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Watch for fees on unemployment benefits

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NEW YORK (9/30/09)--Thirty-one states have issued prepaid debit cards to reduce their costs to print and mail unemployment checks. While this helps cash-strapped states save money, consumers may end up paying fees on their use (SmartMoney.com Sept. 4). Prepaid cards typically benefit the state, not the consumer. The state doesn’t pay a fee to the banks issuing the card, and can save millions on printing and postage. The banks get paid by the retailer when the consumer uses the card to make a purchase--in addition to any fees paid by the consumer. Federal rules allow at least one free ATM withdrawal per benefit payment, but you may get charged up to $1.50 per transaction after that. Some states charge for an automatic transfer to your bank account. If your transaction is declined because of nonsufficient funds, you also may be charged a fee. It’s typically free to check a balance online, but you may pay if you check it at an ATM. The best way to avoid misusing your unemployment earnings is to know what the rules and options are in your state. Direct deposit is usually a better option because of fewer or no fees. When filing for unemployment, be sure to ask about payment methods and get a copy of the fee schedule before you sign up for a prepaid debit card. For more information, see “Tough Times Series: Steps Before, During Layoff Make It Easier to Cope” in Home & Family Finance Resource Center.

IRS extends deadline to roll over 2009 RMDs

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MADISON, Wis. (9/28/09)--Individual Retirement Account (IRA) owners who have already received a 2009 required minimum distribution (RMD) this year are getting a break from the Internal Revenue Service (IRS). IRS announced Wednesday that individuals have until the later of Nov. 30, or 60 days after the date the distribution was received, to roll over a distribution. An RMD is the smallest annual amount that must be withdrawn from an IRA or qualified plan once the account owner reaches age 70 1/2. Late last year, The Worker, Retiree, and Employer Recovery Act of 2008 waived RMDs from IRAs and qualified retirement plans for 2009. Because of this legislation, IRA owners and beneficiaries who would have been required to receive an RMD for 2009 are not required to receive a distribution. Most financial institutions notified their IRA owners about the waiver and gave them the option of whether to waive the 2009 RMD or receive it as a distribution. But some IRA owners didn’t have time to notify their financial institution, didn’t realize that they could waive the RMD, or if they received the distribution, didn't know that they had 60 days to roll over the funds. In many cases, the IRA owner had no choice but to keep the RMD and pay taxes on it. IRS Notice 2009-82 grants relief for these IRA owners by extending the 60-day deadline for rolling over a distribution of the 2009 RMD from an IRA until Nov. 30. However, the extension does not affect the once-a-year rollover rule, so at most an IRA owner can roll over one distribution under this extension. “The IRS recognized the short amount of time financial institutions had last year to notify their IRA owners about the 2009 RMD waiver and the fact that many IRA owners received 2009 RMDs they may not have wanted and were not required to take,” said Dennis Zuehlke, compliance manager for Middleton, Wis.-based Ascensus IRA Services, which serves 80% of credit unions offering IRA programs. By permitting IRA owners extra time to roll over a 2009 RMD distribution, the IRS is helping them avoid taxes on distributions they were not required to take, Zuehlke said. Notice 2009-82 also provides guidance for qualified retirement plan sponsors and contains sample plan amendments that sponsors may use to stop or continue 2009 RMDs, he said.

HandFF Radio Consumer tips for military personnel

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WASHINGTON (9/25/09)--Sunday’s H&FF Radio show includes two segments targeted at military personnel, covering auto insurance and overdraft protection programs. Other experts tackle tax help for older individuals and online resources for consumers. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. A special welcome is extended to WELW AM 1330 in Cleveland, Ohio, which airs Home & Family Finance on Sundays 3-4 p.m. ET. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Federal Citizen Information Center: Consumer Resources Online,” with Teresa Nasif, director, U.S. General Services Administration’s Federal Citizen Information Center, Washington, D.C.; * “10 Things You need to Know About Auto Insurance for Military Personnel,” with Ethan Ewing, president, Bills.com, San Mateo, Calif.; * “Non-Sufficient Funds and Overdraft Protection Programs at Military Financial Institutions,” with Marocco Roberts, captain first class, and banking and credit union liaison officer, U.S. Army, the Pentagon, Arlington, Va.; * “Tax Help for the Elderly,” with Bonnie Speedy, national director, AARP Tax-Aide and vice president, AARP Foundation, Washington, D.C.; and * “Prize-linked Savings Programs: Is This the Incentive You Need?” with Chris Day, senior vice president, Marketing, NUnion CU, Lansing, Mich.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU, also known as WesCorp, and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. For more information, read “Tough Times Series: Services, Sites Help Veterans Navigate Benefits Maze” in Plan It: Retire Ready Toolkit.

