Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, December 27, 1993 TAG: 9312270008
SECTION: BUSINESS PAGE: A8 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Long
A: It's the purpose of the check or record that counts.
You can throw away monthly statements when you get an annual report.
Hang on to insurance policies for three years after their termination in case there is a retroactive claim, either by you or against you.
Any statement or check that pertains to a taxable item or tax deduction should be kept for seven years.
Checks for tax payments should be retained for at least seven years or, better yet, held on to for a lifetime, along with the tax forms themselves. You can throw away the backup material for the tax form.
Anything pertaining to an IRA, 401(k) or other tax-deferred plan must be kept so you can prove whether you paid any taxes. And save for a lifetime all records related to improvements to your home, because these increase the tax basis from which your capital gain will be measured.
Also, you should review your checks and records carefully before you discard the bulk of them.
\ Special cancer policy not needed
Q: Can you tell me if it is necessary to have a cancer policy if one has a good medical insurance plan?
I have had one for a year, as has my husband. We live on Social Security and pay close to $500 yearly for the two plans. Every time we mention dropping it, our agent frightens us out of our wits as to what could happen if we didn't have it, such as losing our home and everything we own should cancer strike us. We are shown bills of people with thousands and thousands of dollars going to the families of a loved one who has died of cancer. Most are people from outside Virginia. There must be many people who worry over this.
A: Many experts will tell you that you do not need special situation insurance such as a policy covering specific risks such as cancer. Sickness can be devastating, regardless of the cause. A stroke, for instance, could be just as expensive in terms of treatment and long-term care as cancer.
People who are retired should be on Medicare. They should spend their money buying one Medigap policy from a reputable insurance company to fill in where Medicare leaves off. Buy one policy, not two or three, but buy the best terms you can afford.
If you do this, you are likely to be protected from excess medical bills, regardless of the cause of your illness.
Younger people should buy the best insurance coverage they can afford, unless they have a health policy at work. They should also obtain disability coverage because, when you are young, you are more at risk of suffering a disability than you are at suffering death.
\ Cashing savings bonds tax-free
Q: Do Series EE U.S. Savings Bonds need to be in the name of the son or daughter if they are to be cashed tax-free for higher education? We have the bonds in our names, but the bank where we tried to cash them said they should be in our son's name. Is this correct? How do we claim the tax exclusion?
A: You are correct. Bonds purchased starting Jan. 1, 1990, can be cashed tax-free if they are spent on college tuition and tuition-related expenses.
They must be held in the names of the parents - not the children, and not the grandparents. The bank is wrong in this.
Tax will not be levied on the profits if family income is less than $60,000. The benefit begins to phase out and disappears after income reaches $90,000.
Larry Harding, Roanoke-area manager for the U.S. Savings Bond program, said you can keep a record of your bonds on Internal Revenue Service Form 8818. You can show your cash-in values and the amount paid for tuition on IRS Form 8815.
\ Is refinancing triplex a good deal?
Q: I have a triplex that I would like to refinance. It is valued at $79,500-plus. I owe about $60,000 on it. It is financed at 10 1/2 percent. The loan I have is for 30 years, and I would like to refinance for 15 years.
The places I have talked with about refinancing want you to start all over, like you were applying for a new loan: appraisal, survey, etc., plus they will finance only 80 percent of the loan. Do you have any advice for me?
A: Refinancing is the same as applying for a new loan. You are starting out again from scratch, and you will have to pay all of those fees so that the lender, even if it is the same institution holding your loan now, can reassess the risk of lending you the money.
Whether refinancing is a good deal for you depends on several factors. You should calculate what it will cost you and how long, in light of your new lower payment, it will take you to recover that cost. Your lender can tell you the number of years it would take you to be ahead of the game. If you plan to own the property for that long, then it will pay you to refinance.
In your case, it shouldn't take long to recover the costs from your lower payment. Your 10 1/2 percent is a very high rate in today's market, so refinancing should pay off for you.
\ AUTHOR 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. Or leave a recorded message by calling (703) 981-3434 and when asked for a mailbox number, press 66639 (MONEY), followed by the # symbol.
by CNB