Considering a Roth IRA? Check state taxes first

11:30 AM Check, considering, first, State, taxes No Comments

| By Scott Hanson, CNBC.com

If you live in a high-tax state such as New York but plan to retire to an income-tax haven like Florida, a Roth IRA may not make sense.

Just about every article I've read on Roth IRA conversions discusses their benefits for people who might be in a high tax bracket once they retire.

What these articles invariably fail to mention is the negative impact that state income taxes could have and why, depending on where you plan to live, a Roth conversion might actually not be the best decision for everyone.

When you convert a 401k plan account or traditional IRA to a Roth IRA, you're making the conscious decision to pay income taxes today for the promise of a tax-free income tomorrow. This can be a wise choice if you are fairly confident that a) you'll be in a higher tax bracket during retirement, and b) Congress won't dramatically change the tax rules on Roth IRA withdrawals.

Those with high incomes who are saving and investing successfully—and who believe they'll continue to have a high income once they retire—seem prone to a certain line of reasoning: Because the promise of tax-free income from a Roth IRA is so appealing, why not just take some retirement savings today, pay the tax at current levels and then sit back and enjoy tax-free income during retirement? After all, just about "everyone" thinks that taxes will be higher in the future, right?

But converting money from a 401k or IRA to a Roth IRA triggers not only federal income taxes but also taxable income in the state in which you currently reside. While there are seven states -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- with no state income tax, many others have prohibitively high rates.

The top income-tax rate in New York, for example, is around 9 percent, while California's top rate is north of 13 percent.

If you reside in a state with high income-tax rates and convert money to a Roth IRA, you'll not only be forced to pay Uncle Sam, you'll also find yourself writing a check for thousands of dollars to help fund your state government.

This is obviously one reason so many people, once retired, flee high tax-burden states for states with lower taxation rates.

You must consider that because retirement withdrawals are taxed based on the rates of the state in which you reside when you actually take those withdrawals, a traditional 401k or IRA withdrawal will be state tax–free if you live in a state with no income tax. Again, it makes no difference if the withdrawal is coming from a traditional IRA or a Roth IRA -- the withdrawals are taxed the same (0 percent) in places with no state income tax.

If you plan on moving out of your current high-taxed state to retire in a location with no state income tax, why would you want to convert anything to a Roth IRA? By doing so, you would be taking money that would be state income tax–free during retirement and making those dollars taxable today.

Simply put: If your current primary residence has high state income taxes, you could be forking over a considerable amount of money today for absolutely zero benefit during your golden years.

There are some circumstances where a Roth conversion still might make sense, such as during a period of prolonged unemployment, but for those who are confident they'll be leaving their state when they retire, a Roth conversion is simply a bad idea the vast majority of the time.

This same logic applies to contributions to Roth 401k plans. Again, using the traditional plans may have greater benefit if you leave your high-taxed state once you retire.

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Rabbits (Playboy) get cold shoulder in the Indian State

12:00 PM Indian, Playboy, Rabbits, shoulder, State No Comments

Reuters – 1 day

MUMBAI - plans India's first Playboy to open Club in Goa coastal States have taken, last year a bone of contention with local politicians of the idea of "Hare" on its pristine beaches amid increasing pressure for better treatment of women after a fatal gang rape.

India has strict censorship laws and there is no Indian version of Playboy Magazine, but the Playboy brand in India revealed the promoters last year to open clubs around the country plans, customized dress with Indian customs.

A lawmaker from the right-wing party of that rules that the State had threatened a hunger strike if the Government allowed that set Playboy shop in Goa, to say that it would tarnish the image of the State.

"If the Government had to grant a license Playboy, it amounts to giving a license for prostitution," Michael Lobo told Reuters, adding that Playboy promoted vulgarity.

"We respect our women," he said. "We don't want to promote Goa as a sex tourism destination like Thailand."