Dont let college textbooks break the bank

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CHICAGO (9/23/09)--If you’re a college student who’s still reluctant to part with the $200 for that new chemistry textbook, don’t make a last-minute run to the campus bookstore just yet: There are ways to get the textbooks you need at a lower cost--or even for free (chicagotribune.com Sept. 4). It can take more time to explore other options than a single trip to the bookstore might, but the extra effort can translate into hundreds of dollars saved at the end of the school year. Consider these alternatives to braving the bookstore:
* Try your campus library. Many professors make copies of their required textbooks available on reserve at campus libraries--meaning you can check the book out for a short period of time, usually a few hours. Check with your professor to see if they have placed items on reserve. If there is only one copy on reserve, try visiting the library at non-peak hours to ensure that the book won’t be checked out by someone else. * Consider renting. New services like Chegg.com rent textbooks to students for much less than it costs to buy them--usually 50% of the list price or less per semester (usnews.com Sept. 2). Students return the rented textbooks by mail when they are finished using them. * Look for on-campus book swaps. Many university student groups organize textbook swap events at the beginning of each semester. Watch your campus e-mail account for notifications of these kinds of events (many groups will send out mass e-mails to student lists prior to the swap date) or check with your student organization office to see if any swaps are planned. Some websites also facilitate textbook swapping--try TextbookRevolt.com or Bookins.com for an online option if no campus events are available. * Buy international. International versions of textbooks often cost much less than U.S. editions, and they usually contain the same content. Check with online booksellers to compare prices of international editions. However, make sure the international edition is actually the same as the U.S. edition before you buy; read textbook descriptions carefully and consult user reviews and comments when available.
For more information, read “Study Finds Turning to Digital Textbooks May Be More Costly” in Money Mix: Launch Your Life.

Budgeting for boomerang kids

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WASHINGTON (9/21/09)--More unemployed adult children are moving back in with Mom and Dad during these tough economic times, and although most parents are happy to help out emotionally and financially, some basic ground rules can help keep the peace and balance the budget (Kiplinger’s October). According to Collegegrad.com, more than three-quarters of college graduates in 2008 said they planned to move back home, up from two-thirds in 2006 (Bankrate.com June 8). The recession is only partly to blame. Faced with mounting credit card debt, steep student loan obligations, and the high cost of living in some areas, young adults wind up carrying a lot of baggage in the form of IOUs through Mom and Dad’s front door. Experts encourage parents of boomerang kids not to sacrifice their own retirement. Have an open discussion and establish ground rules from the start:
* Determine the timeframe. Make sure the arrangement is temporary by establishing how long the adult child will live in your house. “Until I find a job” may not provide sufficient incentive for some individuals to get back on their feet in a timely manner. * Charge a modest rent. Give them some semblance of reality--even if the amount charged is half the going rate. Some parents have used the money collected as a form of forced savings for their own future expenses. Or, use the rent collected to help pay off the adult child’s student loan. * Establish house rules. Have the talk about chores, smoking, drinking, house guests, and--yes--curfew. It’s your house. The more topics you cover before the suitcases are unpacked, the less likely you’ll have boomerangst down the road. * Stick with your plan. If you don’t, you’ll become an enabler with a financially irresponsible adult child living off you, rather than with you.
For more information, see “Postcollege Life Requires Financial Transition” in Home & Family Finance Resource Center.

Experts tips save money--even on health care

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WASHINGTON (9/18/09)--Sunday’s H&FF Radio Show is all about saving money, with experts giving listeners valuable advice about cutting health care costs, keeping fear out of the financial decision equation, understanding who’s responsible for paying a deceased relative’s debts, and handling frugality. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Is Fear Stopping You From Making Financial Decisions?” With Laura Rowley, Yahoo! Finance columnist and author of Money & Happiness: A Guide to Living the Good Life, Chicago, Ill.; * “10 Ways to Save on Health Care,” with Ethan Ewing, president, Bills.com, San Mateo, Calif.; * “Are You Responsible for Your Deceased Relative’s Debts?” with Quisaira Whitney, attorney, Federal Trade Commission, Washington, D.C.; and * “Extreme Frugality: Can You Handle It?” with Karen McCall, founder and president, Financial Recovery Institute, San Francisco, Calif.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU, also known as WesCorp, and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, read “Tips to Cut Health Care Costs” in Plan It: Retire Ready Toolkit.

