Sorting Out Government Securities
Q. What are the correct names of the various government securities that are periodically sold to the public? Is there some publicly available calendar the government has for its securities auctions? Now that rates are rising, it makes sense to start paying attention to these sales.-- E.N.A .
A. The proper names of government securities are often confusing and confused. Treasury bills come in three basic varieties: three-month, six-month and 12-month. Treasury notes are available with four different maturities: two, three, five and 10 years. Currently, new Treasury bonds are issued only for 30 years.
Actual auction dates are not published far in advance, but the Treasury follows some general guidelines, which we’re including here.
Typically, three- and six-month Treasury bills are auctioned every Monday. One-year bills are sold every four weeks.
Two- and five-year notes are auctioned once a month. Three- and 10-year notes are usually auctioned in the first week of February, May, August and November.
The 30-year bond is sold in February and August.
For more information, check the recorded messages at the Federal Reserve Bank branch: (213) 688-0069 or (213) 624-7398.
Loss of a Pretaxed Sum Not Deductible
Q. Several years ago, I invested my IRA in first trust deeds with a mortgage broker who has since filed for bankruptcy. I fear my investment is completely lost. May I write off these losses, and then, if any of my funds are recovered in the future, may I report those as income at the time?-- E.D.P .
A. Losses on tax-deferred investments such as IRAs are not deductible. Remember, you have not paid taxes on the funds in your IRA. Why should you be allowed a tax deduction if you lose them? You and Uncle Sam are even at this point. You haven’t paid him taxes yet on that money, and he’s not going to give you a tax break for losing it.
However, if you invested after-tax money in your IRA--that is, if the funds in your account had been taxed before you deposited them in the IRA--then you are entitled to a deduction for your loss. But the deduction is allowed only for the amount that was taxed.
If your IRA had accumulated interest or dividends that were as yet untaxed, you may not claim an investment loss deduction for these funds.
One further note: If you are entitled to a deduction, be absolutely sure your investment is worthless before you claim it. As we have discussed before, you must be “reasonably certain” your investment is “wholly worthless” before you are entitled to the deduction.
On Spousal Benefits: Choosing Which ‘Ex’
Q. My first marriage lasted 21 years. My second lasted 10. Which ex-husband’s Social Security benefits may I apply for? I understand that I am technically eligible to apply for either one’s benefits, since both marriages lasted at least 10 years, but I know that my first ex-husband’s Social Security account is larger.
How do I find out how much money I would be entitled to draw under his account when I reach retirement age, and how do I get his Social Security number?-- S.B .
A. You are allowed to draw Social Security benefits under the account of either ex-spouse. No doubt you will choose the account of the “ex” whose earnings were the highest and who is entitled to the highest benefits. If you were still married to husband No. 2, however, you would not be able to claim the benefits of husband No. 1 even if his account were more attractive.
(There is one exception: If you remarried after age 60 and your former spouse has died, you are entitled to claim benefits on the deceased former spouse even if you are currently married.)
You can obtain the Social Security number of a former spouse by contacting your local Social Security office and giving them all the identifying information you have--his birth date, last known address, employers, mother’s maiden name and birthplace are some of the important facts you should collect.
Be prepared to prove that you are an ex-spouse who is entitled to draw benefits. At the very least, you will need to produce marriage and divorce certificates.
A Social Security worker will help you get the information and benefits to which you are entitled. By the way, the payment rate for ex-spouses is 50% of the primary wage earner’s benefit, minus a certain percentage if you draw Social Security before you turn 65.
How to Keep Tabs on Your Social Security
Q. Can you tell me again how to check whether the Social Security Administration has an accurate accounting of my employment and earnings history? Isn’t there some form I can get to verify my earnings? Although I am still working and decades away from retirement, I want to be sure I am being accurately credited with all the Social Security taxes I am paying.-- J.S .
A. Taxpayers who have not yet retired should periodically check with Social Security to reassure themselves that their employment and tax records are being correctly forwarded.
Social Security representatives recommend that every employee request a “personal earnings and benefits estimate statement” every three years.
These statements are available from Social Security at no charge by calling (800) 772-1213. Ask for Form SSA-7004 or the personal earnings and benefits estimate statement.
You will receive a work sheet that you must complete and return in order to obtain an estimate of your potential retirement benefits.
