Recently in Recordkeeping Category
Some things you don't miss until they're gone. Remembering what you've lost can sometimes be the hard part. Take the following steps today so in the event your wallet is lost or stolen, you can spring into action immediately and make a quick recovery.
1. Remove your Social Security card from your wallet, memorize the number if you haven't already done so, and store in a safe place at home like a strong box or store in a bank safe deposit box.
2. Remove everything remaining in your wallet and make photocopies of the front and back of each item important to your financial life. Put a date on this copy and store in your home file where you can easily retrieve it if/when you need it.
3. Note on your calendar to perform the same procedure a year from now.
ACTION steps to take in the event your wallet is missing:
1. Plan to immediately cancel all your credit and debit cards when your wallet is lost or stolen and request new cards as well as new account numbers.
2. Report your missing wallet to the police to create an official record of the incident in the event that it was stolen.
3. Report missing driver's license to your state's department of motor vehicles and request a new one.
4. Alert the fraud departments of the three major credit reporting companies. They will place a fraud alert on your name and Social Security number, and you can request that they alert you before opening a line of credit in your name. (Equifax: 1-800-525-6285; Experian (formerly TRW): 1-888-397-3742; Trans Union: 1-800-680-7289)
5. Wait about a month and then check your credit history with all three credit bureaus www.annualcreditreport.com to check for possible identity theft.
6. Request a replacement Social Security card (If you failed to follow step 1 above) and avoid carrying it in your wallet in the future.
7. Replace your health insurance cards by either contacting your employer's HR department or the health insurance company. Contact the Social Security Administration to replace your lost Medicare card.
8. Contact any other companies whose cards you may have lost. Refer to your master copy that you photocopied and stored at home to easily remember what you lost and who to notify.
Unlike the box at your local elementary school office that contains assorted unclaimed articles such as lunchboxes and hoodies, there is no central location for people searching for lost or unclaimed money. Indeed, you might not even know that you could have "lost" money. Spending an hour or two culling through these various sources might help you find funds you weren't aware of!
Let's start with the IRS - A November 5, 2009 press release from the IRS indicates that 107,831 refund checks for the 2008 tax year were returned by the U.S. Postal Service due to mailing address errors. Averaging $1,148, these checks total $123.5 million in undeliverable refunds. If you did not receive your 2008 refund check call the IRS at 1-800-829-1954 or check the "Where's My Refund" section of the www.irs.gov website. To affirm your identity you must provide your social security number, filing status and amount of refund from your 2008 tax return. To avoid this situation in the future, plan to e-file your return and request that your refund be directly deposited into a bank account.
The IRS might also owe money to folks who failed to file their annual returns. Life happens and sometimes for various reasons people just don't file their income tax returns. By not filing, not only could you miss out on a refund of your money, you also miss out on tax credits to which you might be entitled like the Earned Income Tax Credit. Generally, refunds must be claimed within 3 years of the return due date or you could lose your right to it.
Pennsylvania State Income Tax Refunds - Pennsylvania residents meeting certain income guidelines are eligible for partial and possibly full tax-forgiveness. Any person having $33 in taxable income must file a Pennsylvania Personal Income Tax return even if there is no tax due. In order to receive the Tax Forgiveness tax credit, you have to apply for it by completing Schedule SP and attaching it to a PA-40 return. If you were eligible and didn't receive the special tax forgiveness you can file amended returns within 3 years of the original return due date. If you have not received your 2008 Pennsylvania State Income Tax refund log onto www.revenue.state.pa.us and click on the Personal Income Taxes e-services link. From there click on the "Where's My Refund" link. You can also call 1-888-PATAXES for information.
Pennsylvania Rent and Property Tax Rebate - Eligible applicants who have not received their 2008 PA Rent and Property Tax rebate forms can call the same phone number or log onto the same website above except click on the "Where's My Rebate" link. Unlike federal and state income taxes, you cannot file for this rebate retroactively. Once the filing deadline is past applications will not be accepted. The regular deadline to file is June 30 but often that deadline has been extended through the end of the calendar year.
US Savings Bonds - Many of us, (myself included) received US Savings Bonds as gifts during our youth. Because they have a long life (earn interest up to 30 years) many bonds have been lost or forgotten. According to the US Treasury website BILLIONS of dollars in Savings Bonds are no longer earning interest - so owners of missing bonds could be missing out on earning additional interest. www.savingsbonds.gov has detailed information on how to search for lost, stolen or destroyed bonds.
Pennsylvania Unclaimed Property - www.patreasury.org/unclaimed/search.html is currently holding $1.5 billion in unclaimed property. Common types of unclaimed property include: Bank accounts, safe deposit box contents, stocks, mutual funds, bonds, dividends, uncashed checks, insurance policies, CD's, trust funds, utility deposits, and escrow accounts. www.missingmoney.com is useful for searching for unclaimed property in other states.
Past employer retirement plans - If a previous employer offered a pension plan in which you were vested, it's important to keep them updated on your current address. Periodically they will mail you information regarding the status of your account so remember to let them know of any new address.
