This upcoming weekend (Friday, August 6th through Sunday, August 8th) will be the annual “back-to-school” sales tax holiday for both North Carolina and South Carolina.   

North Carolina Sales Tax Holiday

Qualified items generally include clothing, footwear or school supplies that are individually priced at $100 or less, some instructional materials priced at $300 or less, sports equipment that is priced at $50 or less, computers prices at $3,500 or less, and some computer equipment priced at $250.  It does not apply to clothing accessories, jewelry, cosmetics, protective equipment, furniture or any item purchased for use in a business.  It also does not apply to computer equipment, such as monitors, unless they are purchased in a bundle with a computer system.   For a detailed list of items that are exempt during the North Carolina Sales Tax Holiday, click here (opens as .pdf).  For a list of frequently asked questions about the NC Sales Tax Holiday, click here (opens as .pdf).

South Carolina Sales Tax Holiday

Qualified items include certain clothing, footwear, school supplies, computers and computer software., bath wash clothes, blankets, bed spreads, bed linens, sheet sets, comforter sets, bath towels, shower curtains, bath rugs and mats, pillows, and pillow cases.  It does not apply to items such as  jewelry, cosmetics, eyewear, wallets, watches, furniture, rental of clothing.  It also does not apply to any items for use in a business.  A detailed list of items can be found here, on the South Carolina Department of Revenue’s website (opens as .pdf),   For a more detail questions and answers on the South Carolina Sales Tax Holiday, go here (opens as .pdf).

Other States

Sales Tax Holiday Information for Other States.

The parent who believes that the college admissions process is a game is intent on figuring out first the rules, then the unwritten rules, and especially the deep secrets of this new game – and then mastering them.  Game-playing parents range in style from the athletic through the compulsive gambler type and finally to the organized-crime-connected politician.

The athletic parent rises to the challenge of mastering the new sport.  I have a  friend who always gets lessons when he does a sport; the moment something goes wrong with his golf game he’s back to consult his pro.  He takes windsurfing lessons, skiing lessons, he consults with experts before he hikes.  So when his son, who was a good student in public school, got to spring of his junior year, the father hired an outside educational counselor.

The counselor explained that the rules of the game were fair, there were no deep secrets, told him that his son had a good chance at five colleges, but he had to “present himself well.”   So the father and son went on the trip, with the father acting like a Little League dad, giving pointers, pep talks, expressing disappointment when his son did not chat up the hockey coach at one college.  Happily, his son fell in love with the first college he saw and is at the present moment enjoying his years there very much.  My friend retired from the field, fully satisfied that he had played the game the right way, and had gotten the right advice from his pro.

The gambler parents are like the fans of race tracks, talking about weather conditions, trading stories about previous races and the mental state of jockeys, and finally, painfully laying down their bets. The wisest among them at least acknowledges that there is something arbitrary about the process. The worst of them want to give their child an advantage by getting a phony psychologist to certify a dubious learning disability so that their child can take untimed SATs. The sad part about the handicappers is that their children are not racehorses and it does them harm to be talked about in terms that imply winning or losing.

The only students that are destined to fail in college are the ones who have been shoehorned by their parents into schools for which they are not well qualified academically. The secret, sometimes unconscious knowledge that he doesn’t really belong there undermines the student and he drops out, flunks out, or fails to thrive.

To the students, follow a few simple rules when preparing for the overwhelming thought of choosing the right college:

1. Assess your personality type – Don’t hyper focus on the things you “like” at the moment or what other students are doing.  Remember, abilities and interests change.  Just ask your parents.  Make sure your values and personality traits come first.
2. Perform research on the careers that best fit your personality -  CSI, Grey’s Anatomy, and Law & Order don’t speak to the extra years of education, internships and multiple years working long shifts before you can branch out into the field of choice.  Choose a college that offers a solid curriculum in your career.
3. Keep up your grades, community service and extracurricular activities -   Get yourself the credentials so that others can easily see your ambitious personality and be able to write a powerful recommendation for you.
4. If necessary, seek a professional counselor.   Trained professionals depend on the success of their student clients to maintain their business.  They can be a valuable investment in one of the biggest decisions in your life.

