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Friday Financial Five – January 31st, 2014

Friday, January 31, 2014


The new government retirement plan

The big financial news coming from the State of the Union address is the White House’s push to implement a government-sponsored savings account called “MyRA”. The account would be treated similar to a Roth IRA in that it would be an after tax contribution and would grow tax deferred. The funds would be invested in government bonds, which seems like a good way to make sure there’s always a market for the government’s debt. For employers that participate, the proposed threshold would allow contributions for households that make below $191,000. There would also be a maximum balance of $15,000, at which point the worker would be forced to roll the funds over to privately held Roth IRA. This isn’t a cure, but it brings renewed focus to workers’ lack of retirement savings.

Taper, taper, taper

In the lexicon of finance, “taper” has seen a compounded level of importance to the point that it may be the most important word for markets globally. The market’s abysmal week may have been a direct result of the anticipation of Wednesday’s Fed meeting. To their credit, the FOMC stayed the course and reduced bond purchases by another $10 billion, without any dissenting votes. This should continue throughout the year, while keeping the target interest rate near zero and reducing the market’s reliance. And at some point, the public will be able to hear “taper” and simply go about their day.

The intricacies of Roth conversion

All people with a traditional IRA can convert to a Roth, but some may shy away from doing it because of the steps or analysis involved. The primary concern is that converting will cause a taxable event. Any amount that is moved from traditional IRA to Roth will be included as income in the year of conversion, and it’s best that funds to pay that additional tax come from outside of retirement accounts. Converting is also not necessarily the end of the story. If an individual’s situation changes or the account value drops dramatically, the IRS allows a recharacterization of the IRA, reversing the process. Traditional IRA holders should review income, tax brackets, and financial goals to see if a Roth conversion makes sense.

Penalties for not having health insurance

With the Affordable Care Act dependent on young people enrolling, the IRS recently detailed possible penalties for non-compliance. The fine line here is making it painful enough that people will be inclined to join but not so burdensome that people go broke just trying to pay for insurance coverage. The penalty for lack of coverage starts out relatively affordable this year at $95 per month. It then jumps to $325 monthly in 2015 and $696 monthly in 2016. After that, the penalty will adjust according to inflation. The government will accept “minimum essential coverage” as proof of insurance, and the cost of this coverage can’t exceed 8 percent of an individual’s household income or the person is exempt.

Save the yacht owners!

Yacht owners and boat builders are uniting to save a tax deduction that currently allows the classification of yachts as second homes, which allows some owners to deduct financing interest. Democrats in congress are targeting this deduction as an unnecessary loophole, pushing the “Ending Subsidies for Yachts Act”. Currently, the IRS requires a camp stove, temporary toilet, and occupancy for 14 nights a year for yachts to qualify as a “second home”. This is a small portion of the overall interest deduction, but it’s expected to be included in a grander revision of the tax code.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected] .


Related Slideshow: 25 Movies Filmed in Rhode Island

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Moonrise Kingdom


Director: Wes Anderson

Cast: Bruce Willis, Edward Norton, Bill Murray Frances McDormand

This Oscar nominated film features many local landmarks including Fort Wetherill State Park, Bayfield Farm, and the Conanicut Lighthouse.

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Mr. North


Director: Danny Huston

Cast: Anthony Edwards, Robert Mitchum, Lauren Bacall

Shot in Newport, this comedy-drama features Anthony Edwards as a con man attempting to break into the 1920s Newport social scene. 

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There's Something About Mary


Directors: Peter and Bobby Farrelly

Cast: Cameron Diaz, Matt Dillon, Ben Stiller

Filmed partly in Providence, this movie was the highest-grossing comedy in 1998. 

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Federal Hill


Director: Michael Corrente

Cast: Nicholas Turturro, Anthony DeSando, Libby Langdon

Set in Providence's Federal Hill neighborhood, the movie marks the directorial debut of Pawtucket native Michael Corrente.

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Age of Innocence


Director: Martin Scorsese

Cast: Daniel Day-Lewis, Michelle Pfeiffer, Winona Ryder

This Oscar winning drama was partly filmed in Portsmouth.  

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True Lies


Director: James Cameron

Cast: Arnold Schwarzenegger, Jamie Lee Curtis, Tom Arnold

The ballroom scenes in the movie were filmed at the Rosecliff Mansion in Newport.

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High Society


Director: Charles Walters

Cast: Bing Crosby, Grace Kelly, Frank Sinatra

Nominated for two Academy Awards, the movie's opening shot features a flyover of Newport’s oceanfront mansions. 

