Annuities, IRAs, taxes, recommended reading, a phony investment site, and more. you'll find it all below in this month's edition of the IRA.Com Retirement Newsletter. This month we've also introduced the Tax Corner, with tips and resources for this year's tax season.

Featured Question of the Month
Annuities Within IRAs

IRA.com News
Recommended Reading for Your Financial Future
IRA.Com Offers On-Line Tax Prep and Planning Resource

Tax Corner
Important IRS Deadlines
IRS Online Withholding Calculator

Article Briefings
SEC Uses Phony Web Site to Snare, Educate Investors
How Much Insurance Is Needed to Help Cover Long-Term Care?
All About IRAs
Balancing Risk, Reward in Your Post-Enron 401(k) Plan

Resource Link
AnnuityFYI

Q. Can you explain what it means to purchase an annuity "inside" of an IRA?

A. If you purchase an annuity inside of an IRA or other qualified plan, your purchase is made with the same money that you invest in the IRA. You simply direct its investment into an annuity. Annuities can play an important part in your retirement planning, but they may also involve a lot of options, possible penalties for early withdrawals, or other fine print. Be sure to check with your financial advisor very carefully before investing.

The taxation of annuity money inside of IRAs is treated like any other investment inside of an IRA. The basic rules regarding investment in IRAs are covered in questions from previous newsletters. For review, please see July 2001 and June 2001. However, there may be additional withdrawal and/or liquidity issues with each separate annuity contract. Make sure you understand these terms from the annuity company before you invest.

Most annuities within an IRA are variable annuities (an equity- indexed annuity is another option, but you should meet with your financial advisor to weigh the pros and cons very carefully). Variable annuities are still life insurance products, but they are separate from the company's assets and are managed by an independent, mutual fund manager. This means that you can retrieve your money more easily if the company fails. Also, variable annuities offer some interesting riders. For example, they might guarantee your investment, plus 5 to 10% per year. A death benefit option can provide your beneficiaries with the highest value of your annuity over time, even if that value is lower at the time of death. The availability of different riders varies between companies.

If you are interested in annuities, you should locate an advisor who is properly licensed to sell annuities. This means that the advisor has both a life insurance license and a series 63 license. He or she should be able to offer you a variety of annuity products from different companies. In addition, it is preferable to work with an advisor who can show you a broad variety of investment strategies, which includes annuities, mutual funds, CDs, stocks, etc.

Read All About It!

Stay tuned: a top-notch recommended reading list on retirement planning and personal finance will be available soon at IRA.com. Each title will have a direct link to amazon.com for easy purchase and access to further comments and reviews. The experts at the Internet Retirement Alliance have collaborated on this list, making it invaluable to anyone who wants to make informed decisions about their financial future. Check in with IRA.com -- it's coming your way soon.

On-Line Tax Prep via IRA.COM

IRA.com now points the way to fast, convenient, on-line tax preparation. Many free resources are available, such as an easy-to- understand Tax Guide (including a summary of the 2001 Tax Relief Act) and glossary on nearly everything related to tax reporting and future tax planning. You'll find all the forms, tables, and worksheets you need, as well as personal finance calculators on IRAs, home buying, college savings, car loans, and more. This service offers efficient, thorough, on-line tax preparation and e-filing at a reasonable price with no download necessary. Explore for yourself: visit IRA.com today.

Important IRS Deadlines for IRAs

April 1, 2002:	Deadline to take the required Minimum Distribution for individuals who reached age 70-1/2 in 2001.
April 15, 2002:	Deadline to establish and fund an IRA for a 2001 contribution.
April 15, 2002:	Deadline to remove excess IRA contributions (extensions allowed).
April 15, 2002:	Deadline to re-characterize contributions - that is, to convert between a traditional IRA and a Roth IRA (extensions allowed).

IRS Withholding Calculator
www.irs.gov

The beginning of the year is a great time to check the tax withholdings you specified on your W4 (the form your employer uses to determine how much tax to withhold from your paycheck). If you owe a great deal of tax money this year, you might want to have more withheld for 2002. If you are getting a sizable refund, you might want to withhold less so that the government isn't holding so much of your money, interest free. The IRS offers a convenient on-line calculator to help determine the right withholding amount for you. Click Here to go directly to the IRA Witholding Calculator.

SEC Uses Phony Web Site to Snare, Educate Investors
Computerworld [www.computerworld.com], 01/31/02; Perera, Rick.

The U.S. Securities and Exchange Commission (SEC) has launched a new web site to warn investors about fraudulent investment opportunities. The site advertises a fictitious company called McWhortle Enterprises that promises investors a more than 400% return in three months. Potential investors are asked to provide credit card information and their social security number "for identification purposes." People who respond to the offer are then led to a warning about the dangers of investment opportunities that make incredible claims of fast profits with little or no risk. The SEC's phony site was developed in conjunction with the National Association of Securities Dealers and PR Newswire Association.

How Much Insurance Is Needed to Help Cover Long-Term Care?
Wall Street Journal [online.wsj.com], Pg. C1, 01/29/02; Clements, Jonathan

Long-term care insurance has become a hot commodity that can help the insured cover nursing home and home-care costs. Experts suggest that those without significant assets will be eligible for federal assistance and that those with significant assets should have sufficient funds to cover long-term care costs. Long-term care insurance should only pay for the costs that individuals cannot afford on their own, and should only last as long as the policy is needed--between one and five years.

All About IRAs
The Motley Fool Online [www.fool.com], 01/30/02; Braze, Dave.

Here's a crash course in the rules governing IRAs. Husbands and wives are each allowed to have an IRA, even if one of the two is unemployed. Under IRA guidelines, one person's annual contribution is limited to the lesser of the total taxable compensation or to the normal yearly amount whether made to one or more IRAs. Also, there is no minimum or required IRA contribution, and all IRA earnings are tax- free until the funds are withdrawn. For a Roth IRA, withdrawals may be tax-free if certain minimum rules are met. Contributions to a Roth IRA are not tax-deductible, but contributions to a traditional IRA may be tax-deductible in the tax year made, depending on the owner's income tax filing status, adjusted gross income, and eligibility to participate in a tax-qualified retirement plan. The following are exceptions to the 10 % penalty for an early withdrawal from an IRA account: the owner's disability; the owner's death; if there are a series of "substantially equal periodic payments" made over the life expectancy of the owner; if it is used to pay for unreimbursed medical expenses that exceed 7.5 percent of adjusted gross income; if it is used to pay medical insurance premiums after the owner has received unemployment compensation for more than 12 weeks; if it is used to pay the cost of a first-time home purchase; if it is used to pay for the qualified expenses of higher education for the owner and/or eligible family members; and if it is used to pay back taxes because of an IRS levy placed against the IRA.

Balancing Risk, Reward in Your Post-Enron 401(k) Plan
Washington Post [www.washingtonpost.com], 01/27/02; Crenshaw, Albert B.

In the wake of the Enron debacle, the Labor Department, the White House, and Congress are working on proposals to fix the 401(k) plan system. But the risk in a 401(k) plan is not something that can simply be removed. From the standpoint of an employer, the whole point of the 401(k) is the ability to shift the investment risk from the company, which bears the risk in a traditional pension plan, to the worker.

AnnuityFYI
http://www.annuityfyi.com

AnnuityFYI is available to help you learn about, compare, and select annuities. Their web site offers offers a wealth of annuity information from the basic to the complex. You'll find FAQs about how annuities work, the various types, benefits, and cautions. The site also provides short on-line questionnaires to evaluate whether a particular annuity is right for you. Ultimately, you can place orders for annuities you select.

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