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Show 2W The Salt Lake Tribune Sunday, January 1, 1984 Womans best protection is good retirement plan By Dawn Tracy Tribune Writer If you think Individual Retirement Accounts are only for the or youve got to make substantial contributions to open or maintain one youre wrong. If youre a housewife, and you think you cant open an IRA unless your husband does or that you get special tax breaks if your husband contributes more to his own account than to yours youre wrong again. One Salt Lake tax lawyer said that because of rising divorce rales, he advises his clients to contribute the maximum amount to their own IRAs and the minimum to their wives. One reason why 45 percent of all women over the age of 65 are living on less than $260 a month is because many dont understand retirement planning, said Karen Letts, financial services executive at United Savings & Loan Association, Salt Lake d, City. Men Already Know Men already know theyre the ones who are responsible for their own retirement, said Ms. Letts. Many women dont have the same including those understanding, whove had jobs for many years. About 65 percent of all women will receive less than $3,000 a year when theyre 65, while only 27 percent of all men will, according to Ms. Letts. I tell women that to become a ward of their families or the state is to lose individual freedom, she said. Becoming knowledgeable, and participating in some kind of a retirement plan preferably an IRA is the best protection theyve got IRAs have been around since Congress passed the Economic Recovery and Tax Act in 1975, enabling individuals to set aside a portion of their income for retirement. But it wasnt until 1982 that the law was changed to allow all wage earners to participate. Confusing Couples Ironically, however, the 1982 revisions may have confused couples into thinking that tax breaks are realized if husbands contribute more to their own IRAs than to their nonworking wives accounts. Before 1982, couples with a spouse had to make equal IRA contributions if both had accounts. But when Congress passed the Economic Recovery Tax Act of 1981, the law allowed couples to split contributions any way they wished non-worki- so long as one of the accounts did not $? non Thus, many couples ended up contributing $2,000 to the husbands IRA and $250 to the wifes account to achieve the $2,250 maximum yearly contribution allowed by law. "Its become standard practice for many couples to contribute the maximum amount to the husband's IRA and the minimum to the wifes, said Ms. Letts. "Yet in many cases, theres no reason for such a division." At Zions First National Bank, Frances Redington, manager of the Salt Lake Retirement Planning Department, said most spousal IRA accounts for wives are accounts in which the women receive $500, the husbands, $1,750. The second most popular account is one in which husbands contribute $2,000 to themselves and $250 to tblr wives IRAs. Personal Preference? In most cases, the only way to explain such divisions is the personal preference of the couples inshe said. The Internal volved, Revenue Service only wants to know not tne total IRA contribution how the money is divided. Ms. Redington speculates that many couples think some kind of a tax savings is realized by unequal IRA contributions which isnt the case. IRA spokesman Bill Craig agrees. Mr. Craig said a wife with a smaller IRA account than her husband can be protected if her husband names her as beneficiary. But if the couple divorces, each has absolute control over his or her own IRA account, unless the courts decide otherwise. Weve had cases in which husbands named children, and their mothers as beneficiaries, unbeknown to their current wives, said Ms. Redington. IRA accounts are indiindual accounts just that under the control of individuals not couples. Divor&d Continue IRAs In some cases, a divorced spouse can continue her own IRA, using alimony, wages or other compensation to fund it But the IRA must be in existence for at least five years fore the divorce, and the former spouse must have contributed to the account for at least three of those years. IRAs are personal tax shelters,' enabling individuals to save hundreds of dollars in income taxes each year. The main advantage of an IRA is that deposits are earnings are and d. To open an IRA, simply walk into any bank, savings and loan institu- tion or most credit unions and make an initial minimum deposit, which can be as low as $25. You may set aside 100 percent of your earned income, up to a maximum amount of $2,000 per year. If both you and your spouse work, each of you may set up a separate IRA plan. If your spouse does not work, the two of you can set aside as much as $2,250 annually. A wife whose husband does not have an IRA account may open her own, as long as the husband has an earned income and the couple files a joint income-tareturn. Contribute When You Can Contributions are flexible. They may be increased, decreased or even omitted in any particular year. Many employers allow IRA payroll deductions. Individuals get the greatest benefit when IKA contributions are made over a number of years, said Ms. Letts. Its difficult to offset the benefits of daily compounding interest, even when contributions are increased later. womFor instance, a an contributing $300 a year at a 10 percent daily compounding