As we approach the time of year during which high school seniors finalize their college plans, I thought I'd offer a post detailing some scholarships that are either exclusive to or particularly valuable for twins and triplets.  Paying for college is a burden known to most parents, but it's particularly taxing to those who have multiple kids going away to school at the same time.  Please note that I've done some research on each of the scholarships listed, but I am certain there are more out there.  I will post more as I become aware of them, but please feel to use the Contact page on the main Foothills Financial Planning site to send me a note with any information that might be helpful to others.

Note that these are not in any special order, although I am starting with my alma mater. 

 

Kelley School of Business, Indiana University

The Kelley School offers the Layton Frazier McKinley Scholarship established by his brother, Lewis E. McKinley.  The preference is that the recipient is a twin, especially an identical twin.

 

George Washington University

Although not specific to multiples, George Washington University offers a 50% discount for siblings, which would obviously be beneficial for twins and triplets. 

 

Wilson College - Chambersburg, PA

The all-female Wilson College offers the Twins and Triplets scholarship, which provides a 45% discount on tuition as long as all students remain enrolled full-time.  

 

Eastern Michigan University

The Furlotte Twins Scholarship is available at Eastern Michigan, in the amount of $571.

 

Lake Erie College

Lake Erie calls its Twins Scholarship a full tuition scholarship, although it is split 50/50 between twins.  Nonetheless, Buy One Get One Free is a pretty good deal when it comes to a college education.

 

Appalachian State University – Boone, NC

Appalachian State offers the Misti Dawn Triplet Memorial Scholarship, which doesn’t appear to have formal criteria beyond a North Carolina state residency requirement, but presumably being a triplet would help.

 

Sterling College 

I have read that Sterling College in Kansas offers a scholarship for twins, but I have not been able to verify that.

 

 

Twins Days Festival in Twinsburg, OH

Scholarships are awarded each year at the Twins Days Festivals.  Awardees are repeat festival-goers.

 

There are many local clubs and organizations dedicated to parents of multiples, and they sometimes offer scholarships.  By their nature, the sums may not be as substantial as what is provided by the schools themselves, but every little bit counts.  One very noble offering comes from the Illinois Organization of Mothers of Twins Club, Inc., which offers $100 and $300 scholarhips to several parents of multiples who are furthering their education.

 

 

A common, folksy investing maxim is to invest in good companies that you understand.  It's not a bad place to start, but as this Bloomberg article on Apple's valuation underscores, the downside is that such companies may have prices that are assuming perfection.  If that perfection doesn't happen, the stock price may be in trouble.  Even if they hit the targets, the likelihood that the investment will grow at a rate greater than the overall market is often low.

Note that this is not a commentary on Apple specifically, or whether or not I agree with the author.  The point is that investing - particularly in individual companies - cannot be done in a vacuum.  The quality of the company is not necessarily correlated with the quality of the investment.  What really matters is how the market values the company.  There are good companies and mediocre ones that make good investments.  The same is true of bad investments.

As part of "Jump-Start Your Retirement Planning Days", Kevin O'Reilly is teaming up with Kiplinger Personal Finance and The National Association of Personal Financial Advisors to provide free advice to consumers. See the press release and learn more here:http://tinyurl.com/FFP-Napfa.

More about Kiplinger:http://kiplinger.com
More about NAPFA:http://www.napfa.org

Some quick facts from Bankrate.com's 2009 Checking Study:

• NSF (nonsufficient fund) fees rose to a record high for the 11th straight year.  In other words...don't bounce checks!

• Another new high:  monthly service charges on interest-bearing checking accounts that fall below minimum balances.  This is a good reason to use a checking account for transactions, and a savings account or similar vehicle for earning interest. It's still pretty easy to find free non-interest bearing checking accounts, and the miniumum opening balances tend to be low.

• Online bank accounts require higher opening balances, but lower minimum balances to avoid fees, and the fees are lower.  They also pay considerably higher rates of interest on interest-bearing accounts (.69% vs. .12% average in 2009).  These accounts are a good option for the tech-savvy (or simply tech-unafraid).

• The average ATM fee increased 12.6% to $2.22; this was under $1 in 1998.

• The average fee for "foreign" ATM usage dropped from $1.46 to $1.32, as some banks dropped these fees altogether.  It is a no-brainer to use your own bank's ATM if it is at all possible.

As the federal government and media have made clear in recent months, banks make a considerable amount of money from fees.  Theoretically, retail banks accept deposits and pay a relatively low rate of interest, then turn around and lend that money at a higher rate.  That spread is their profit.  That's a bit simplistic, but banks - especially the big ones - don't typically operate that way anymore.  They do make money on the spread, but fees are a big part of their profits.  When you see big jumps in averages fees from year to year, rest assured that their expenses are not increasing at the same rate.  That's pure profit, at your expense.  Check out these tips from Bankrate to avoid paying fees on your checking account.

View a summary of the 2009 Checking Study at http://www.bankrate.com/finance/checking/2009-checking-study.aspx.

I recently investigated a couple of tools that allow you to model your tax return for 2009 to get a ballpark feel for what your refund or obligation will be.  One tool is offered by Intuit's TurboTax.  Check out the Get Ready for Tax Time section on their home page, as there are a couple of other modeling tools that can give you a feel for the tax implications of certain life changes.

