Jewish World Review August 4, 2000 /3 Menachem-Av, 5760
Time to take on the airlines
DEAR BRUCE: I have a 401(k) with a former employer, and my current employer offers a 401(k) as well. Is it possible to have my funds go into the first 401(k), rather than into this company's? -- S.K., via e-mail
DEAR S.K.: No. I know of no circumstance where you can elect to have your 401(k) go to a former employer. In the event that you leave this employer, then it may be possible to have that money rolled over into a self-directed account or into the 401(k) plan offered by a new employer. As long as you are with the employer, your 401(k) must stay with them.
DEAR BRUCE: My wife and I own a two-family house. We bought it in 1972 and lived in one half, and we have always rented out the other. Today the house is worth about $170,000. If we sell it, will we still have to pay tax on it, or is the sale exempt up to $250,000? -- E.M. Lecanto, Florida
DEAR E.M.: The portion of the building that you live in was your primary residence and is not subject to tax. The portion that you are renting out will be subject to tax. It's likely that it has been depreciated down to next to nothing. Your accountant can show you how this works.
Assuming that the apartments are of equal size and value, then you will only pay profit on half of the amount received for the house, minus your base deductions and adding in any depreciation that has to be recaptured.
DEAR READERS: It has come to my attention that the airlines enforce some very, very unfair rules. The problem is that you don't have a choice but to follow them because the airlines are all, possibly with one exception, in lock-step.
It is their position that if you buy an airplane ticket, only you can use it. It cannot be traded, bartered or sold. Only you can be in that seat.
It is my contention that when you buy a ticket, you should be able to do with it what you wish. You should be able to give it to someone, trade it to someone or use it yourself in part or in whole. The airlines should allow a ticket to be used by anyone who has it in their possession. The airlines can and should ask that a new name be put into their computer and the old name be taken out.
Similarly, sometimes it's cheaper to fly out of a smaller city than the city that is the airline's hub. If you discover this, you have found the loophole of what the airlines call a hidden city and you should be able to make your reservations out of the cheaper city if you wish and then, on the trip back, deplane in the airline's hub if it is closer to your home. The airlines go ballistic if someone tries this.
Finally back-to-back ticketing, which the airlines abhor, simply means that if you plan short trips (two-day business trips, for instance), it is often cheaper to buy round-trip tickets reflecting a "Saturday stay" (and therefore cheaper) and then use the flight out from one ticket and the flight back from another ticket on the two legs of the two-day trips. There are times, too, when it is cheaper to buy a round-trip ticket when you are only planning on going one way.
If you can find these ways to save money on the cost of flying, I see no reason why they can't be exploited, and yet the airlines have fought against their customers' taking advantage of these situations, and have even required additional payment or refused further ticketing when it was discovered that customers had gone against the rules.
Nowhere else in our society do we have this situation. If a hamburger and coke are $1.95, and the kids meal is $1.50 and consists of a hamburger, coke and french fries, it is very unlikely that a manager will come out and thrust the french fries into your mouth if you take advantage of the sale. So why should travelers have to use both parts of a more-economical round-trip ticket?
It's the same as when people cherry-pick in stores. If they buy only what is on sale, this is not what the merchant intended. However, shoppers have an absolute right to do that. Or when someone pays off a credit card on a regular basis and does not pay any interest charges, the credit card company is distinctly unhappy. Despite this, they continue to allow you to have a credit card, as they should. You found a way to beat their system.
Congressman Jim Gibbons of Nevada has agreed to draft legislation to help change the airlines' rules, and I'm asking my readers and listeners to support this by contacting their representatives and senators. Simply say that this is a deal-breaker, that unless they support this type of legislation, in no way can they be supported in their election efforts.
This is not a partisan issue but a people issue. It is intended to end airline tyranny. I sincerely ask all of my readers to enter into this effort. It is in your collective best interest. Your comments are sincerely invited; I will print a representative number of your letters reflecting both sides of this
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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