Roth IRA Convert or not to convert

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NEW YORK (9/16/09)--Are you looking for an opportunity to shelter retirement savings from future tax increases? On Jan. 1, the usual income limitation of $100,000 will be lifted, and tax rules will allow you to spread the conversion taxes you’ll owe over two years instead of paying them all in 2011 (The New York Times Sept. 3). There are good reasons to convert a regular individual retirement account (IRA) to a Roth in January, but it might not be the best strategy for you. Consider the pros and cons. If you’re young, converting to a Roth is a smart money move. It’s true that you’ll pay ordinary income taxes on the money you convert at your current tax rate, but consider this:
* A Roth IRA allows tax-free growth and tax-free income distributions at age 59 1/2 or older and as long as you have held your Roth account for five years or longer. The younger you are, the longer you have to grow your retirement savings tax free. * The market’s been down, and is slowly climbing. Most likely your account value is at a low. By converting now, you may pay lower taxes than if you wait. * With looming federal budget deficits as well as Medicare and Social Security obligations, there’s a good chance tax rates will increase in the coming years. You’ll be better off paying those taxes now rather than later. * By converting to a Roth, you avoid the traditional IRA requirement to take yearly minimum distributions starting at age 70 1/2. This can leave more for your heirs if you don’t use the money yourself.
If you are older, a Roth still may make sense. Here's why:
* A traditional IRA requires you to take withdrawals starting at age 70 ½, but a Roth IRA does not. The longer you can wait, the more time your money has to accumulate tax-free. * Under the present tax laws, converting a traditional IRA to a Roth can lower the size of your taxable estate. Think: decades of tax-free growth. * If you name your spouse as the beneficiary of your Roth, and your spouse foregoes withdrawals after you die, those Roth IRA assets keep compounding untaxed for the rest of your spouse’s lifetime. If your spouse could name a child as their beneficiary, the tax-free compounding goes on (Kiplinger.com March 19).
Reasons why converting may not be right for you:
* Young, old, or in between, there’s reason to think twice about converting: You will pay taxes now. Do you have enough in savings to cover these taxes? If not, don’t convert. * It will not benefit you to pay for the taxes out of your current IRA. If you’re under 59 1/2, you’ll have to pay a penalty to take the money out of your IRA. In addition, the amount you take out to cover the taxes will lose the benefit of tax-free compounding.
For more information, read “Switching to Roth May Ease Conversion Taxes” in Plan It: Retire Ready Toolkit.

New initiatives aim to boost retirement savings

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NEW YORK (9/14/09)--New initiatives announced this month by President Obama and Treasury Secretary Timothy Geithner will make saving for retirement a lot easier and more automatic, particularly for the estimated 78 million working Americans--approximately half the workforce--who don’t have a retirement savings plan at work (The New York Times Sept. 6). A White House document released Sept. 5 outlines four steps, effective immediately, to expand the range of retirement savings options for workers:
* Streamline automatic enrollment. Behavioral research indicates that workers are more likely to contribute to a retirement plan if they’re automatically enrolled. Although many large- and medium-size companies already have adopted automatic enrollment, the new initiatives target very small firms that often use a simpler system called the “simple I.R.A.” Watch for new guidelines from the Labor Department on how small businesses can use automatic enrollment, and how to institute an automatic “step up” to increase the worker’s savings rate each year or with each pay raise. Workers can opt out of automatic enrollment or stop the increases at any time. * Redirect tax refunds. Beginning in early 2010, taxpayers can check a box on their tax return and use their refund to purchase U.S. savings bonds, which will be mailed to the taxpayer. Beginning in 2011, taxpayers can add co-owners, such as children or grandchildren, to the bonds purchased with tax refunds. * Convert unused vacation or leave. Rather than receive cash for unused vacation and similar leave when leaving a job, employers can allow employees to contribute those amounts to their 401(k) plan. * Use plain language. To help workers understand the confusing rules governing retirement plans when changing jobs, the Treasury Department and the Internal Revenue Service are publishing an easy-to-read, plain-English guide. This road map explains how to transfer plan balances, what key decisions need to be made, and what the tax consequences are for each decision. Look for new user-friendly website materials, too, at irs.gov/retirement.
For more information, read “HR an Essential Member of Your Retirement Planning Team” in Plan It: Retire Ready Toolkit.

