401(k) scrutiny ahead

The Ticker

June 07, 1996|By Julius Westheimer

GOOD, BAD and mixed news about your money:

SURPRISING NEWS: "IRS Targets -401(k) Plans," reads the title of a June INC article. Excerpts:

"Bad news: IRS launches first full-scale audit program aimed at 401(k) plans. Good news: Sorry, there is none.

"If IRS determines your firm's 401(k) doesn't comply, you could owe overdue taxes, back interest payments, penalties. This is IRS' first all-out set of instructions to guide agents through 401(k) audits.

"If you're selected, expect tedious, time-consuming process where they'll check everything. Your troubles may worsen if

-401(k) contributions get reclassified as taxable income. Right away, consider hiring a

401(k) expert to make a preliminary audit."

MONEY FROM HOME: "Consider a home equity loan if you need money for a few years, like college tuition. For longer-term loans, refinance your mortgage for larger amount, since home equity loans have higher rates than comparable primary mortgages." ("Investing for Dummies," by Eric Tyson, $20)

SAD NEWS: "Median net worth of American households fell 14 percent from 1988 to 1993 to $37,600, after inflation adjustment. Loss largest for younger households. Chief culprit: falling real estate values." (American Demographics)

MONEY-SAVING NEWS: "Surprising Places Where You Can Bargain," in McCall's, June, is worth reading. Highlights:

"Virtually everything is negotiable, heart operation to severance package. Snag super discounts on almost anything, if you know how to ask. Talk directly to person in charge; don't waste time with a clerk. Flattery works wonders. Assure seller you'll patronize him/her in the future."

OF INTEREST: Kiplinger Letter (May 31) feels the Federal Reserve, surprised by economy's recent strength and subsequent inflation, will raise interest rates in July or August. "S&P economist David Blitzer believes the Fed will hike short interest rates, probably not until November." (S&P Outlook, June 5)

BANK ON IT: Did you realize that two banks with Maryland branches -- Citibank and NationsBank -- are under "Cyber-Savvy Banks: A Selected Listing," in Self magazine, June? The article is titled, "Home Banking Lets You Move Funds, Apply for Loans, etc., on the Cheap."

UNHAPPY NEWS: "Severance checks are shrinking, as worker tenure drops and companies tighten purse strings. Standard now: About one week per year of employment. In 1996's first quarter, median severance shrank to 12 weeks, down from 18 in 1991." (Business Week, June 10)

LOCAL NEWS: Alex. Brown is listed under "The New Game in New Issues: Biggest Underwriters," in Forbes, June 17.

Morry Zolet, certified financial planner, says, "Outlook bright for investors in Israel. Growth Fund of Israel should benefit from billions of dollars going into joint infrastructure projects with Jordan."

Procter & Gamble, with its Cosmetics & Fragrances Division based in Hunt Valley, appears in a short list of "Core Stocks for Long-Term Appreciation" in S&P Outlook, June 5.

Kiplinger's Magazine, July, says, "Westinghouse stock was a dog for five years but the company is changing, now more a media company than a manufacturer."

Pub Date: 6/07/96

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