Bill Hughes is a Professional College Planner located in Lake Wylie, SC.  Bill works with parents and students to help them with financial aid, career planning, scholarships, and SAT/ACT test planning for college.  You can contact Bill at 704-239-7772 or you may email him at billhughes [@] comporium.net.


Raising your health insurance deductible just a few thousand dollars can cut your premium by up to half. But that leaves you responsible for out-of-pocket costs. And even if you itemize, those are deductible only to the extent they exceed 7.5% of your adjusted gross income. Is there a way to capture premium savings from high-deductible insurance and tax savings for out-of-pocket expenses?

If you have self-employment income, even from a startup or sideline business, you can take advantage of a little-known tax break to save a bundle on your family’s health care costs. Medical expense reimbursement plans (“MERPs”) let you reimburse your employees, their spouses, and their dependents for uninsured medical costs. Plan benefits are deductible by the business, and nontaxable to the employee. Here’s how they work:

• You have to establish the plan for employees. If you operate as a proprietorship, partnership, LLC, or “S” corporation, you’re considered “self-employed,” and not eligible. If you’re single, you can establish a C corporation and pay benefits to yourself as an employee. If you’re married, you can hire your spouse and pay benefits to them. (If you operate as an S corporation, you and your spouse are both considered self-employed. In that case, segregate part of your income through a proprietorship or C corporation and pay benefits through that entity.)
• You have to offer benefits to all employees. However, you can exclude those under age 25; those who regularly work less than 35 hours per week; those who work less than nine months out of the year; and those who have worked for you for less than three years.
• You’ll need a written plan document. No special IRS filings are required for plans with less than 100 employees. You’ll deduct benefits as “employee benefits” on your business return, which may also lower self-employment tax bill.

Example: You’re self-employed as a real estate agent. You hire your spouse to provide marketing support, and establish a MERP for his or her benefit. The plan covers your employee, their spouse (meaning you!) and your dependents.

Once you’ve established the plan, you can still deduct 100% of your health insurance costs. This includes major medical and supplemental coverage, Medicare Parts A and B coverage, qualified long-term care, and “Medigap” coverage. You can even reimburse your spouse for any after-tax premiums they pay through their employer.

You can also write off 100% of your out-of-pocket costs and bypass the 7.5% floor for itemized deductions. This includes routine expenses such as co-pays, deductibles, and prescriptions; occasional expenses such as eyeglasses, teeth cleaning, and chiropractic care; and  big-ticket items like orthodontics, fertility treatments, and schools for learning-disabled children. It also includes nonprescription medicines and health-care supplies. You can reimburse your employee, or you can use business dollars to pay health-care providers directly. For more information, see our office.

MERPs won’t make your visit to the doctor less painful. But they may be the best kind of tax strategies because they give you new deductions for money you’re already spending. Enjoy them in good health!

For other posts in this series, please visit:

Part I: What is a Roth IRA? What is changing about Roth IRA Rules?
Part II: Reasons to Convert to a Roth IRA.
Part III: Reasons NOT to Convert to a Roth IRA.
Part IV: Planning Ideas around Converting to a Roth IRA
Part V: Planning Ideas – What is the Pro-Rata Rule?

In this post, I will review a few more tax planning considerations related to Roth IRAs. It is important to keep in mind that everyone’s situation is different and that these ideas may or may not apply to you. You should sit down with your tax professional and do proactive tax planning prior to doing anything.