Tens of thousands of tourists visit Goa during the high season October to March, its golden beaches, to enjoy, which are known for long night parties.

Media reports suggest that many other politicians and women's groups of Humongous share concerns, but the Bharatiya Janata Party, that rules Goa has not officially made known his displeasure.

On Monday, Goa Chief but told Minister Manohar Parrikar of the State Assembly that Playboy license application had been refused for "technical reasons", citing rules allowing such licenses for individuals but not companies.

Playboy clubs are promoted with images of naked women part of the hedonistic lifestyle of octogenarian Hugh Hefner, founder of Playboy Magazine. Playboy clubs around the world feature waitresses dressed in black satin bodice, bow tie, cuffs and bunny ears.

The clash underscores the growing pressure for a more restrictive climate in India after the brutal rape of a young woman in the capital New Delhi provoked widespread outrage over attitudes toward women in December.

Undaunted, the promoters of the brand Playboy in India - PB-lifestyle, has a license agreement with American Playboy Enterprises Inc - said she would try again.

"There are certain technical errors, we need to correct, and then we take it from there", said Sanjay Gupta, CEO of PB lifestyle. "I can not predict what will be the Government's decision."

Gupta, said that they have tried to make sure, the Playboy Club clothes offend not Indian sensitivities even weakening his characteristic Bunny costumes for local tastes – a first for Playboy clubs around the world.

He added that the Goa property was planned, not as a night club, but as a Beach Cafe, where women would be given special privileges. It was not specified, what were these privileges.

"The environment and atmosphere that we create women are friendly," said Gupta. "There is no male bastion, spouses are more than welcome."

The company still plans to open Playboy Clubs in other Indian cities.

Copyright 2013 Thomson Reuters.

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State with widest gap between rich and poor? New York

7:00 AM between, State, widest No Comments

Michael B. Sauter, Alexander E.M. Hess and Samuel Weigley , 24/7 Wall St.

Since the late 1970s, income inequality in the U.S. has grown by nearly 20 percent. The Great Recession has brought the disparity between the rich and the poor to the forefront of the news. The Occupy Wall Street movement and terms such as the 99 percent and 1 percent further highlight the attention about the subject. Instead of improving after the recession, income inequality rose 1.6 percent between 2010 and 2011.

In some states, the Gini coefficient -- a ratio between zero and one that reflects perfect equality at zero and significant concentrations of wealth, extreme poverty and a limited middle class as the ratio increases -- is well below 0.0476 national average. In Wyoming, the coefficient is just 0.408. In New York state, income inequality is now at 0.503. Based on 2011 figures from the U.S. Census Bureau’s American Community Survey, 24/7 Wall St. identified the states with the widest gap between rich and poor.

In an interview with 24/7 Wall St., Director of Research and Policy at the Economic Policy Institute Josh Bivens explained that the recession, despite its disastrous effects on employment, actually has temporarily caused growth in inequality to slow, as extremely high-income individuals in finance were hit particularly hard. Still, Bivens believes that income will again begin rising much faster among the top 1 percent than the rest of the population in the next several years.

The reasons some states have more income inequality than others are varied, but the industrial makeup of these states is perhaps chief among them. States with a disproportionate representation of industries with the potential for extremely high-income positions are more likely to have higher income inequality than those with more diverse industries.

Connecticut and New York, for example, are home to the largest finance centers in the country. Investment bankers and hedge fund managers in the state can earn many times the average middle-class worker. In New York, 8 percent of households earned $200,000 or more in 2011, much higher than the national average of 5.6 percent. In Connecticut, 11.2 percent earned more than $200,000.

In other states, such as Texas and Louisiana, the oil extraction industry has created a small group of billionaires. These states also have some of the largest impoverished populations in the country. In Louisiana, more than one in five residents live below the poverty line, significantly higher than the national rate of just 15.9 percent.