Mortgages - If you paid off a FHA mortgage before November 5, 1990, you may be due a refund. Call the FHA Support Service Center at 1-800-697-6967, or search the Housing and Urban Development website http://www.hud.gov/offices/hsg/comp/refunds/index.cfm
Pensions - Some $133 million in unclaimed pension benefits overseen by the Pension Benefit Guaranty Corporation maintains a searchable database http://www.pbgc.gov/ of abandoned pension accounts.
Bank Accounts -If you forgot about a bank account, try calling 1-800-PA-BANKS the Pennsylvania Department of Banking. Accounts that were held at savings and loans or banks that are out of business might be trackable by calling the Federal Deposit Insurance Corporation (FDIC) Division of Resolutions and Receiverships (DRR) at 1-888-206-4662.
Life Insurance Demutualization - In the past few years many large mutual life insurance companies converted to publicly traded firms through the process of demutualization. Instead of being a policyholder/owner of the mutual company, now you are a shareholder. If the insurance company did not have your current address, those shares of stock and subsequent dividends were undeliverable. Millions of policyholders may be entitled to these funds. Contact the insurance company to see if you are affected.
How does property achieve the designation of unclaimed or abandoned? Most likely it is the result of one of the following: change of address, name change, death of owner, or lack of activity with a particular account. One way to avoid experiencing "financial lost and found" is by developing an effective financial recordkeeping system. This up-to-date collection of your family's assets should include all bank and credit union accounts, CD's mortgages, retirement accounts including IRAs and pension plans, stocks, bonds, mutual funds, life insurance policies and safe deposit box locations and contents. Annually review your system and notify each asset of any changes of address or name. At least two other people should be familiar with your system. One would be a financial buddy (trusted friend or spouse) to assist you should you be incapacitated - preferably someone to whom you have assigned a financial power of attorney. The other person should be your executor who will carry out your wishes after your death as detailed in your will.
I'd like to hear about your successful experiences with financial lost and found or of those with whom you've shared this information. If you use these resources and find lost money, please email me at email@example.com. I can't wait to hear how much you found and where you found it!
MonthlyBillTracker.xls This past week I met a widowed mother of three whose only source of income was the Social Security survivor's checks that her children receive. Combined, this income amounts to a little over $3,000 a month and should be adequate for the community they live in. In reviewing her bills... it took two hours just to open all the envelopes and determine which are the most recent as some had gone into collections during the time she hadn't been opening them...and another hour to develop a place to start dealing with the issues. In the past two months she had paid $300 and $220 respectively in bank overdraft fees. Part of the problem we discovered is that, unlike other types of payments or bills that are due on a particular DATE, the Social Security payments are deposited on a certain DAY of the month. For example, the mortgage is automatically debited on the first of the month, the electric bill is due on the 15th, the gas bill is due on the 19th, etc. Her income date falls between the 15th and 21st. So in the worst case scenario, her two utility bills will come due prior to her income arriving. Without adequate planning (avoiding other expenses until the income is deposited) she will continue to incur overdraft fees. The attached budgeting tool might help her visualize and plan ahead for paying her bills.
I am meeting with her this morning and with her family preservation caseworker who should be able to monitor her progress. When I left her last week she has several tasks to accomplish and I'm eager to see what she was able to do. Success breeds success and small steps really do help you make progress. We will establish a recordkeeping system by uisng a plastic crate and some hanging files labeled with the different ongoing bills so that she can more easily keep track of her payments.
Other issues that surfaced during my initial visit were that she gave her now ex-boyfriend her ATM PIN and in reviewing her bank statement he had spent in excess of $100 at a New York Casino without her knowledge. She has used Rent-to-Own in the past as a source of furniture and presently is without a kitchen table or chairs and apparently a large screen TV was returned as well for non-payment. We discussed various ways to obtain furniture such as yard sales, thrift stores or even buying a folding table and chairs to suffice until money could be saved to purchase more stable furniture. Thrift stores are also great places to find clothing for kids a well as other items.Many people have misperceptions about Thrift Stores. Some are unaware that these stores may also sell brand new clothing in addition to donated used clothing.
I will not reveal names to protect the guilty, but one of my descendents (I will not use her name to protect the guilty) recently called to discuss what could possibly have happened to her bank account...money was missing! She had been tracking her account ONLY using the ATM receipts and noticed a significant discrepency between transactions. I had suggested awhile back that she enroll in online banking so she could track her money, but she found other things to occupy her time. So after a night of anguish, she called the bank this morning and established online services ("it was easy and the bank lady was really nice!") and deterined where her missing money went. It seems she had written a check to pay her credit card bill and it had taken some time for the check to clear. My suggestions to prevent this kind of panic in the future
1. DON'T only rely on the ATM receipts to determine your account balance. The bank doesn't know about your checks that are written until they receive them so you may have an artificialy high bank balance that doesn't account for the obligations incurred when you wrote the checks.
2. DO keep an accurate register of your account transactions that include deposits, automatic payments, ATM transactions and checks written.
3. Check your online account balances weekly and watch for possible discrepencies between your recordkeeping and the banks. Act promptly if there is a transaction you aren't sure about.
