Personal Finance Q&A
BOSTON — credit unions: nice rates, less service
Q. My employer is now offering a credit union. What are the advantages, or disadvantages, of joining?
R.H., Westfield, N.J.
A. "Interest rates tend to be lower on loans and higher on savings accounts than at commercial banks," says Michael Schenk, an economist with the Credit Union National Association, Madison, Wis. "Credit unions are also less likely to charge fees" than banks.
"And as a member, you're an owner," says Mr. Schenk. "You can vote in elections to select directors who will be responsive to your needs."
Disadvantages: If you own a business, you might do better with a commercial bank, which tends to offer greater assistance and higher loan limits. Also, some credit unions limit the participation of family members in certain banking services.
Q. When you reach 59-1/2, how can you distribute your 401(k) money to minimize your taxes and avoid penalties?
V.K., via e-mail
A. "Are you under the impression that you have to take a distribution at age 59-1/2? You don't have to take money out until you reach age 70-1/2," says Ed Slott, of accounting firm E. Slott & Associates, Rockville Centre, N.Y.
"Any distribution you take at 59-1/2 is purely voluntary on your part. If you do take out earnings, you will pay taxes at your regular tax rate. But once you have reached 59-1/2, there will be no tax penalty on the distribution, as there would be before that age," Mr. Slott says.
Q. Why is it so important to fill out an accident form every time something happens at my workplace, even though there is usually no real emergency? I have reservations about filling out forms.
S.C., New Haven, Conn.
A. Job accidents or incidents must be reported under state workers compensation laws, says Loretta Worters, a spokeswoman for the Insurance Information Institute in New York.
Requiring that a form be filled out "protects both the worker and the company," she says, since "sometimes there are unexpected repercussions weeks or months later. The form provides essential information."
Besides, companies that do not file proper notification documents after such incidents with state insurance departments can have their books audited, Ms. Worters says.
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