ElGuapo

I don't think you--or E*trade--have done anything wrong. A "recharacterization" might sound like what you did, but it's a completely different animal from a "conversion." (An example of a recharacterization is when you make an annual contribution to a regular IRA and then decide in the same year you wanted to contribute to a Roth instead, so the IRS lets you pretend you put it in the Roth to begin with.) Hey, it's all semantics, right?

PCA stands for "personal care account"; what does HSA stand for? I thought (too late) of the idea of having the doctor bill directly to me, but the total bill is more than my $750 anyway, just not enough to use my $1,500 PCA and my flex money. The thing they emphasized with this new plan is that by giving you an account to manage that hopefully people would be more cost-conscious with their health care, but at the same time encouraging preventive stuff (like an HMO) by fully covering (i.e., not charging your PCA for) regular checkups, etc. I'm in Utah, the company is based in Wisconsin. I had heard word-of-mouth that you had the option of paying flex dollars first, but never from an official source. I do think our HR people would be surprised--it almost makes flexible spending accounts incongruent with the health plan. Thanks again for any comments.

I'm a first-time participant in a flexible spending acct this year; we put in $750 for my son's cleft soft palate operation, which ended up costing less than we expected. So it would appear we may have thrown away some cash, but here's the twist: My company's health insurance this year switched to a group called Definity that works through a regular PPO (Beechstreet), but essentially gives you an account, called PCA, that is used to cover the first $1,500 of the $2,000 deductible. AND, unlike flex spending, money you don't use from your PCA carries forward to next year. SO, it makes sense to me to ask Definity to let me cover the first $750 myself out of flex spending, but their rep tells me there's no way to do that. Is she right? Anything else I might think about doing? I'd appreciate any help on this subject that I find so confusing.

IRC 72(t) lists the exceptions to the 10% penalty, of which death is one, so the bene is not relying on the substantially equal rules to avoid the penalty. In other words, minimums are just that--minimums. A beneficiary may always take more or take it all and not worry about the penalty.

I see, sounds like you're not new to mutual fund investing, and the initial fund minimums won't be a problem. So you could really open Roths with any no-load mutual fund company (American, Vanguard, Fidelity, T. Rowe Price, etc.) or with a discount brokerage that has a fund supermarket available without transaction costs (Schwab, Fidelity). In other words, if someone is telling you you'd pay a commission every month for buying more shares of a fund, you're looking in the wrong place. Commissions are for stock trades. Both Schwab and Fidelity will give you access to hundreds of funds from dozens of fund families without paying a transaction fee; they'll probably require you to hold the fund at least six months to avoid a fee on the sell, but hopefully you would do that anyway. And because the Roths would then be set up as brokerage accounts you could, if you chose, play around with individual stocks in the same account. Good luck!

And I'd be careful telling clients they have five years to decide, since by then they've missed RMD deadlines and in effect have already decided to take a lump sum.

Is it safe to assume, then, that you don't have a lot of investments/investment experience outside of maybe a 401(k)? If so I'd be inclined to say paying anything for the privilege of trading individual stocks is a waste of money for you. You'd each be depositing maybe $250/mo to your Roths, not nearly enough to justify trading costs. (That $12/mo is equivalent to a 5% sales load on each deposit!) But the bigger issue is you'd have none of the diversification a mutual fund offers and, unless you plan to do a lot of research or have an uncommon gift for day trading, you could be in for a very expensive investment education. No, take mbozek's advice and shop around, specifically for a mutual fund company or a discount brokerage that will allow you to buy funds periodically without an initial deposit minimum. In fact, for the first few years you'll probably limit your Roths to one mutual fund each. Vanguard is a good choice, but you may have to come up with $1,000 to start. I believe Fidelity now allows Roths to be opened without a fund minimum with automatic monthly investing--they even waive their normal brokerage fees if you only invest in their funds. TIAA-CREF is also well-known for allowing Roths without an initial minimum.

Re: Brownco IRA options trading: fyi, found their IRA options trading application (same for IRA and Roth) online. It only asks for your experience with and interest in "purchasing options" and "writing covered options."

Line 22 "Other expenses" on Schedule A. On the description line call it "Loss incurred from total distribution of all Roth IRAs." Keep in mind this is a somewhat limited deduction because of the 2% of AGI. With your scenario of a total loss of about $3,000, if your AGI (1040 line 35) is $50,000 (x 2% = $1,000), you can only deduct the remaining $2,000. If your AGI is $150,000 your entire deduction is wiped out. Of course, TaxCut will help you determine whether the standard deduction is better in your case. If so, go ahead and contribute to the Vanguard fund for 2003.

I used to work on the IPO team of a brokerage that usually acted as a selling group member (not technically part of the syndicate, although I don't think that has any bearing on your question). Anyway, we used to allocate shares to IRA accounts all the time. Unless there's more to your question than I'm seeing, the fact that the brokerage is also your IRA custodian doesn't make you a prohibited person under the NASD's freeriding and withholding rules--that is, you're still not an employee of the B/D, nor are there any IRA restrictions for holding IPO shares.

Yes, Vanguard does. Seriously, if you call and ask them they'll help you choose an appropriate fund. If you don't have a complicated investment portfolio and just want something simple, you'd probably start with one of their asset allocation (all-in-one) type funds. Good luck!

Just to clarify, no doubt what Brown & Co. is saying is they allow buying calls/puts and then selling these long positions. No way they allow you to take unlimited risk selling naked calls in a Roth IRA. My Fidelity Roth IRA doesn't even allow cash-covered puts, but I think that's more a system limitation on their part than a deliberate decision.