Recent legislation mandates that employers who sponsor defined benefit (pension) plans now send out an annual notice about the current financial health of their plan. The Pension Protection Act of 2006 (PPA) provides workers with information that is useful in looking forward to and planning for retirement. If you work for a company that provides a pension, generally you have to work for a length of time in order to be "vested" in the plan. For example, my son is a county employee. If he works at least 5 years for the county, the counties "promised" contributions toward his retirement are locked in or vested. His contributions are guaranteed from the beginning of his employment. some plans have a graduated vesting schedule where each year that you work a certain percentage of your employers benefits are vested. For example after year 1 20%, year 2 40% and so on up to the 100% vesting date.
In addition to the vesting schedule, you should also be aware of the various payout options your plan provides. In my case, because I have worked at other places with larger retirement balances, I intend to start taking distributions from this particular plan at the age of 55 but while I am still employed elsewhere. Because these benefits were never taxed, they will be fully taxable and I do need to take into consideration my other sources of income and if this extra will move us into a higher tax bracket.
But let's get back to the Dear Plan Participant letter. For one thing, I moved and failed to notify my previous employer of my new address so they had a little difficulty getting this notice to me - POINT - when you move, notifying past employers who have retirement benefits waiting for you is a great idea!
The letter goes on to inform me about the health of the entire pension plan, how the money is invested and other important details. For my particular plan 683 current employees, past employees and retirees should expect to receive a total of $17,250,000 if they all chose to take their money and run as of December 31, 2008. This is called the plan's liabilities and are based on actuarial assumptions. At that same time, the assets in the plan were worth $12,000,000. In other words if the plan cashed out, the account balance would only provide for 70% of the plans obligations. Since that time the stock market has rebounded and I could guess that at this point in time the plan is at 75%. the plan document informs me that 8.5% of the money is invested in common stock, 5% in cash equivalents and the remainder is in mutual funds. So, just like my 403B plan with my current employer, the performance of my pension plan is tied to the stock market. Unlike my 403B however, my pension is insured by the federal government through the PBGC Pension Benefit Guarantee Corporation. The document I received goes on to further explain the PBGC benefits.
BOTTOM LINE - notify all past employers where you held retirement funds of your current address. If you received an annual funding notice from past employers regarding your pension plan performance, read through it and file it until next year when you receive a new notice. Don't panic about the information you learned but put it into context of your larger financial picture.
Don't open your mail...well at least not at 10:00 PM when you left for work at 6:30 AM and have driven about 250 miles throughout your day...especially if your mail contains at thick (14 pages) notice from the IRS regarding your taxes from 2 years ago. Particularly when it is a bill for $8,500 plus another $1,200 in interest and penalties! But I did! Starting to deal with the IRS when you're tired and cranky is not the best way to handle a situation. But, thinking I'm a pretty good recordkeeper and that I had provided my CPA with all appropriate information, instead of waiting until the next morning, I retrieved the 2007 tax file from the spare bedroom and set to work reviewing my records against the deficiencies in the IRS mail audit. My point here is due to keeping my records in one place, I saved time searching. Ultimately my recordkeeping should vindicate me, but that comes later in the story. In 2007 we bought a different home and sold numerous investments to help reduce the mortgage including an early distribution of principal from my Roth IRA . I also cashed in a 529 college savings plan to pay for my daughter's last semester of college. The audit focused on these two transactions as well as questioning the dividends I reported. I sorted through my files to find the documentation for the three issues in question and slept fitfully that night, with a 99% assurance that the 2007 1040 was accurate.
The next morning I got to work composing an explanation to the IRS but decided that it would be a good idea to consult my CPA... remember that 1% of uncertainty? I gathered up all my materials and headed downtown. It is the middle of June and my guy was still in Ireland on a vacation, but his partner graciously met with me to review the situation. He assured me that their office would handle the paperwork which is due in a month. He carefully reviewed the IRS letter and then my supporting documentation.
1. I had failed to provide my CPA with the 1099-R for the Roth withdrawal - knowing that it would not be taxable, but not realizing that it still needed to be reported. My financial institution reported the withdrawal, but it was up to me to indicate on my 1040 the action taken and that it was NOT a taxable event.
2. The 529 college withdrawal - interest was taxable IF not used for qualifying tuition expenses. Since my daughter was claimed as a dependent on the 1040, we just needed to indicate the money was used for her rather than the information that the IRS received that she as beneficiary did not directly receive the money, I as the account holder did.
3. the dividends from the various stocks I hold. Not really sure what happened with the auditor on this one because in their review they correctly indicated the amount of dividends I recieved from Verizon and Coca Cola, but later in the document show those same two stocks with different amounts of dividends. (We only hold one account with each stock company)
So, this next week when my CPA returns home, my file will be one of the files stacked on his desk waiting for action.
BOTTOM LINE: DO NOT PANIC when you receive letters from the IRS, they are only doing their job. Don't assume they are correct. BUT, if you don't have accurate records to back up your assertions, you'll have a very difficult time proving your case.