|
Posted by R. C. White on October 17, 2007, 11:53 pm
Please log in for more thread options Hi, Andrew.
> Really? So I'm curious now. What sort of retirement plan did you have?
> Just a pension? Independently wealthy? Currently eating dog food and
> loving it? :-)
No pension except Social Security. Not independently wealthy. Just a good
education, hard work and long hours for 30 tax seasons, spending less than
we made - and good luck, I guess. As I think I've said before, it's partly
a matter of my personal philosophy and partly a matter of timing. The
current Keogh/IRA/401(k) climate did not occur all at once. It arrived in
incremental stages during my working years in the 1960s to 1980s, with each
stage a couple of years too late to do me any good. By the time I might
have qualified, I had stopped paying interest and started earning some.
THAT's the hump that most folks never get over. From there, it was just a
matter of investing and reinvesting our savings until it snowballed into a
nest egg. Haven't had to eat dog food yet. ;<)
> Damn credit cards and
> debts - what a bother. But still I want to account for them and pay
> them, hopefully off.
Credit cards are a wonderful tool, when properly used. We've used them for
decades and never pay any interest or annual fee. We use THEIR money - and
earn interest on it - instead of letting them use ours. We never even look
at the interest rates on our cards because we're not going to pay it,
anyhow.
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Quicken 2008 Deluxe in Vista Ultimate x64 SP1 beta)
> R. C. White wrote:
>> Hi, RC. (Love that name!)
>>
>> You shouldn't enter it in YOUR books at all, because it isn't YOUR
>> income.
>>
>> I've never had an IRA, 401(k) or similar plan,
> Really? So I'm curious now. What sort of retirement plan did you have?
> Just a pension? Independently wealthy? Currently eating dog food and
> loving it? :-)
>> and have never used Quicken to account for one, even for a client.
>> But I was in practice when Congressman Keogh got Congress to pass the
>> first of such retirement plans back in the 1960s. These plans were
>> invented to allow self-employed individuals to get tax benefits
>> similar to those enjoyed only by employees whose employers established
>> retirement plans.
>>
>> The essential theory in all these plans is that a TRUST is created.
>> Money is contributed to the Trust and no longer belongs to the
>> contributor. It is technically owned by the Trustee, who has a
>> fiduciary duty to manage it, in accordance with the Trust agreement,
>> for the benefit of the beneficiary - the future retiree. So, while
>> the beneficiary has a strong interest in what happens to the funds in
>> the Trust, that money does not belong to the beneficiary until it is
>> paid out of the Trust to him, at retirement (or early termination of
>> the Trust). The beneficiary's income statement should not reflect any
>> transactions or growth in the Trust, except maybe by a footnote. And
>> the beneficiary's balance sheet should not include the balance in the
>> Trust - again, except in a footnote.
>>
>> As I said, I've never used Quicken for such a plan, but I THINK it
>> should be in a separate Quicken "file" - actually a set of related
>> files - established for the Trust by the Trustee. All that should
>> show up in YOUR Quicken file should be contributions from your
>> checking account, or via payroll deductions, to the Trustee - and the
>> eventual retirement checks coming from the Trust. The Trust's file
>> should reflect receipt of the contributions, plus all income, expenses
>> and other transactions by the Trustee, including eventual pension
>> payouts.
> I'd say most people use Quicken merely to get control over their
> spending. IOW they get it to manage their checking account. Some enter
> accounts for their savings and their credit cards. Damn credit cards and
> debts - what a bother. But still I want to account for them and pay
> them, hopefully off. Some then get into online banking to make paying
> off such debts and other expenses in an easier fashion. Some look at
> /the bottom line/ and realize it's largely negative. I mean I have my
> checking account then mostly liabilities like credit card accounts,
> perhaps a car loan and mortgage. So some then think "Well gee I do have
> a car worth some money and a house worth some money" and enter in asset
> accounts for those. Then they start thinking about their retirement and
> how those are assets too. Plus they want to make sure that their
> investment choices don't suck. So entering in 401(k) and other
> retirement accounts and/or other non retirement accounts become
> something they want to have in Quicken so as to have /The Big Picture/.
>
> As such tracking retirement accounts makes sense in the same Quicken
> file so one can take advantage of Quicken's tools to get an accurate
> financial picture of ones finances. Additionally such information helps
> with Quicken's financial planning tools.
>
> Technically, legally perhaps the money isn't the individuals until
> withdrawn, however people rightfully see it as theirs as they are one of
> the few people who are allowed to gain access to it either at retirement
> or by paying early withdrawal penalties.
>> I know that most IRA beneficiaries ignore the legal niceties of all
>> this theory.
> Most people see it as it's money that belongs to them.
> --
> Andrew DeFaria <http://defaria.com>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap