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December 29, 2007

Why So Slow?

Here's a brief story of holiday cheer. For seven years a waitress served a mean old man, but a very loyal customer, and when he died he left her $50,000 and a car.

She learned about the gift a few days before Christmas, making this an aww-isn't-that-nice holiday story.

I seldom write about aww-isn't-that-nice things — for better or worse — and yes I do have something to complain about, here. The old man died in July. Why did it take five months for her to be notified about the gift? Who was dragging their feet, and why?

Unless it was the dead man's instructions to deliver the gift during the holiday season, I smell something foul.

The linked story is very short and doesn't address this angle. I searched for more details but only found reworded versions of the same short article. Am I the only one who thinks the long delay is more newsworthy than the gift itself?

December 25, 2007

The Roth IRA Income Limit and the Roth 401k

If your employer offers a Roth 401(k) option — as mine will, starting in 2008 — it's worth exploring the tradeoffs between the Roth and Traditional 401(k) plans.

Many advice columns are happy to demonstrate that the results are equivalent unless taxes change. If your tax rate is lower now than when you'll retire, you should go for the Roth… and if your tax rate is higher now than when you'll retire, you should pick Traditional. As I explained a couple years ago, there's a lot more to consider.

Most importantly, the fact that the contribution limit ($15,500 in 2008, unchanged from 2007) is the same whether you're making Roth (post-tax) or Traditional (pre-tax) contributions is an advantage for Roth contributions if you're able to contribute up to the full limit: $15,500 in post-tax dollars is more money than $15,500 in pre-tax dollars.

If you're in a position to save a lot of money, your inclination should be toward the Roth. But there's an interesting interaction between the Roth 401(k) and the Roth IRA. Eligibility to contribute to a Roth IRA is phased out at higher incomes. By making Roth instead of Traditional 401(k) contributions, you lose that tax deduction, which may reduce your eligibility to contribute to a Roth IRA. When does it make sense to make Traditional instead of Roth contributions to your 401(k) merely to remain eligible to contribute to a Roth IRA?

Let's do some math. First, here's some reference material on Roth IRAs and their contribution and income limits.

The figure we need are:

  • Income estimate, after all deductions except for Traditional 401(k) contributions.
  • 401(k) contribution limit
  • Roth IRA contribution limit
  • Roth IRA income limits (start and end of phase-out)
  • Marginal income tax rate

I created a spreadsheet to calculate the post-tax-equivalent contribution to retirement accounts. I tried a few scenarios and then realized that I did a lot more work than I needed to.

The phase-out range for Roth IRA eligibility is $15,000 wide. Each $1 reduction in income increases your Roth IRA contribution limit by one-fifteen-thousandth of the normal contribution limit ($5,000 in 2008), or $0.33. But to get that $1 reduction in income by making a Traditional instead of Roth contribution to your 401(k), that contribution becomes taxable upon withdrawal.

Compare your marginal tax rate to the $0.33 per dollar Roth IRA contribution increase. My marginal tax rate is 37% (28% federal + 9% Oregon), so I lose more in taxes on my eventual 401(k) withdrawal — $0.37 — than I gain on my ability to contribute more to my Roth IRA — $0.33. So for me, in Oregon, it doesn't ever* make sense to use Traditional 401(k) contributions for the purpose of retaining eligibility to contribute to a Roth IRA.

In a state with low or no income tax, the reverse could be true. But it's difficult to take advantage of that fact because you need to very accurately know your income before the end of the year — before you get tax statements! (If your Traditional 401(k) contributions are too large and bring your income (after deductions) to less than the lower bound of the Roth IRA phase-out, you're missing out on the opportunity of making more of those contributions Roth.) You'll likely need to fine-tune your contributions in December, which implies you're contributing throughout the year instead of front-loading your contributions. I prefer to front-load because that gets the funds invested as early as possible.