The Tax Estimator can be found on the Tax Tips & Calculators page of H&R Block's site.  This serves a similar function to the one offered by Intuit, and in fact the results were pretty similar with both tools.

Although my results were similar, there were some tax events that I could not model with these tools.  Those events are pretty significant for my taxes, so I wouldn't consider these highly effective for any but very straightforward tax situations.  Nonetheless, I think there is some benefit in the sense that it allows people to a) learn or reinforce the impact of things such as personal exemptions and tax credits, and b) do what-if scenarios with certain tax actions to determine the relative benefit of taking specific steps to reduce the tax bill.

Of course, in both cases the companies are trying to sell software for providing tax returns.  I'm not making any recommendations here, except to say that if you choose not to use a tax preparer, software can be extremely helpful.  If you are planning to purchase tax preparation software, I recommend doing some comparison shopping through sites like Upromise, Amazon, or even the shopping section of Microsoft's Bing.

 

Some financial planning humor, courtesy of Saturday Night Live.

If you were to ask the IRS, the term IRA refers to Individual Retirement Arrangements, which can take the form of Individual Retirement Annuities or Individual Retirement Accounts.  The latter vehicles are what people typically refer to when they use the term “IRA”.  The IRA was created by Congress in 1974 to encourage individuals to save for retirement.  Prior to that, the only formal retirement accounts that existed were pension plans that were set up by some companies to help ensure a comfortable retirement for their employees.  People saved and invested, of course, but there was no particular tax incentive to prepare for retirement before 1974. 

The IRA has undergone some changes since it was created, and there are now several flavors of IRA that exist in the marketplace.  In this post, we’ll focus on traditional Individual Retirement Accounts.  These IRAs are the most direct descendant of the original act.  They allow individuals to set aside money each year that will grow on a tax-deferred basis until it is withdrawn after the age of 59½.

Deductibility

Under certain circumstances, the contributions to a traditional IRA are deductible on the contributor’s federal tax return.  If neither you nor your spouse is covered by a plan at work, the full amount of your contribution can be deducted from federal taxes in the year that it is made.  If you are covered by a retirement plan at work, you may still deduct contributions if you are single and your income is below $55,000.  If you’re married filing jointly, the threshold is $89,000.  In both cases, the deductibility phases out as income increases from those levels.

Contribution limits

For 2009 and 2010, taxpayers can contribute a maximum of $5,000 to their traditional IRA.  For those aged 50 and above, the limit is $6,000.

Taxes at withdrawal

In all cases, taxes will be paid on the investment earnings that have accumulated over time when those earnings are withdrawn.  If a deduction was taken for a given contribution, that contribution is subject to taxes.  If a deduction was not taken for a contribution, the amount of that contribution can be withdrawn without paying tax, because taxes have already been paid on those funds. 

When can funds be withdrawn?

As I alluded to earlier, funds can be withdrawn without penalty beginning at age 59½.  However, it is not mandatory to withdraw funds until the accountholder turns 70½.  These mandatory withdrawals are referred to as Required Minimum Distributions, and are designed to allow the IRS to start capturing tax revenue on the investments that have been enjoying tax deferral for so many years.  They are based on the investor’s remaining life expectancy, with the idea being that distributions will be taken evenly over the remaining years.  In a future post, I’ll demonstrate how the RMD is calculated.

Last Friday saw the signing into law of the much-anticipated extension to the First-Time Homebuyer Tax Credit, called The Worker, Homeownership, and Business Assistance Act of 2009.

I’ll summarize the other areas in a separate post.

On the First-Time Homebuyer front, this bill extends the original First-Time Homebuyer Credit  through April 30, 2010.  The original legislation for 2009 required that homes be purchased by November 30 of this year.  Furthermore, current homeowners who’ve owned their homes for more than five years may now be eligible for up to $6,500 if they opt to buy a new home.  Originally, the full credit was unavailable for individuals earning more than $75,000 and couples earning more than $150,000.  Those limits have been increased to $125,000 and $225,000.  The credit phases out as incomes approach $145,000 and $245,000.

Note that the new provisions are in effect for homes purchased between November 7, 2009 and April 30, 2010.  As long as a binding contract is in place by April 30, buyers will have until July 1 to close.

Homes that cost more than $800,000 are not eligible for the credit.  Given the income limitations, this is not likely to be a common problem.

Foothills Financial Planning was featured in the Ahwatukee Foothills News this past Friday in a Q&A session. Check it out!

After concern that the limits may actually be lowered, the IRS today announced that pension plan contribution limits will remain level with 2009.  The specter of a downward adjustment arose because the cost-of-living index that the IRS uses to calibrate contributions dropped during the third quarter of 2009.  However, the IRS says the Social Security Act prohibits them from reducing these limits.  Therefore, the maximum 401k contribution that can be made pre-tax remains at $16,500 for 2010. For individuals who turn 50 before the end of 2010, the law allows for an additional $5,500 to be contributed.  This is called the “catch-up” contribution.

Progression of pension contribution limits

• 2004 - $13,000
• 2005 - $14,000
• 2006 - $15,000
• 2007 - $15,500
• 2008 - $15,500
• 2009 - $16,500
• 2010 - $16,500