What the experts say

What the experts say

Companies roll out Roth 401(k) plans

Employers are teaching their retirement plans new tricks, said Janice Revell in Money. “A growing number of companies have started offering employees a choice between a standard 401(k) plan and a Roth 401(k).” A Roth 401(k) is a “mirror image of a regular 401(k)”—you don’t get upfront tax breaks on the contributions, but you pay no taxes on the money you withdraw. With a standard 401(k), by contrast, withdrawals are taxed as ordinary income. “For most people, the Roth 401(k) is the better choice,” particularly if you expect to be in a higher tax bracket when you retire. Young employees especially will like the Roth. But “if you’re close to retirement and fairly certain that your income will drop noticeably once you stop working,” skip it. Ditto if you live in a state with high income tax but plan to retire to a tax haven some day.

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Unlikely flight to quality

“Emerging-market assets used to be viewed as highly risky investments suitable for only the bravest of investors,” said Joanna Chung in the Financial Times. Now, remarkably, they have “started to resemble a safe haven.” Weary of Western markets, international investors have scooped up everything from Brazilian bonds and Chinese shares to the South African rand. Some analysts believe this is more than a fad. Others worry that the rush to emerging markets could be the start of a speculative bubble. “Nonetheless, investors’ newfound confidence in emerging markets does reflect one reality, namely that many emerging economies are in far better shape than ever before to weather broader financial turmoil.”

Kickbacks for buyers’ agents

Sellers and builders are getting desperate, said Amy Hoak in Marketwatch.com. In markets with a glut of homes for sale, they are offering agents extra incentives for showing buyers their homes. “Mentions of cash bonuses, gift cards, and other incentives are attached to some listings,” and some lucky agents have scored $5,000 American Express gift cards and leases for BMWs. Buyers don’t usually know when such deals are in place. But they should know that agents are obligated to show them homes that best suit their needs, according to Michael Thiel, associate counsel for the National Association of Realtors. Sellers considering using such perks to sway agents should gauge the market. It may, in fact, be a “better move to appeal to the buyer’s pocketbook by agreeing to cover closing costs or cutting the sale price instead.”