Summary: If your marginal tax rate is greater than 33%, maximize your Roth 401(k) contributions and don't worry about losing your Roth IRA eligibility. If your marginal tax rate is less than 33%, try to plan your Traditional 401(k) contributions so that your income (after deductions) exactly hits the lower bound of the Roth IRA phase-out.

(*Actually, it can. If you're eligible for a Roth IRA at all, the contribution limit has a $200 floor. So there is a point where a $1 reduction in income is worth a $200 increase in Roth contribution limit. But I'm not going to worry about a mere $200.)

December 21, 2007

Name Evolution

Once upon a time, there was an Interrupt Controller. It did its job and all were happy… except for a few who were not. They wanted flexibility. They wanted a Programmable Interrupt Controller. And lo, their wishes were granted.

This PIC also did its job and all were happy… except the insatiable. "More features!", they cried. And it came to pass that an Advanced PIC was born. This APIC had a long life and much happiness existed in the land. Until…

"Extensions!", screamed the chorus. Thus was created the Extended APIC, or XAPIC. Finally, are we done? No! Displeasure begins to rumble again. "These extensions are not enough", the demanding engineers said, "we need more."

"Let us create an Extended XAPIC!" Immediately they sensed that this would be a stupid acronym. Ah yes, "XXAPIC" has a certain flair of redundancy. Let's not call it that.

After a little puzzling, some bright fellow noted that an "Ex-" prefix works as well as an "X" to indicate "extended". We can call it the Ex-XAPIC! Sounding just as silly as XXAPIC, but with the virtue of more letters, a handy hyphen, and a pun. For truly it is no longer a mere XAPIC. It has left that designation behind. It is an Ex-XAPIC.

(Don't ask about the XXX-APIC. This is a family blog.)

Lesson: Be careful with your acronyms lest something silly happen to them.

December 14, 2007

Unprofessional Conduct

I had an unpleasant encounter with an officer of the peace tonight. I have written a letter detailing my concerns with their behavior. I have not decided yet whether to submit it to the police department. (I welcome your comments on this.) I won the last time I fought the government, but this time I really don't care to spend any more time on the matter.

In any case, writing the letter was cathartic. And the fact that I wrote it means that all y'all get to read it.

The purpose of this letter is to report my concerns regarding the conduct of a peace officer.

On Dec. 13th at approximately 7:45pm I went to the WinCo Foods store at the western edge of Hillsboro. While walking up to the store, I noticed a vehicle parked illegally in the fire lane, near the signs urging people not to park there even temporarily. The vehicle was a police car. The officer was not inside the vehicle.

I entered the store and purchased some items. When I left the store a few minutes later, I noticed that the vehicle was still there and that the peace officer was inside it. I approached and told the peace officer that she should not be parked in the fire lane, told her that there was a parking spot reserved for the police, and asked her to move the vehicle to it. At all times I was polite and my voice and demeanor were calm.

The peace officer was not calm, and she did not take my suggestion in a professional manner.

She said that her license plate entitled her to park wherever she wants. I reminded her that she is not above the law. She accused me of harassing her dog (which was barking, making it difficult for us to talk) and that that was a crime. She said it in a manner that felt threatening. I was in no way harassing her dog — I was having a conversation with her. If anyone's emotional state was exciting the dog, it was hers, not mine. Furthermore, it is my understanding that police dogs are very well-trained and that she could have commanded the dog to be quiet. She did not. She asked me to step away from the vehicle. I complied, and she opened the driver's door.

At this point I became afraid of some kind of reprisal, but I stayed calm. The peace officer was not calm - her tone of voice was irritated and defensive. I asked her for her badge number and she refused to provide it, instead telling me to call the police department to get it. Given the date, time, and location (above), you should be able to identify the officer. I do not know whether a peace officer is allowed to refuse a request for their badge number.