Can’t Afford to Convert?  If you are like many taxpayers, you look at the cost of conversion and it is overwhelming.  The good news is that you don’t have to do the entire conversion all at once.  You can convert a small portion of your IRA each year over a several year period – depending upon what you can afford to pay in additional taxes for the year of conversion.  In addition, this allows you to sit down with your tax planner and find out the magic amount that you can convert this year without being pushed into a higher tax bracket.  By planning this conversion out over several years, you may be able to lower the taxes that you pay on the conversion, as well as spread it out over many years.

The Pro-Rata Rule.  Wouldn’t it be great if you could choose to convert your nondeductible contributions and keep the contributions that you deducted as traditional IRAs – thus paying very little, if any tax?  Sorry, but that is where the Pro-Rata Rule comes into play.  When determining the amount of your conversion that was from deductible contributions and the amount that was from non-deductible contributions, the IRS looks at all of your IRAs.  You must add the value of all of them together, then divide by the nondeductible contributions, and this will give you the percentage of any conversion that you make that is tax- free.    This prevents you from converting only your nondeductible contributions.  The good news is that you may be able to use a loophole – the 401(k) loophole below.

401K Considerations.  Balances in 401(k) accounts are not included in the calculations for the Pro-Rata Rules.  In addition, some employer 401(k) plans allow you to rollover your traditional IRA into the plan.  By doing so, it can allow the taxpayer to exclude some or all of their deductible contributions from the calculation.  This will result in a higher percentage that can be converted to a Roth IRA tax free.  In the event that a taxpayer that plans to do a conversion has already rolled their 401(k) into a traditional IRA, they may wish to consider rolling it back to a 401(k) if their employer plan allows.

Due to this Pro-Rata Rule, it is not usually recommended that you convert your 401(k) to a traditional IRA until after you are through with any Roth IRA conversions that you plan to do.  The exception to that would be if you wanted to convert the 401(k) balance to a Roth IRA as well.  Even if you do, it is probably a good idea to sit down with your tax planner to make sure that you structure the timing of the conversions in a manner that will maximize your tax savings.

Minimum Distributions.   As mentioned several times during this series of post, if you are over the age of 70 1/2 and you are taking Required Minimum Distributions (RMDs) from your traditional IRA or workplace plan, you can not include the current years RMD in the conversion amount.  You must pay the necessary tax on that RMD, and then you can convert the remaining balance.  (Note:  There are no RMDs for 2009 because Congress passed legislation to waive them due to the down market – fearing that they would wipe out many peoples retirement accounts.  RMDs are scheduled to resume in 2010.)

For other posts in this series, please visit:
Part I:  What is a Roth IRA? What is changing about Roth IRA Rules?
Part II:  Reasons to Convert to a Roth IRA. 
Part III:  Reasons NOT to Convert to a Roth IRA.
Part IV:  Planning Ideas around Converting to a Roth IRA.
Part V:  Planning Ideas – What is the Pro-Rata Rule?

In this post, I will review some tax planning ideas.  It is important to keep in mind that everyone’s situation is different and that these ideas may or may not apply to you.  You should sit down with your tax professional and do proactive tax planning prior to doing anything. 

Local Taxes.  Have you thought about where you plan to live when you retire?  Where you plan to retire could be a major factor in deciding whether or not to do a conversion – especially if you are close to retirement age.  If you are living in a high tax locale, such as New York, and you are planning to retire in one of the states that currently have no income tax (such as Florida), it may not make sense to convert.  If you convert while still living in the high tax state, you will have to pay a tax when you convert, when you would not be subject to that state income tax when you are in retirement.

The opposite is also true.  If you are currently living in a no state income tax-state such as Alaska, and plan to move to North Carolina for your retirement, it may make sense to convert while you are not subject to state taxation of those funds. 

Of course, as stated in prior post, we can not predict what the tax laws will be in the future.  This obviously applies to the individual states the same way it does to the federal government.  As most of the states are struggling to pay for hefty state employee pensions and Medicaid programs, there is a possibility of higher taxes at the state levels – as well as the implementation of income taxes in current no state income tax states.