interest rate will have a retirement fund of $280,488 when she reaches age 70, according to Ms. Letts. woman contribBut a uting double that amount at $600 will have less than half the accumulated amount of the 25 year old, when the older woman reaches age 70. A disadvantage of IRA accounts is that they cant be pledged as security for loans. There also are federal income tax penalities for early with- drawal. Penalties Can Be Offset Funds withdrawn early are subject to a federal income tax penalty of 10 percent of the amount withdrawn, in addition to certificate penalties if withdrawn prior to maturityPenalties can often be offset by the tax savings already realized on contributions in prior years, said Ms. Letts. The longer the money stays in an IRA, the more you can withdraw without being any worse off, if you allow for the IRA tax advantage. Ms. Letts said IRAs are a boon to housewives who have no retirement benefits, women who have changed jobs and lost corporate retirement vesting privileges or women who have gone back to school. Once established, IRAs can keep on working for us, even theuigh were not making contributions, she said. But once earning years have passed, we cannot make retroactive contributions to a tax sheltered, tax deferred retirement plan. If, for instance, a woman could set aside $6 a week into an IRA account for 35 years, she would ha've a retirement fund of $112,819.07: Enough that she could live on the interest from the account for rather than the principal the rest of her life. I tell women that they should set aside something for themselves, said Ms. Letts. They mu- -t think of their own welfare first. Its their and their responsibility. right Ben Franklin understood the value of not wasting time By Elaine T. Ashcroft Family and Human Development Department Utah State University LOGAN With the New Year comes almost a compulsion to make resolutions. Some are made with earnest intent to keep them, while others are made with laugh- ing admittance that they will be broken before the week or month is over. Id like to suggest a New Years resolution for each of us this coming year: Avoid wasting Resolved time. Doest thou love life? Then do not squander time. For that is the stuff life is made of. So wrote Benjamin Franklin in Poor Richards Almanac. Efficient use of time is a common concern of everyone. One element of time management that is rarely addressed is how our thinking about time influences our use of it. Daydreaming, planning and relaxing are not necessarily a waste of time. They may actually aid you in using time more wisely. But there are two specific thinking patterns that waste a great deal of time. These are thinking negatively and thinking only of the future. Many of you remember a story from your childhood about The Little Engine That Could. He was not the most attractive nor the strongest engine, but he believed in himself and was willing to try. Every day we are faced with a new task or challenge. It may be a presentation at work, a goal we have set for ourselves, a new person wed like to become better acquainted with or any number of other things. Our attitude can make the difference as to whether or not the task is completed successfully. Positive Feelings Positive feelings can help us to accomplish what we would like to do. Feelings of inadequacy and inferiority can prevent us from doing our best and may even prevent us from trying new things. We can learn to think more positively about ourselves if we will take credit for our efforts the pro To Brighton's Bargain Days 33)fla?gu cess is often as important as the finished product. You may not be where youd like to be, but if you are making progress be willing to recognize it. Lack of a skill does not affect the character or value of a person. Looking to Future Another way we waste time is to continually look to the future. Some of us are never happy nor satisfied with life in the present. We do not find satisfaction and joy in what we are currently doing, but are always saying that we will be happy when something in the future comes to when this project is over, pass when I graduate, when Im promoted, when the children are older, when we have more money and on and on. Robert A. Rothman has pointed out that the Declaration of Indepen dence guarantees us life, liberty and not hapthe pursuit of happiness piness. He believes that the secret of happiness is found not in the attaining, but in the pursuing. Enjoy the Present If this is correct, we must learn to appreciate and enjoy whatever we are doing in the present, instead of wasting our time looking toward the future and thinking that we will be happier than we are now. So stop wasting time thinking of the things you cannot, or may not, be able to do. Look at your strengths recognize and admit them to yourself and others. Learn to enjoy the moment, looking for the beneficial instead of wishing for the future time or event. The New Years resolution to stop wasting time, if kept, will make 366 enjoyable and rewarding days for you in 1984. WAS VERY SATISFIED WITH THE RESULTS AND EVEN RECEIVED LONG DISTANCE CALLS. MR. D. NEEDED CASH & GOT IT. CLASSIFIED 237-200- WANT-AD- S 0 Help You Reduce NUTRISYSTiM IS REDUCING a limited time only Day Mondays all gals, allLadies' oges For University Day Thursdays with University Student or Faculty I.D. 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