Irs Issues Extension For Roth Iras

Taxpayers who discovered they are not eligible to convert a traditional IRA to a Roth IRA but missed the April 15 deadline for switching back got a six-month extension this week from the Internal Revenue Service.

Based on research into its own regulations regarding automatic extensions, the IRS determined these taxpayers should have until Oct. 15 to switch the Roth individual retirement arrangement back to a traditional IRA, preserving their full tax advantages for 1998 returns.

The problem came up when some taxpayers had converted to the Roth IRA in calendar 1998, then discovered their adjusted gross incomes topped the $100,000 limit to make the change or that they were ineligible because they were married but filed separate tax returns.

Under Wednesday’s decision, these taxpayers can undo the switch as long as they filed their 1998 tax returns on time and then file an amended return by the normal three-year deadline of April 15, 2002, to reflect the change.

Local brokers receive award

Two senior vice presidents in D.A. Davidson & Co.’s Spokane office were among 10 who received Outstanding Broker Awards recently from “Registered Representative” magazine, a trade publication.

Gary Shea and R.C. Roland earned the recognition based on three criteria: money management and client service, peer respect, and involvement in civic or charitable organizations.

The two have worked together for 22 years, first doing seminars for doctors and dentists. They co-managed the Spokane office of Dain Bosworth before joining D.A.D. in 1995.

Both teach finance at Gonzaga University and have taught at Eastern Washington University and Whitworth College.

Shea is president of the Spokane Symphony board of trustees.

Roland helped start the AAU basketball program in the 1980s. He is a stake mission president for Mormon Church, a position that gives him responsibility for 11 regions.

Lynch praises small-cap stocks

Fidelity’s Peter Lynch, the greatest mutual fund manager of all time, recently had kind words for small-cap stocks, everyone’s whipping boy.

“Small companies have big moves,” he reminded us. “Big companies have small moves.”

Robert Pozen, Fidelity’s CEO, said that his ”go-anywhere” large caps funds are overweighted in small- and mid-caps.

Contrafund, for instance, owns such small companies as Earthgrains Inc. (EGR), a baker. Destiny I owns Papa John’s International Inc. (PZZA), a pizza chain.

Meanwhile, Red Chip Review (1-800-733-2447), the small-cap research service, has upgraded D&K Healthcare Resources Inc. (DKWD), a drug distributor, to its top rating. Also rated “A”: Building Materials Holding Corp. (BMHC); Advanced Marketing Services Inc. (ADMS), book distributor to discounters, at a P/E of 10; and Tarrant Apparel Group (TAGS), fast-growing private-label clothing manufacturer.

401(k) no reason for complacency

How much money will you need for a comfortable retirement? “More than you think,” says financial adviser David Foster. “Surprisingly, if you’re in your 30s or 40s, your 401(k) plan could threaten your financial future.

“Reason: complacency. Most people feel they can retire in high style if they save $10,000 a year in their retirement plans.

“Wrong. You must save more than you’ve been saving - outside of your 401(k) and IRA - and for a longer time period. The number of years you must save for retirement while you’re working must equal the number of years you plan to spend in retirement.”