Future Tax Rates.  What tax bracket are you going to be in during retirement?  Many individuals expect that their income to be lower during retirement, and thus have a lower marginal tax rate.  If this is the case, it may not make sense to convert.  Why pay tax at a high tax rate now, when you can pay a lower tax rate later? 

Conversely, other individuals may have higher income during retirement – especially once the required minimum distributions from retirement accounts kick in at age 70 1/2. 

Over the Income Limit.  Do you currently want to fund a Roth IRA, but are over the income limits for contributing to a Roth IRA?   You can open a traditional IRA, which is not subject to the income limits that a Roth IRA is, then contribute the maximum amount allowable and convert it to a Roth IRA in 2010.  Depending upon your individual tax situation, the contributions to the traditional IRA may or may not be deductible.  Just remember that if you can not deduct the contribution now, it will not be taxable upon conversion – although any earnings would be.   Many taxpayers have been maxing out their nondeductible contributions to traditional IRAs for several years now in anticipation of converting to a Roth IRA in 2010.

Protect Yourself Against Losses.  In future tax years, you can help to protect your account from losses or at least the taxes on money that you lose.   An individual can hold two Roth IRA accounts – one that is their “new” Roth IRA and one that is their “old’” Roth IRA.   Overtime, the individual will migrate all of the assets to the “old” Roth IRA.  Each year, contribute your funds to a traditional IRA (see “Over the Income Limit” above) and then subsequently convert that traditional IRA to the “new” Roth IRA.    The reason that you want to convert it to a “new” Roth IRA instead of just combining it into your “old” Roth IRA is that the tax law allows you to recharacterize a Roth IRA as a traditional IRA within certain time limits.  By doing this, if the investments in this “new” Roth IRA suffer a loss during the first year, you can recharacterize it as a traditional IRA and eliminate the taxes due from the conversion.  You can then reconvert the assets to a Roth again, at the deflated value, which would create a lower tax due.  This eliminates the possibility that you may have to pay taxes on value that no longer exists (See IRS Publication 590 for timing details surrounding your ability to recharacterize the IRAs).  In the event that the account increases in value, you could then transfer the assets to your “old” Roth after the time to recharacterize the account to a traditional IRA expires.  You can repeat this process each year that  you plan to make contributions. 

If that whole process was not enough pain for you, you can extend it even further to protect from losses in the investments.  You can open a separate Roth for each type of investment that you make with the converted money.  For instance, if you are investing the funds in three different investments, roll the funds into three separate Roth IRA accounts.  This way you can pick and choose which particular investments that you recharacterize – not just which Roth IRA account.  For example, if you had the following three investments:  Investment A that doubles in value during the year, Investment B that stays the same during the year, and Investment C that becomes worthless.    If all three of these investments were held in the same Roth IRA account, the total value would be the same and you would have to pay taxes on the converted amount as such.  If they are in separate accounts, you can pay the tax for the conversation of Investment A and Investment B, then recharacterize investment C as a traditional IRA – thus eliminating the taxes due on that portion of the conversion amount.

Estate Planning.  As discussed in Part III, Roth IRA’s do not have any required minimum distributions once they reach age 70 1/2 like they are required by traditional IRA’s.  If a retiree does not need the funds to live on, the earnings on their investments can continue to grow tax-free inside the Roth IRA.  Another advantage is that beneficiaries do not have to pay income tax on withdrawals that they make from an inherited Roth IRA.    Although, Roth IRA beneficiaries do have to take distributions across their life expectancies, Roth assets are still included in an estates value for Estate Tax purposes.

For other posts in this series, please visit:
Part I:  What is a Roth IRA? What is changing about Roth IRA Rules?
Part II:  Reasons to Convert to a Roth IRA. 
Part III:  Reasons NOT to Convert to a Roth IRA.
Part IV:  Planning Ideas around Converting to a Roth IRA.
Part V:  Planning Ideas – What is the Pro-Rata Rule?

