======================== THE MOTLEY FOOL ========================
                        PERSONAL  FINANCE 
                    Wednesday, November 21, 2001 
										 
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IN THIS ISSUE

- ASK THE FOOL: How to "Unconvert" an IRA
  http://www.fool.com/m.asp?i=542162

- RETIREMENT: Social Security Benefits and Income Taxes
  http://www.fool.com/m.asp?i=542163 

- YOUR MONEY: Year-End Tax Advice
  http://www.fool.com/m.asp?i=542164

- LBYM Tip of the Week: Savings Tricks for Dog Owners
  http://www.fool.com/m.asp?i=542165

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ASK THE FOOL
Q. Last January I converted my traditional IRA to a Roth IRA. It 
seemed like a good idea at the time because the account had 
dropped pretty dramatically since the previous year, so the 
taxes looked like a bargain. Now the account has dropped another 
25%. I'm going to be paying taxes on money that has disappeared! 
Can I do anything about this? -- Jumped the Gun 

A. Best laid plans go oft awry, eh? I'm sure you weren't the 
only one who took advantage of what seemed to be a market bottom 
last winter to convert your traditional IRA to a Roth. It seemed 
like a good move, given what we knew at the time. By converting 
in January, you gave yourself 16 months to prepare to pay the 
taxes that would be due on the conversion, and you picked a time 
when the value of your account appeared to be relatively low. So 
much for good planning. 

Relax, Jumped -- Uncle Sam in his infinite wisdom has given you 
an out, but not an easy one. You can unconvert your Roth (it's 
called a recharacterization in IRS-speak) and -- poof! -- those 
taxes that would have been due next April will vanish. But then 
you are left with a traditional IRA instead of a Roth, which 
wasn't your goal. 

So the next question is, can you convert IRA Deux back to a Roth 
and lock in the lower valuation? Well, yes... and no. 
Full Answer: 
http://www.fool.com/m.asp?i=542167

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RETIREMENT

SOCIAL SECURITY BENEFITS AND INCOME TAXES
Each year many Social Security benefit recipients are surprised 
to learn that part of those payments may be considered as 
taxable income. Worse, they fail to file quarterly estimated 
income taxes on their Social Security benefits. As a result, 
they could end up having to pay both the unexpected added income 
tax plus a penalty. David Braze explains how to be prepared. 
Full Story: 
http://www.fool.com/m.asp?i=542168

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YOUR MONEY 

YEAR-END TAX ADVICE
Do you expect to make more money next year than this year? 
That's good news, but what will happen to your tax burden if you 
are bumped into a higher tax bracket in 2002? 

Your best bet is to start planning your tax strategy now. If you 
think you may be in a higher tax bracket in 2002, you may want 
to try shifting some of your income into the 2001 calendar year 
with these tips: 

- Year-End Bonuses: If your employer generally pays bonuses 
after the end of the current year, you might try to negotiate to 
have your bonus paid to you before the end of 2001. 

- Retirement Plan Distribution: If you are taking money from a 
retirement plan, consider taking your withdrawals before the end 
of this year, rather than waiting until next year. Even if you 
have no immediate use for the money, paying tax in 2001 and 
simply putting the money in the bank (or other investments) may 
be a smarter way to go. 

- Roth IRA Conversion: If you convert a regular IRA to a Roth 
IRA, you'll be required to report taxable income in the year of 
the conversion. So you might want to increase your 2001 income 
by making a Roth IRA conversion prior to the end of the year. 

- Investments: Review your portfolio now. Try to determine your 
gains and losses for the year. See if there are stocks, bonds, 
or mutual funds you might want to sell. You might want to take 
some additional short-term stock gains in 2001. 

For more info on year-end tax strategies, visit our tax area and 
read our articles on the subject. 
http://www.fool.com/m.asp?i=542169
http://www.fool.com/m.asp?i=542170


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LIVING BELOW YOUR MEANS - TIP OF THE WEEK

SAVINGS TRICKS FOR DOG OWNERS
Those cute little bundles of fluff can take a bite out of your 
wallet. Here are seven ways to be a good pet parent and still be 
financially Foolish: 

- Adopt from a shelter. A purebred, pet-store puppy can cost 
anywhere from $500 to several thousand dollars. Why not look 
into adopting an animal from the Humane Society or a local 
animal shelter? The costs are minimal and you get the added 
bonus of knowing that you may have saved a life. Check with your 
American Society for the Prevention of Cruelty to Animals 
(ASPCA) for a list of shelters in your area.

- Spay or neuter your dog. OK, so don't tell her beforehand, but 
your little Fifi LaRue will thank you for it later. Many 
shelters will waive spaying or neutering fees in order to 
encourage pet population control. 

- Get your dog vaccinated. Think preventative maintenance. Those 
heart worm pills are much cheaper than actually treating heart 
worm. 

- Train your puppy. A puppy kindergarten class can cost as 
little as $25. The cost of repairing furniture that has been 
gnawed on, ruined shoes, and your frittered patience can be much 
higher. 

- Choose the right vet. Instead of paying four first-visit fees, 
find the right vet right away. Ask your friends and neighbors if 
they can recommend someone. Call around and ask what the cost of 
an initial visit would be. 

- Be creative with pet toys. The ones at the pet store often 
look appealing with their glitzy packaging. But sometimes the 
best toys are free or cost next to nothing, like grungy tennis 
balls and old stuffed animals. 

- Brush their teeth. I know, "You want me to do what?" But a 
University of Minnesota study showed that 80% of dogs and 70% of 
cats have a gum disease by age 3. Vets recommend brushing your 
pet's pearly whites several times a week. See the "You can pay 
me now, or you can pay me later" theory above. 

Visit our Pet Lovers discussion board to share your own tricks. 
http://www.fool.com/m.asp?i=542171


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