She may have been responding to a genuine emergency where the few extra seconds needed to park her vehicle legally, in the space reserved for the police, could have made a difference. But there was no apparent emergency; everything inside the store seemed completely normal to me. Even if there was an emergency, after it had passed and she had the opportunity to return to her vehicle, she should have moved it to a legal parking spot. There are good reasons why fire lanes are no-parking zones, and those reasons are as valid for city vehicles as they are for private vehicles.

It is my opinion that she was irritated by being caught and confronted while doing something she knew to be wrong. Peace officers should be exemplars of proper conduct. Their authority does not entitle them to break the law, and I am disappointed that she attempted to intimidate me rather than apologize for and correct her error.

December 12, 2007

Insulting Offer

I like to skim through my junk mail because once in a while I find something amusing. Today was one of those days. I found a real gem.

Some company called American General Financial Services sent me a letter offering me a loan: $7,500, paid over 5 years, with a 16.81% APR. But the beauty is in the fine print (emphasis mine):

*Not a guaranteed offer. All loans subject to our normal credit policies. Rates and terms advertised are for very well-qualified borrowers and require collateral. Rates will vary based on individual creditworthiness and loan size. Rates will be higher for unsecured loans.

Wow! They want to offer me a secured loan at 16.81%! Just who do they think I am? Suddenly I feel like I need to pull my credit report to see whether my identity has been stolen.

Their local branch is actually within walking distance of my home. I fantasize about going in there and asking them to explain themselves. I almost regret that I have better things to do with my time, because seeing them blubber and stutter would be pretty funny.

December 10, 2007

Bad Blogger!

Hello, everyone. This is one of those pathetic "sorry-I-haven't-written" notes. I have no good excuse; I just haven't been in the mood. I thought I might write about A New Hope the Hope Now Alliance, but I had trouble finding first-hand specific details (not mere press releases) and I'm loathe to write scathingly about a program whose details I might have wrong.

But there is hope. A New Hope. [cut that out - ed.] I have a lot of vacation time left this year and am not planning to travel, so I'll see what I can do about blogging when I'm not working. You know, because you're all worth it. :)

December 03, 2007

Symphony Luck

As I've written before, I seem to be an unusually lucky person. Traditionally this luck ends abruptly whenever women are involved.

Lady Fortuna

To wit, I got dumped on Thursday, but had bought two very good tickets (over $100) to the symphony … for Sunday. Not keen on attending alone, I scrambled to find someone to go with.

I asked three co-workers. Each declined. I appealed to a large mailing list of employees who buy and sell from each other, either to find a companion for the event or to sell the tickets. Not even a nibble. I asked a few non-work friends. No luck there either.

Increasingly desperate, I turned to craigslist, where I got … a nibble! Just one. Naturally, it was a one-liner with a typo:

..I would love to go. What do I need to to to be your guest?

I wrote back to her three hours before the concert, but never heard anything again. I'm accustomed to Oregonians being flakes, but the dissonance between "I would love to go" and then not checking your e-mail was pretty strong.

I went to the symphony alone. Sitting in my seat a few minutes before the start of the program, a girl moves into my row, looking confused.

She didn't know where her seat was. A glance at her ticket revealed that she was in the wrong section. I told her where she was supposed to be, and then added that the seat right next to me was available and she was welcome to it.

She was tall, blonde, a violist, and a senior in high school.

Too young for me, granted, but that's not the point. I didn't want to be at the symphony alone — and I wasn't! I had a lovely girl next to me, of the sort I would be happy to be seen with, and we chatted all through the intermission.

We didn't exchange names and I'll never see her again. We thanked each other for sitting together. What I expected to be a crushingly lonely event turned out to be very pleasant.

Oh, the performance? It was excellent. Vivaldi's Four Seasons played on a Stradivarius by a gorgeous soloist in a green dress who stood for the whole piece.

As she played I counted five broken strands on her bow. According to my violist companion, that was not unusual given the way she was playing. See, I even learned something. :)

Tiny Island