In this post, I will explain some of the common reasons that you will want to consider for not converting to a Roth IRA.  It is important to keep in mind that everyone’s situation is different and that these reasons may or may not apply to you.  You should sit down with your tax professional and do proactive tax planning prior to doing anything. 

Reasons NOT to Convert to a Roth IRA. 

Taxes!  If you convert your traditional IRA to a Roth IRA, you will most likely have to pay income taxes on the amount of your pretax contributions and earnings that are included in the amount that you convert.  If you have $100,000 sitting in your retirement account, this could be a hefty tax bill to absorb.

It is usually not a good idea to convert to a Roth IRA  unless you have other sources from which to pay the taxes other than retirement funds.  Depleting these funds to cover the taxes, offsets the positive benefits derived.  Another downside to paying these taxes with retirement assets is that you are “locking in” you losses that you have experienced over the last couple of years.  Once you cash these investments in, there is no chance for recovery.  In addition, if you are not 59 1/2, you would likely have to pay a 10% tax penalty on the funds you withdraw to pay the tax.

Possibility of Future Surcharge on the “Rich.”  As stated in Part I, under current law, distributions under Roth IRA’s are to be tax free since the tax was paid at the time of the contribution.  The key word there is “current law.”  We have no way of knowing what Congress will do in the future as it becomes more and more desperate to raise tax revenues for its never ending laundry list of government programs and agencies.  There is a possibility that at some point in the future Congress will find it “necessary” to tax a portion of Roth IRA distributions for “wealthy” Americans.   While most politicians will say this will not happen, keep in mind that they also told us that no portion of Social Security benefits would be taxable since it had already been taxed once.  

When our country was formed, our founding fathers were vehemently opposed to the income tax.  It wasn’t until the ratification of the 17th amendment in 1913 that the income tax was Constitutional.  At that time, we were assured by our politicians that it would never need to go above one to two percent, and that it would only apply to the wealthiest Americans.  Well, we have all seen how that promise played out.  My point is that most of the publications and articles I read on the Roth IRA assume that all distributions will always be tax free.  Keep in mind that they may not be.

Fair Tax.  Another possibility that we must be aware of is what happens if the Fair Tax or something similar ever becomes law?  What if there is a total transformation of our tax system in which the income tax is eliminated and replaced with a transaction oriented tax?  Would the people who converted their traditional IRA’s to Roth IRA’s and paid in hefty sums in taxes to do so get the shaft?  I am willing to bet they would.  It is unlikely that this is going to happen in the next few years, but some people are planning 20, 30 or 40 years out.  There is no telling what the political landscape or the tax system will look like at that time.  (See Tax Diversification on Part IV)

Part I:  What is a Roth IRA? What is changing about Roth IRA Rules?
Part II:  Reasons to Convert to a Roth IRA. 
Part III:  Reasons NOT to Convert to a Roth IRA.
Part IV:  Planning Ideas around Converting to a Roth IRA.
Part V:   More Planning Ideas – What is this Pro-Rata Rule?

In this post, I will explain some of the common reasons for converting to a Roth IRA.  It is important to keep in mind that everyone’s situation is different and that these reasons may or may not apply to you.  You should sit down with your tax professional and do proactive tax planning prior to doing anything. 

Reasons to Convert to a Roth.

Low Values in Accounts.  Due to the market conditions over the last few years, many retirement accounts have plummeted in value.  Converting now would allow individuals to pay taxes on this currently deflated value.  Keep in mind though that for this to be an advantage it assumes that the market is going to recover quicker rather than slower.  There is no way to predict if account values will soar back to their prior levels anytime soon.  Nevertheless, it does yield a lower tax bill than it would have if a conversion were done when the account values were at their peak.

