Labor Day as everybody gears up for the fall.

   ·     You can do it online at www.annualcreditreport.com/cra/index.jsp .  This site is run by the Federal Trade Commission (FTC)

   ·    You can call:  1-877-322-8228

   ·    You can get a request form at the web site above and mail it to:  Annual Credit Report Request Service, P. O. Box 105281, Atlanta, GA  30348-5281

Don’t wait for an unpleasant surprise.  Know what on your credit report and stay in control of your finances.   Until next time, here’s to good planning!

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By Rosemary White, August 17, 2010 5:38 am

So, it was a U.S. District Court judge last week that ruled against what he said were “unfair and deceptive business practices”.  We’ve heard this about many other businesses in the last few years and it is getting pretty old.  But when a judge accuses a big corporation of “profiteering”, then it’s definitely something I’m going to blog about.  And, you didn’t think there could be more negative news about a big bank?  Enter Wells Fargo & Co.

They’ve been ordered to pay customers $203 million, to reimburse them for multiple overdraft fees.  If you were a Wells Fargo customer, your online checking account would show your checks coming into your account in chronological order.  But, in reality, the bank had changed it policies to process checks, debit card transactions and bill payments from the highest dollar amount to the lowest.  That meant, if you had a modest balance in your account, you would be much more likely to bounce checks.  In many cases, some customers would have overdraft fees amounting to hundreds of dollars in one day.  Now, of course, the best way to avoid overdraft fees is to have enough dough in your account.  But during tough times, a lot of people are on the edge.  Bank records reportedly showed that nearly 40% of the bank’s overdraft revenue was coming from four percent of its customers. 

Judge William Alsup has ordered Wells Fargo to reverse overdraft fees charged to customers from November 15, 2004 through June 30, 2008.  The bank changed it’s policy earlier this year, but is appealing the decision (because they want more bad publicity).  Until next time, here’s to good planning!

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By Rosemary White, August 13, 2010 5:49 am

The Internal Revenue Service (IRS) announced last week that’s it’s going to stop releasing information about back taxes, child support or delinquent federal student loans owed by taxpayers.  Referred to as “debt indicators”, this information has been sent in the past to tax preparers by the IRS as an acknowledgement after a tax return was filed electronically.  The Agency, apparently,  letting the preparer (and the taxpayer) know the client’s refund may be redirected to pay these debts.  These indicators have been used by larger tax prep. companies to provide refund anticipation loans.  Those loans have been heavily criticized by consumer groups because they generally come with high fees and interest rates.  They are frequently offered to lower income taxpayers who need their refunds ASAP.

So, why’s the IRS dropping the debt indicator?  Since refunds can be direct deposited into a taxpayer’s bank account fairly quickly, the Agency figures it can still withhold a refund if back taxes are owed, and the Feds can move the money quickly…sometimes within ten days.   It may also reduce the number of refund anticipation loans, which would be a good thing, Martha.  I’m old fashioned.  I mail in my returns…and will continue to do so until it’s no longer an option.  Until next time, here’s to good planning!

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By Rosemary White, August 10, 2010 10:35 am

It’s official.  The Bay State is having another weekend where the state’s 6.25% sales tax will not be added to most purchases under $2,500.  It’s this coming weekend, August 14-15.  Not that I want you to run out and spend wildly.  But if you’ve had something on your list for a while, or you’ve got a long list of school supplies to get, this might be the best weekend to get things purchased, including beer, wine and alcohol.

The MA Department of Revenue estimates consumers may save between $20 and $23 million.    That’s certainly a chunk of money I’m sure the state could use, but tax revenues are bound to be significantly higher through the increased economic activity that’s bound to be generated.  The state has done this for several years and it’s always a popular move.  It’s especially popular with the Retailers Association of Massachusetts which has hailed the move as an important stimulus in this tough economy.  19 states are having a sales tax holiday this year according to the Federation of Tax Administrators. 

So, make a list of the bigger ticket items that you need….and happy shopping!  Until next time, here’s to good planning!

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By Rosemary White, August 6, 2010 5:50 am

I’m pretty tired of hearing about the end of the world that’s on its way because of the new health law.  I’d prefer to see how everything plays out once it starts kicking in.  But I did notice an article last week on CNNMoney.com about how employers may start having dependent eligibility audits done in an effort to weed out those who shouldn’t be part of an employee’s family coverage.  Eligibility audits typically boot 10% of listed dependents.  Of course, the new health insurance law will allow parents to keep their kids (up to age 26) on their health plan.

Some employers will be moving toward the “spousal carve out” plan.  If your spouse can get coverage through his/her employer, then your employer may deem him/her ineligible or add a surcharge to your coverage.  Actually, I’ve seen that already for domestic partners coverage.  Eliminating ineligible dependents can save companies between 4% and 6% of their annual health care premiums.  That’s not chicken feed. 

So, going forward, you may see a request for a copy of your marriage license…or divorce decree.  Apparently, some employees continue to claim their ex-spouse on their health coverage, even though the divorce paperwork says otherwise.  Some divorces require continued coverage for the ex.  Bottom line, don’t try to fudge coverage for someone.  If your company has a code of conduct, you might end up losing your job.  Is it worth losing your job just to cover your daughter-in-law?  Until next time, here’s to good planning!