Unemployment hit 7.8 percent in September, the lowest it has been since January 2009. It rose to 7.9 percent in October as more people returned to the work force. However, while more people return to work, this is not necessarily positive news for the long-term health of the American middle-class. The U.S. is not projected to return to pre-recession employment levels until 2017, Bivens explained, and as Americans return to work, they will be more willing to work for lower wages.

In this environment, “it’s really tough for workers to get good wage increases at the middle when there are unemployed workers who could replace you if you start making big wage demands,” Bivens said.

Based on data from the U.S. Census Bureau, 24/7 Wall St. identified the 10 states with the widest gap between rich and poor, as measured by states’ Gini coefficient scores. In addition to these scores, 24/7 Wall St. reviewed median income and the distribution of household income provided by the Census Bureau for these states. We also reviewed the percentage of households living below the poverty line and the percentage of households receiving food stamps. Additionally, we looked at the Institute for Policy Studies’ Inequality Report Card, which provided grades to senators and congressmen based on their voting record related to income inequality.

These are the states with the widest gap between rich and poor.

1. New York

· Gini coefficient: 0.5033

· Median household income: $55,246 (16th highest)

· Households earning $200,000+: 8.0 percent (6th highest)

· Population living below poverty line: 16.0 percent (21st highest)

New York, which had the highest income inequality in 2010, had an even higher inequality in 2011. The 16 percent of the population living below the poverty line in 2011 increased from 14.9 percent in 2010 to 16 percent in 2011. The median income declined by $466 between 2010 and 2011. Meanwhile, the percentage of households raking in at least $200,000 was 8.0 percent in 2011, virtually unchanged from 2010 and well above the national rate of 5.6 percent. According to a recent study conducted by Martin Prosperity Institute, income inequality in the New York City metro area is roughly equivalent to that of Swaziland, a poor sub-Saharan country that has the lowest life expectancy in the world.

2. Connecticut

· Gini coefficient: 0.4859

· Median household income: $65,753 (4th highest)

· Households earning $200,000+: 11.2 percent (the highest)

· Population living below poverty line: 10.9 percent (5th lowest)

At 11.2 percent, Connecticut has the highest percentage of households making $200,000 or more. On the other side of the income gap, the percentage of the population living below the poverty line rose from 10.1 percent in 2010 to 10.9 percent in 2011. Many residents also lost their jobs. The state’s unemployment rate in Sept. 2012 was 8.9 percent, up from 8.6 percent the year before. During that time, the national unemployment rate fell from 9 percent to 7.8 percent. In Connecticut’s Fairfield County, the Gini coefficient was 0.535 -- higher than any state. The county is home to several hedge funds and country clubs, but also to government housing and food pantries.

3. Louisiana

· Gini coefficient: 0.4836

· Median household income: $41,734 (7th lowest)

· Households earning $200,000+: 3.5 percent (17th lowest)

· Population living below poverty line: 20.4 percent (3rd highest)

The percentage of households below the poverty line shot up to 20.4 percent in 2011, the third-highest percentage in the country, from 18.7 percent in 2010, the sixth-highest rate that year. Households earning less than $10,000 grew to 7.7 percent in 2011, the second-highest in the country. In 2010, it was 6.2 percent -- sixth-highest at the time. This happened even as the unemployment rate in Louisiana dropped to 5.6 percent in 2011 from 6.2 percent in 2010, indicating job growth primarily at the lower-end of the wage spectrum. East Carroll Parish, located in the northeast corner of the state, had the highest income inequality of all counties in the U.S., according to a Feb. 2012 report from the U.S. Census Bureau looking at data from 2006-2010.