Possibility of Higher Taxes in the Future.  Let’s face it, the finances of our nation are in turmoil.  With massive record deficits and an Administration and Congress that are proposing massive new government programs, it is unlikely that we will see income taxes go much lower than they are today.  The federal government rarely, if ever, cut their budget from one year to the next.  It just keeps growing.  Because of this many taxpayers are betting on much higher tax rates in the future – even for retired middle class Americans.  Why does this apply to Roth IRA conversions?  Many taxpayers are choosing to pay the taxes on their retirement money now – at a rate that they anticipate to be much lower than in future years.

Withdrawals are Tax Free.  As long as you have held your assets in your Roth IRA for at least 5 years or are age 59 1/2, withdrawals are generally tax free (special rules apply to earnings that have not been held in an account for 5 years).   Keep in mind that they say this is “tax free,” but the fact is that you have already paid the tax on your contributions in the year that you made them.  What they are really meaning is that you just do not owe tax when you pull the money out because you already paid it.   Also, bare in mind that this “tax-free” status is based on current law, and that does not mean it will be the law when you retire (see below).

Income Tax Deferral Option for 2010.  As part of the law change that goes into affect on January 1, 2010, Congress is allowing taxpayers who convert to a Roth IRA to defer the tax and pay half of it in 2011 and half of it in 2012 based on their tax brackets for those years.  Taxpayers who wish to pay the entire tax due in 2010 may do that also.   While this does not provide a taxpayer an eternity to come up with the money to pay the taxes, it does provide them with a couple of years .  Of course, not converting defers the tax until the funds are withdrawn during retirement.  The biggest advantage here is that if you are converting for other reasons, this gives the taxpayer an option that was not available before.  This option to spread the tax over the following two years is only available for conversions completed in 2010.  This is something that should be discussed during your tax planning session with your tax professional.  The timing of when you pay the tax could affect your tax brackets, your alternative minimum tax (AMT) situation or cause other tax issues.  You want to make sure you do it in the right years.

No Minimum Distributions.  I will discuss some planning ideas around this in Part IV, but another advantage to a Roth IRA over a Traditional IRA is that you are not required to take minimum required distributions (RMDs).  Traditional IRA’s require that once you reach age 70 1/2, you must take a distribution amount that is calculated based on your life expectancy.  This is a negative if you do not need as much money that you are required to pull out.  With a Roth IRA, you can leave the funds in there as long as you wish with no distribution requirements during your lifetime.  See Part IV for some tax planning ideas around the Roth IRA and No Minimum Required Distribution.

Have You Done Your Retirement and Tax Planning?

There has been much in the news lately about the January 1, 2010 change to the rules surrounding the conversion of ROTH IRAs. I am going to write a short  long series of posts that will explain the rules around Roth IRAs, as well as what the recent changes in the law means. I will also provide you with some reasons to convert, as well as some reasons not to convert. In addition, my final posts will include some tax planning tips around the Roth IRA.

Part I:  What is a Roth IRA? What is changing about Roth IRA Rules?
Part II:  Reasons to Convert to a Roth IRA. 
Part III:  Reasons NOT to Convert to a Roth IRA.
Part IV:  Planning Ideas around Converting to a Roth IRA.
Part V:   More Planning Ideas – What is this Pro-Rata Rule?

What is a Roth IRA? First, let me assume that at least a few of you are unfamiliar with what a Roth IRA even is. The biggest different between a traditional IRA or retirement vehicle (such as a 401(k), and a Roth is that traditional IRAs typically allow the taxpayer to deduct the contributions against income when they contribute them. In turn, those taxpayers will pay taxes on those funds when they remove them during retirement.  With a Roth IRA, taxpayers pay their taxes on those earnings now, and under current law would pay no tax upon withdrawal of those funds.

In order to contribute the maximum amount allowed to a Roth IRA in 2009, individuals must have a modified AGI less than $120,000.  Married couples filing jointly or a qualifying widow(er) must have a modified AGI less than $176,000 to make their maximum contribution.  The maximum contributions begin to be phased out when those income limits reach $105,000 and $166,000, respectively. 

