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Subject: Making Money In he Mutuals
Date: Thu, 29 Oct 92 13:13:30 EST
Message-ID: <13.1992Oct29.131330@AmeriCast.com>


10/29/92

TITLE Making Money In he Mutuals #m#gmrama#m#North American
Presents Tax-Saving Idea

Beware New Withholding Law On Retirement Plan Rollovers Doug
Rogers North American Funds has come up with a tax shield - rath-
er, a tax-planning tip - designed to help shareholders and fill
the firm's asset coffer at the same time.  It's inviting inves-
tors who have lost money in any front-end load mutual fund to
liquidate their positions and transfer the money into any North
American Fund without paying a sales load.  If losses exceed cap-
ital gains for the year, the excess loss can be deducted dollar-
for-dollar against income up to $3,000 - $1,500 if married and
filing separately.  North American Funds, based in Boston, began
in 1989. The group has $2 billion under management.

In recent years, the trust has adopted the concept of using in-
dependent portfolio managers to run each of its seven funds. Each
portfolio is now managed by an institutional money manager.
Salomon Brothers Asset Management manages its U.S. Government
Securities Fund. Wellington Management Co. runs Growth & Income,
Investment Quality Bond, and Money Market funds. Goldman Sachs
Asset Management handles Growth and Asset Allocation funds. And
Oechsle International Advisors L.P. manages Global Growth Fund-
***

There's a new law that investors should be aware of when moving
money from a retirement plan at work to their own accounts.
Starting Jan. 1, distributions from qualified retirement plans or
403(b) plans that are eligible for rollover will be subject to
20% withholding, unless appropriate steps are taken.  The with-
holding applies whether you accept a distribution for immediate
use or decide to roll the sum into another eligible plan.  The
new plan does not apply to distributions ineligible for rollover
treatment or distributions consisting of employer securities.

The 20% withholding can be avoided if the appropriate steps are
taken. The investor must do a "direct rollover" by arranging to
have the distribution directly transferred into another qualified
plan, 403(b) plan or IRA. As an employee, its your responsibility
to inform your employer or plan sponsor that you wish to make
such a transfer.  Dreyfus Service Corp. has made a toll-free
number available for people to learn more about how to avoid the
20% withholding: (800) 782-6620.  ***

Jack White & Co.'s Connect System has won some official legitima-
cy. The Securities and Exchange Commission staff issued a state-
ment that it has no regulatory opposition to the listing of bids
on electronic databases to accommodate secondary market trading
of load mutual funds.

Jack White's secondary market program matches buyers and sellers
of load mutual funds where buyers pay no load and sellers receive
a $100 premium per trade for routing redemptions through the Con-
nect System.  The SEC staff said that Jack White's Connect system
doesn't conflict with Section 22(d) of the Investment Company Act
of 1940, since Jack White acts as a broker only, not as a dealer,
in the execution of market crosses of load mutual funds.  "Based
upon our interpretation of Section 22(d) of the Investment Com-
pany Act of 1940, we developed the Connect System in 1990 as a
way of offering our discount clients the opportunity to buy load
mutual funds and pay no load," said Jack White, president of the
discount brokerage.  Jack White is selecting vendors of electron-
ic quotation information and regional securities exchanges to
list Connect bids on their systems.  Once the selection process
is completed, brokers throughout the country will be able to ac-
cess listed Connect bids on their electronic quote screens for
the benefit of their clients. More than 2,500 bids are listed on
the Connect System at Jack White's headquarters in San Diego.
Through Connect, buyers of load mutual funds pay a transaction
fee of $200, regardless of the transaction size, rather than the
mutual fund's standard load. Half of that transaction fee, $100,
is passed along to the seller as an incentive to use the Connect
System. All transaction prices are based on the daily net asset
value as determined by the fund.

A company spokesman said the SEC statement is important because
people had questioned the legality of the Connect System. Jack
White has been trying to get the SEC's opinion on its system
since 1990. NASD required some form of approval from the SEC be-
fore it would consider allowing the System on its OTC Bulletin
Board. The White spokesman said the company is in the process of
preparing its planned administrative procedures for NASD review.

This article is copyright 1992 Investors Business Daily. Redis-
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