Expert gives homeowners tips for hurricane season

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WASHINGTON (9/11/09)--One of the experts on Sunday’s H&FF Radio show has important, timely insurance tips for hurricane-affected homeowners. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is sponsored by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Groupon: What Is It and How Does It Work?” with Andrew Mason, founder and CEO, Groupon.com, Los Angeles, Calif.; * “Hurricane Season: Homeowners Insurance and Catastrophes,” with Michael Barry, vice president of media relations, Insurance Information Institute, New York; * “How to Avoid Auto Warranty Scams,” with Steven Baker, director, Midwest Region Federal Trade Commission, Chicago, Ill.; * “The BBB Goes ABC: New Grading System Helps Consumers,” with Steve Cox, vice president of communications, Council of Better Business Bureaus, Arlington, Va.; and * Your Questions Answered: How to identify “secure” websites; monitoring accounts for identity theft; saving money on groceries.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU, also known as WesCorp, and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, read “Compile Your Financial Notebook” in Plan It: Retire Ready Toolkit.

Robocalls prohibited unless you opt in

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WASHINGTON (9/9/09)--Say goodbye to annoying, prerecorded commercial telemarketing calls--commonly referred to as robocalls. As of Sept. 1, most robocalls are banned unless the telemarketer has your written permission to make them (Federal Trade Commission, Aug. 27). The ban is part of amendments to the Federal Trade Commission’s Telemarketing Sales Rule (TSR), and it applies whether or not you previously have done business with the seller. Telemarketers who violate the new rule will face penalties of up to $16,000 per call. Note that some robocalls are not covered by the TSR. You still may receive robocalls associated with:
* Purely “information” recorded messages that don’t try to sell you anything, such as flight cancellations, deliveries, and school delays; * Debt collection; * Politicians; * Financial institutions; * Telephone carriers; * Most charitable organizations; and * Health care.
If you receive a robocall covered by the TSR but you haven’t agreed to it in writing, file a complaint with the Federal Trade Commission by visiting the donotcall.gov Web site or calling 888-382-1222. For more information, see “Read Fine Print to Avoid Subscribing to a Scam” in Home & Family Finance Resource Center.

Security expert How to safely discard electronics

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WASHINGTON (9/4/09)--Don’t toss out personal electronic equipment with account numbers and other sensitive information. Learn how to safely discard these devices--and protect yourself from identity theft--on Sunday’s H&FF Radio show. Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA’s websites. Sunday’s show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Gadgets That Help You Use and Conserve Water Wisely,” with Stacy Bass, utilities department public relations officer, and manager of education and outreach programs, Mesa, Ariz.; * “Saving for College,” with Jason Alderman, director, issues management, Visa USA, San Francisco, Calif.; * “The Secrets of Money: A Guide for Everyone on Practical Financial Literacy,” with Braun Mincher, entrepreneur and author, Fort Collins, Colo.; * “Identity Theft and Safely Discarding Your Personal Electronic Equipment,” with Jim Stickley, founder, chief technical officer and vice president of engineering, TraceSecurity, San Diego, Calif.; and * Your Questions Answered: Simple ways to save gas, laddering certificates of deposit, and selecting a credit counselor.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU, also known as WesCorp, and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide. For more information, read “Higher Credit Scores More Apt to See ID Theft” in Home & Family Finance Resource Center.

New credit rules aim to help young adults college students

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NEW YORK (9/2/09)--Young adults stand to be the group most affected by the Credit Card Accountability and Disclosure (CARD) Act of 2009, and it’s worth the effort to fully understand the changes (forbes.com Aug. 4). Although the majority of the CARD Act won’t go into effect until Feb. 22, 2010, five sections of the Act are dedicated to the protection of young adults:
* Credit usage. Anyone younger than age 21 must be an authorized user on the parent’s account, or show proof indicating an independent means of repaying card debts, or have an adult co-signer. * Special offers. Creditors may not send prescreened offers to consumers younger than age 21. * Free gifts. Card companies may not offer free gifts for the completion of an application on or near a college campus and at college-sponsored activities or events. * Privacy protection. Colleges, universities and alumni associations must disclose details of contracts they sign that allow credit card marketers access to student and alumni contact info. * Full disclosure. Card issuers must file annual reports with the Federal Reserve Board listing all business, marketing and promotional deals with schools. These reports must detail the terms and conditions, list schools by name, and identify how much the issuer is paying the school. * Education sessions. A “sense of Congress” provision--not treated as law, but rather a suggestion from lawmakers--recommends that colleges offer credit card and debt education sessions during new-student orientation.
Some provisions became effective Aug. 20. Creditors now must deliver bills 21 days in advance of the due date and provide 45 days notice when changes are made to consumers’ credit card agreements (chicagotribune.com Aug. 20). For more information, read “CARD Act Kicks In, What Will Happen?” in Money Mix: Launch Your Life.