The maximum allowable annual contribution to a Roth IRA is $5,000 annually for 2009 if you are under age 50.  If you are over age 50, the maximum contribution is $6,000 for 2009.  Starting in 2010, these amounts are going to be indexed to inflation.

 What is changing about Roth IRA Rules?  As part of the Tax Increase Prevention and Reconciliation Act of 2005 (signed my President Bush on May 17, 2006), the $100,000 income limit for converting certain retirement plans to Roth IRA’s has been “permanently” removed. This means that regardless of your income, you can now convert your qualifying retirement assets to a Roth IRA. Because Roth IRA conversions create immediate income tax revenue for the government, it is unlikely that the Obama administration is going to push to put the limits back in place.

In addition, married couples who file separate tax returns can also convert to Roth’s. Prior to the January 1, 2010 rule change, these individuals would have been prevented from doing so except under certain circumstances. What types of plans can you convert to a Roth IRA?

You can convert all of part of the assets from your own or an inherited employer-sponsored qualified pension, profit sharing or stock-bonus plan, such as a 401(k), 403(b) annuity plan or a government deferred compensation plan, such as a section 457 plan. You may also convert your own, but not an inherited SEP-IRA or SIMPLE IRA, although you must hold a SIMPLE IRA for at least 2 years from the date of establishment to convert to a Roth IRA.

Apparantly, the Mythbusters team set out to test the Myths related to potential security flaws in the new RFID-enabled credit cards, also referred to as “magic wand credit cards.” Some argue that it is possible to hack the card and take money from someone’s bank account from as far a 70 feet away.

Below is a quote from one of the shows host, Adam Savage on the subject:

“Texas Instruments comes on along with chief legal counsel for American Express,
Visa, Discover, and everybody else… They were way, way outgunned and they
absolutely made it really clear to Discovery that they were not going to air
this episode talking about how hackable this stuff was, and Discovery backed way
down being a large corporation that depends upon the revenue of the advertisers.
Now it’s on Discovery’s radar and they won’t let us go near it.”

A short time later, Savage retracted these comments, releasing a new statement:

“If I went into the detail of exactly why this story didn’t get filmed, it’s so bizarre and convoluted that no one would believe me, but suffice to say…the decision not to continue on with the RFID story was made by our production company, Beyond Productions, and had nothing to do with Discovery, or their ad sales department.”

I think the second statement was one that was “required” by legal counsel on the side of Mythbusters. The real question is what would be the purpose of squashing the story?

Are these new RFID cards really so easily hacked? If so, why would the credit card companies issue them. Surely, they tested them before the started sending them out in to the market.

After all, who is on the hook for the fraud? The consumer is limited to $50 and the rest is the merchants responsibility. This of course, assumes that they do a charge back to the merchant. I could not imagine that they would want to put out a product that would subject their merchants or themselves to this risk.

Upon farther investigation, it was not very hard to find some places on the web that would teach you how to hack these cards. I found one that showed you how to do it for $8. I don’t know if their methods worked, since I am not exactly into hacking other peoples credit card accounts, but it makes you wonder – Why did they kill the Mythbusters episode?

Below is video of Adam spilling the beans on the conference call:

If you are unfamiliar with what RMD’s are, they are basically the amount that tax law requires that you distribute from your IRA, SEP-IRA and SIMPLE IRA account(s) each year once you reach age 70 1/2. The amounts of the required minimum distribution is generally calculated based on a life-expectancy divisor (if it is your personal account.) This divisor is figured against the previous year’s ending balance of the IRA.

Congress supposedly took this measure because everyone’s account values are so low right now. Unfortunately, for the relief to provide any real bang for retiree’s, they should have made it apply to 2008 as well – since the RMD for 2008 is based on the year end 2007 balance.