Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, August 2, 1993 TAG: 9308010017
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Medium
1. The Amway Corp. distributes oversupplies of products. He said by paying them a fee, they would send me at a low price these excess products, which I could sell at a higher price. For instance, 50 dresses at $2 each which I could sell at $15 to $20. Or 50 footballs at $3 each, which I could sell for $10. The profits can be fabulous.
2. By getting a 900 number at a fee, I can offer a service or a product listing my 900 number. The telephone company charges the caller $1 a minute. The telephone company credits you for the 900 calls. He told me that a lady who offered her recipe for a cake if you called her 900 number reaped $35,000 for her fees from the 900 callers.
Is this possible? I'd like to know.
A: Is your friend rich? It would seem he's not likely to be wealthy from these ideas.
Mark Longstreet, spokesman for the Amway Corp. in Ada, Mich., said there's only a grain of truth to the first story.
Amway sells all of its products through a network of independent distributors. They buy the products at wholesale cost and sell at suggested retail price. The markup is 30 percent, which is the gross profit earned by the distributors. Also, there are incentives for performance and for enrolling other distributors.
Longstreet said Amway has a personal shoppers catalog, but no overstock items.
You could earn money by becoming a distributor, depending on your ability as a salesman, but you probably wouldn't "strike it rich."
Daisy Ottmann, a marketing representative for the AT&T 900 program at Basking Ridge, N.J., said she's familiar with the industry but has never heard of the lady with a cake recipe.
Some people do make a lot of money with 900 numbers, but Ottmann said they also spend a lot of money promoting their services.
The line is the least of the expense, she said, because it's the advertising that's costly. You have to convince many people to call your particular line, so you must offer a service many people want.
If you have an idea for such a product or service for which people would pay, you can buy a 900 number from AT&T by calling 1-800-243-0900. Other long-distance carriers have similar programs, so check your telephone directory.
Ottmann said the product can be simple, such as recorded information the caller simply hears, or more complex and interactive. The latter extends from pushing buttons for voting yes or no, or to punching in selections for a choice of various programs or to an actual operator the caller talks to.
AT&T charges a monthly service fee plus time charges by the second plus a percentage for billing services. All of these charges vary with the type of service.
If the caller pays $5 for a two- minute call, for instance, you might pay a monthly fee plus 60 cents plus 10 percent of the $5. That's just an example.
So if you have an idea that you think will sell, plus the money to advertise it, you can send for the 20-page list of guidelines to help you get started. Coming up with the idea may be the hardest part.
In the alternative, you could start a savings program and grow rich more slowly.
IRA and after
Q: Thanks to a recent column, I learned when I should start withdrawing the money from my IRA. I will begin disbursements in April 1995.
My question concerns what happens to this money when I die. My wife is my beneficiary. Will all of the money become taxable in the one year in which I pass away?
A: Special rules apply in the case of husbands and wives who are each other's beneficiaries for their Individual Retirement Accounts.
Valerie Kowalski, a certified public accountant with the Roanoke firm of Kowalski & Associates, said surviving spouses have the right to roll over the money into their own names. This is a specific action that must be taken, and she advises her clients to do it.
If your wife survives you and transfers the money to her own name, the account becomes her property just as if it had been her own in the first place. She can take distributions from the account according to law, paying tax only on the money as it is disbursed.
If any other person is the beneficiary, whether that person is a child, a nephew or just a friend, the money becomes taxable income to them, according to Kowalski. Only married couples enjoy the favored tax treatment.
Mag Poff will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke 24010.
by CNB