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By Rosemary White, July 27, 2010 9:02 am

The average American household pays $107 a month for cell phone service.  Multiple phones, voice and data plans.  It’s always so easy to pay $15 a month for this and $30 a month for that.  Pretty soon, you’re shelling out a pretty good amount of dough.  I’ve always been pretty stingy about this sort of thing after the necessities like my insurance and investments are taken out of my checking accounts.  And so it is, also, with my cell phone.  Not usually one to have the very latest within hours of an unveiling, I like to wait until the bugs have been worked out. I’m proud to say that I still pay only $39.95 a month for 1,500 anytime minutes for cell service.  Not bad, eh?  I did, however, just add unlimited internet access last week for an additional $10.

But cell phones (smart phones, whatever) are becoming a huge money pit, as I bet you’ve noticed.  As more people use their phone to check their email, their favorite web site or watch a TV show, the costs associated with such pleasures are increasing.  Data is the future and the future will cost more.  Providers seem to have a knack for offering either too little or too much.  Here’s some ideas to keep your costs under control:

  *  If your carrier has a Friends and Family plan, make use of it.  You can list both friend, family and most called businesses

  *  Don’t pay for stuff you don’t use.  Do you really need phone insurance? 

  *  Don’t pay for directory assistance.  Try 800-GOOG-411 or 800-FREE-411

  *  Check your minute usage since January and if you’ve gone over, see what the next level of service vs. what you have paid for additional minutes under your current plan

  *  No need to be rushing for a smart phone, especially if you would have to change carriers and pay a whopping termination fee

  *  Save the TV shows for the TV.  Downloading a program uses a huge amount of data

And don’t forget to review your monthly bills.   Hope this helps.   Until next time, here’s to good planning!

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By Rosemary White, July 23, 2010 3:36 am

I’ve become a fan of the online group purchasing groups.  So far, I’m getting emails from four:  www.Groupon.com, www.Eversave.com, www.BuyWithMe.com and www.LivingSocial.com .   I’ve used one to get a terrific discount on barbeque at a great joint near me and another for a couple of stone massage treatments (or as a friend in the Midwest says, “rocks on your back”). 

It’s just another example of how the internet has changed everything.  On these sites, merchants decide the minimum number of customers they’re willing to offer a discount to.  If enough people want the product or service and enter in their credit card information online, then everybody gets the deal.  A great discount on something you want, at a price you may or may not pay again and the merchant has a throng of new customers in the store or calling to book their service.  What’s not to like.   I predict these sites will continue to thrive long after the economy recovers.  Half price on a cruise around Boston Harbor.  60% off for a massage.  Save $50 on a dinner at a fancy restaurant you’ve been wanting to try for years.   Everybody’s doing their part to help the economy.

Most of these online groups are operating in a number of different cities around the country.  Another reason to live in a metropolitan area?  Anyway, check out the sites.  Until next time, happy shopping and here’s to good planning!

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By Rosemary White, July 20, 2010 6:04 am

President Obama is scheduled to sign the new Wall Street Reform and Consumer Protection Act this week.   Some in Congress have already started yapping about repealing it.  Good luck to them.  It’s not as tough as some of us would have liked, but, in politics, you gotta do the best you can (hello, you on the left).  So, if you’re a consumer, here’s a few highlights that will help protect you down the road:

• Debit/Credit Cards – merchants will be allowed to offer a discount to customers who pay with debit cards that carry lower transaction fees, something that’s never been possible.  The Federal Reserve will also have the authority to cap the fees that Visa and Mastercard charge for processing transactions, currently averaging between 1.6% – 2%.  In Europe, these fees are as low as 0.2% so that should give the Fed some leverage, thereby helping to save struggling merchants some dough (and you, too, hopefully)
• Consumer Financial Protection Bureau – part of the Federal Reserve, it will have sweeping powers to regulate lending from the biggest banks down to pawn shops (but not car dealers).   The big question right now is who will head this agency.  Like many, I’m pulling for Elizabeth Warren, a professor at Harvard Law School.  Here’s her explanation last year why a Consumer Protection Agency was needed:  http://www.youtube.com/watch?v=lYd08e5Cjvs
• Investor Advocate – the new law will create an Investor Advocate within the Securities and Exchange Commission (SEC) that will represent the interests of retail investors
• Investor Disclosure – there will be increased disclosures required for retail investors before they invest in financial products
• Office of Financial Literacy – programs will be developed to teach Americans about savings, loans, fees and liens.  This will establish standards for financial advice programs and help Americans from becoming victims of scams
• Free Credit Scores – you’ll still be able to get a free peek at your credit histories annually from the three credit bureaus.  But now, the definition of “adverse action” is expanded to include not only denial of a loan or credit, but also being charged a higher interest rate than the one offered those with excellent credit
• Mortgages – no more easy mortgages or pre-payment penalties.  Full documentation will be required by lenders.  No more incentives to mortgage brokers who then push loans with unfavorable terms on borrowers

 I’ll keep you updated as things start kicking in.   Until next time, here’s to good planning!