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Gold For The Golden Years

In "Does a Roth 401(k) fit your future?" (Retirement Guide, July 25) Robert Reby gives his example of how a Roth 401(k) is "a great thing for future gratification." You earn $22,500, pay $7,500 (33 1/3%) tax, invest the remaining $15,000, which triples by retirement to $45,000, which you get to keep. But if you earn $22,500 and put it all into a traditional 401(k), it triples to $67,500. You then pay $22,500 (33 1/3%) in taxes and get to keep $45,000 -- the same as the Roth 401(k). You cannot ignore the $7,500 you pay up front on the Roth.

The Roth is better if the applicable tax rate is going to be higher when you take it out than when you put it in. For middle-class Americans, who will take a pay cut and have a lower tax rate when they retire, the traditional 401(k) or individual retirement account is best.

Robert Harrison

Vassar, Mich.

Many households would like to save for retirement, but the government won't let them! My family bought a fourplex [house] in 1974. The IRS holds that there is no difference between holding a stock or bond and running a building. They are both passive investments! As a teacher, I've asked my students if they think shoveling snow, mowing grass, replacing plumbing fixtures, painting, cleaning carpets, etc. is work. Their response: "Well, duh!"

An IRS agent told me that people owning rental property can't contribute to an IRA because the building produces the income. I then said: "So I take it a farmer can't have an IRA?" The agent replied: "Of course, farmers can have IRAs. It's a lot of work to farm. They have to plow, plant, irrigate, fertilize, treat for weeds and insects, and harvest." I said, "But the field produces the crop, not the farmer. So what's the difference?" He was silent.

Doug Spaulding

Mill Creek, Va.

I am writing on behalf of John Hart, principal of Milio International Ltd., whose company was incorrectly represented in "The Rich boys" (Investigative Report, July 18) as being part of or somehow involved with the network or person of Marc Rich. John Hart did briefly work for Marc Rich & Co. Investments Ltd. in 1998. Hart and his team joined after more than eight years working at Philipp Brothers (Phibro), the commodity trading arm of Salomon Inc. Hart and his team left Marc Rich & Co. after less than six months because of vastly conflicting business philosophies.

Carrie Barich

Milio International Ltd.


Re "Marcial's hits and misses," Finance, July 18): As a professional money manager for the past 25 years, I know how difficult it is to beat the benchmarks consistently. That's why I have been impressed with Gene Marcial's knack for picking stocks and achieving returns that outperform the market year in and year out.

However, the math does not support the contention of the subhead ("His Inside Wall Street column did well over three months, not as well longer term"). In fact, over six months, Marcial significantly outperformed the Dow Jones industrial average and NASDAQ. In your effort to modulate the tone of the headline, accuracy might have been an unintended casualty.

John Maloney, Chairman

M&R Capital Management Inc.

New York

You claim that Marcial's stock picks did well over a three-month period, and that he had "a few" strikeouts. Viewed differently, only 56% of Marcial's three-month-horizon stocks, and only 53% of the six-month picks, made money -- numbers are not significantly over the 50-50 rate you would expect from the dart board approach to stockpicking. If a stock loses money, what else can you call it but a strikeout? Marcial's column is always thought-provoking, but please do not parse the statistics to make him seem substantially better -- or worse -- than anyone else trying to outwit the market.

Xavier Pique

Evans, Ga.

Gene Marcial's performance record would be presented more realistically to readers if his trades were calculated from the Friday opening price, following their Thursday after close release, rather than that Thursday close. A second weakness that could be stated is that his calculated presented performance is before commission charges have been deducted on 152 buy trades and 152 sell trades.

Conrad Leslie

Oxford, Ohio

I am an internist who has been practicing "risk management" for the past several years and who has witnessed heart attacks and the call for invasive cardiac procedures in my clientele virtually disappear

Physicians are reimbursed generously for treatment, penuriously for prevention. Counseling patients, outlining drug treatment options, and applying techniques to foster compliance are all labor-intensive. With reimbursements optimized for churning people through the mill, and with a greater than 20% reduction in Medicare-allowed fees per visit looming, preventive doctor-to-patient counseling is becoming obsolete.

Health-care inflation would be much easier for the U.S. to manage if we based incentive to providers on outcome rather than on process. We have a good model for that: It is how the business world works.

Harvey Lerner, M.D.

St. James, N.Y.

I guess I'm an urban legend. I'm that healthy, active post-surgery patient Dr. Nortin M. Hadler described as such in your article on heart surgery. Ten weeks after my triple bypass in May, 1995 (at age 53), I was riding bicycles around Block Island, R.I., with my then-teenage son, something that would have been impossible before the operation because of angina. Dr. Hadler cites the risk of surgery but says little about the risk of having a fatal heart attack while waiting for drug therapy to work when the left anterior descending artery is more than 95% blocked, as it was in my case. I'll take the known risk of surgery over the unknown but probably greater risk of waiting for drugs to kick in and reverse clogging any time.

Michael J. Clowes

Huntington, N.Y.

Technology companies continue to build better, faster, cheaper, and more integrated versions of traditional products ("Too much cash, too little innovation," Information Technology, July 18). But more aggressive innovation that provides users with new, higher-value service could revitalize the tech marketplace. For example, many customers -- large and small -- need products and services based on the information demand-centric realities of how those organizations and people work. Yet the industry seems mired in improving information supply-centric products that force customers to learn how information is indexed and guess at words that might appear in useful documents.

Thomas J. Buckholtz

Portola Valley, Calif.

Editor's note: As a U.S. General Services Administration commissioner (1989-93), the writer led procurement of $60 billion of information technology services and equipment for the executive branch.

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