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Thirteen Days


Director: Roger Donaldson

Cast: Kevin Costner, Bruce Greenwood, Steven Culp

This docudrama about the Cuban Missile Crisis was partly shot in Newport. 

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Little Children


Director: Todd Field

Cast: Kate Winslet, Patrick Wilson, Jennifer Connelly, Jackie Earle Haley

Shot partly in Providence, this critically acclaimed drama received three Academy Award nominations, including a Best Lead Actress nod for Kate Winslet.

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Director: Peter M. Lenkov

Cast: Ryan Reynolds, Jeff Bridges, Kevin Bacon

A car chase for this action-comedy was filmed in downtown Providence.

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Director: Steven Spielberg

Cast: Morgan Freeman, Anthony Hopkins, Dijimon Hounsou, Matthew McConaughey

Shot at the Rosecliff Mansion in Newport and the State House in Providence, this drama received four Academy Award nominations in 1998. 

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Outside Providence


Director: Michael Corrente

Cast: Shawn Hatosy, Amy Smart, Alec Baldwin

Filmed in multiple locations throughout Rhode Island, this movie is an adaptation of Peter Farrelly's 1988 novel of the same name.

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Me, Myself & Irene


Directors: Peter and Bobby Farrelly

Cast: Jim Carrey, Renée Zellweger. Chris Cooper, Robert Forster, Richard Jenkins

Filmed in Newport, Narragansett, Jamestown, and Galilee, this comedy centers on a Rhode Island State Trooper played by Jim Carrey. 

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Director: Lajos Koltai

Cast: Vanessa Redgrave, Claire Danes, Toni Collette, Meryl Streep

The film was primarily set in Newport and included large portions shot at Gooseberry Beach.

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The Great Gatsby


Director: Jack Clayton

Cast: Robert Redford, Mia Farrow, Sam Waterston, Bruce Dern

This Academy Award-winning drama was filmed in Newport at the Rosecliff Mansion on Bellevue Ave.

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Self Storage


Director: Tom DeNucci

Cast: Eric Roberts, Jonathan Silverman, Michael Berryman, Tom DeNucci

Filmed in a self storage facility in East Greenwich, this horror-comedy marks the directorial debut of Cranston native Tom DeNucci. 

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27 Dresses


Director: Anne Fletcher

Cast: Katherine Heigl, James Marsden, Malin Åkerman, Ed Burns

Shot throughout Rhode Island, locations included the Rosecliff and Marble House mansions in Newport and a beach in Charlestown. 

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Dan in Real Life


Director: Anne Fletcher

Cast: Steve Carell, Juliette Binoche, Dane Cook, Alison Pill

Filmed primarily in Jamestown, the movie also features the Point Judith Lighthouse in Narragansett.

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Hachi: A Dog's Tale


Director: Lasse Hallström

Cast: Richard Gere, Joan Allen, Jason Alexander

Filmed primarily in Bristol and Woonsocket, other locations included the Columbus Theater in Providence and the University of Rhode Island in Kingston. 

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The Education of Charlie Banks


Director: Fred Durst

Cast: Jesse Eisenberg, Jason Ritter, Eva Amurri

Shot partially in Brown University in Providence, the movie marks the directorial debut of Limp Bizkit frontman Fred Durst.

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Meet Joe Black


Director: Martin Brest

Cast: Brad Pitt, Anthony Hopkins, Claire Forlani

Warwick's Aldrich Mansion served as the residence of Anthony Hopkins' character in the film. 

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Reversal of Fortune


Director: Barbet Schroeder

Cast: Jeremy Irons, Glenn Close, Ron Silver

Jeremy Irons took home the Oscar for Best Actor for this drama, which was partly shot in Newport.

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Director: Frederik Du Chau

Cast: Jason Lee, Peter Dinklage, Patrick Warburton, Amy Adams

Shot entirely in Rhode Island, filming locations included Hope High School on the East Side of Providence.

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Tanner Hall


Directors: Francesca Gregorini, Tatiana von Furstenberg

Cast: Rooney Mara, Georgia King, Brie Larson

Shot in Providence and Newport, the film marks the the directorial debut of Brown University graduates Francesca Gregorini and Tatiana von Furstenberg.

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Dumb and Dumber


Directors: Peter and Bobby Farrelly

Cast: Jim Carrey, Jeff Daniels, Lauren Holly

Scenes from the beginning of this comedy were filmed on location in Providence, including a shot of the Big Blue Bug.


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