4. New Mexico

· Gini coefficient: 0.4821

· Median household income: $41,963 (8th lowest)

· Households earning $200,000+: 3.4 percent (tied for 15th lowest)

· Population living below poverty line: 21.5 percent (2nd highest)

Between 2010 and 2011, New Mexico’s Gini coefficient rose from 0.464 -- then 15th in the nation -- to 0.482, one of the highest in the country. During this time, many New Mexicans brought home less money, as median income fell from $43,326 in 2010 to $41,963 in 2011. Also, 7.2 percent of the state’s households earned less than $10,000 last year -- one of the highest rates in the nation. Poverty is a long-running problem in New Mexico. The percentage of households living below the poverty line rose from 18.1 percent in 2010 to 21.5 percent last year -- the second-highest poverty rate in the nation. Despite the state’s high poverty rate, one of its three congressman, Steve Pearce, received a “D-” from the Institute for Policy Studies on promoting income equality.

5. California

· Gini coefficient: 0.4812

· Median household income: $57,287 (10th highest)

· Households earning $200,000+: 7.8 percent (7th highest)

· Population living below poverty line: 16.6 percent (18th highest)

Nearly 8 percent of households in California earned at least $200,000 in 2011, more than all states but six. But while California has its sliver of Hollywood bigwigs and self-made billionaires striking it rich in Silicon Valley, the state also has a fair share of residents on the lower-end of the income spectrum. The state’s 16.6 percent poverty rate was higher than the national poverty rate of 15.9 percent. Despite this, California in some regards did better than its peers. For instance, the 8.3 percent of Californians on food stamps in 2011 was a lower percentage than all but four states. Furthermore, the 4.7 percent of households earning less than $10,000 in 2011, while far from being the lowest percentage among all states, was better than the 5.1 percent across the country.

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State Department: Clinton of not going anywhere

5:13 PM anywhere, Clinton, Department, going, State No Comments

WASHINGTON-the U.S. Department of State launched Thursday a report that Secretary of State Hillary Rodham Clinton has been in discussions with the White House about the title of the World Bank.

"The story is completely wrong," said Clinton spokesman Philippe Reines in the United Arab Emirates, where Clinton was involved in the international negotiations on Libya.

He said Clinton has no talks with President Barack Obama, the White House "or anyone else about moving to the World Bank." She has expressed absolutely no interest in the job. "You would not take when offered."

Reuters, citing sources familiar with the discussions, said, their discussions involved leave next year the World Bank lead the State Department.

"Hillary Clinton wants the job, said a source, that white well, Reuters reported the Secretary General." A second source also said Reuters Clinton to the position.

The current President of the Bank is Robert Zoellick, whose Begriff ends not up to the year 2012.

The Bank declined comment on Thursday.

But at a press conference Wednesday in Oslo, Norway, Zoellick was asked whether it is true that an American should lead institution.

"I think this is really a decision for the shareholders, and I think there are many talented not Americans and Americans," he said. He added: "I think it's good for the United States, have some responsibility, have some of its nationals in multinational institutions be added."

Clinton has said that they do not want to stay in their profession, if Obama wins a second term in 2012.

The nation's top diplomat has also said, that it neither has plans for a second White House bid still interested in other bodies, such as Vice President or Defense Minister.

"I am doing, what I want to do now and I have no intention or one idea running even again," she told CNN in March. "I'll do the best I can at this point for the next two years."

Clinton's star power and work ethic were Obama judged crucial qualities for her role as the nation top diplomat, considered, although they get not working with extensive foreign policy background.

It has aspects of the job the globe trotting, embraced logging to visit many hours on level trips to the alliances with countries like Japan and the United Kingdom maintain and hotspots such as Afghanistan and countries in the Middle East.

She has since long been vocal on global development issues, in particular the need for economic empowerment of women and girls in the developing countries. The part of its focus on the State made it. Her husband, Bill Clinton, was global initiative also involved in these issues through his philanthropic work in Clinton.

The World Bank provides billions of dollars in funds for the development of the poorest countries and is also in the middle of issues such as climate change, reconstruction the transitions to democracy in Tunisia and Egypt countries emerge from conflict and more recently.

The associated press and Reuters contributed to this report.

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