Gowri Ganesha Festival

Krishna Janmashtami or Gokulashtami is celebrated in large parts of India as the birthday of Krishna, one of the central figures in the great epic – The Mahabharatha.

When?

Gokulashtami falls on the 8th day of Krishna Paksha in the Shravana Maasa (month) of the Hindu Calendar. This usually falls in the month of August or September of the Gregorian Calendar.

Food

People celebrate this festival with a lot of special dishes depending on the region in India. Different types of Avlakki (flattened rice) is prepared such as GojjavlakkiMosaru (Yogurt) avlakki and Sihi (sweet) Avlakki. Many fried delicacies are prepared that are mostly based on rice flour. We make Chakli and/or Tenkolalu as examples of fried dishes. Payasam (also known as Kheer) is usually prepared as a sweet dish.

In popular culture

Krishna Trivia

  • Krishna means ‘black’ in Sanskrit
  • Krishna has a sister – Subhadra – who weds Arjuna, the great archer in Mahabharatha
  • Krishna grows up among the cow-herding clan ‘Yadava’
  • Krishna is married to Rukmini and Satyabhama among 6 other wives. He saves the lives of 16,000 Gopi (cow-herding ladies) from a demon named Narakasura and (marries?) hence referred to in popular culture as someone who had 16,000 wives.

Stories

Kamsa

Krishna was born as the eighth son of Devaki and Vasudeva. Kamsa, Devaki’s brother overthrew their father and occupied the throne of Mathura in a coup. He had a curse that he would be killed by Devaki’s son, so afarid of that he started killing children borne by Devaki. However the 7th and 8th children of Devaki were secretly moved to Gokul to the house of Nanda and Yashoda where Balarama and Krishna grew up respectively. Later on, Krishna, with the help of Balarama killed Kamsa.

Maakhan Chor

Krishna grew up as a mischeivous kid stealing Maakhan (fresh butter) from homes in Gokul along with his friends. In order to keep the butter away from him, people started to keep the earthen pot containers of butter tied up closer to the ceiling. Krishna, along with his friends made a human pyramid to reach the pot of butter near the ceiling and stole them anyway. He would then be reprimanded by Yashoda after the neighbors complain of his antics.

In some parts of India, people in a community get together to form a human pyramid to break an earthen pot filled with butter enacting pranks of Krishna, followed by singing and dancing.

Sudhaama

Sudhaama comes from a poor family and was childhood friend of Krishna. Sudhaama’s family would be in a lot of trouble due to poverty and his wife pushes him to ask for help from Krishna who would then be a powerful military leader in the kingdom of Dwaraka. After reluctantly agreeing to go seek Krishna’s help he visits Krishna. It is generally a common practice (at least in India) to get something as a gift when visiting someone close, specially after a long time to show how much they are cared. When Sudhaama met Krishna, he didn’t have much to take as a gift and he offers pretty much all he could get, a fistful of flattened rice, as a token of friendship. Pleased with the gesture, Krishna honors and helps Sudhaama.

Krishna Costumes

Costumes of Krishna are worn by kids specially little ones. Bright colored dresses with flute in hand and a crown adorned by peacock feather is one of the typical costumes.

Tax, IRA, Investments… it’s Complicated

Welcome to a novice’s mind after spending an inordinate amount of time researching on IRAs and investment options. Be warned about the occasional assumptions and generalizations.

So what are some of the investment options available to younger demographic having a steady stream of income, an employer-sponsored retirement plan and some cash to spare each pay cycle?

Investment Options

Broadly, they can be classified as either pre-tax (tax-deferred) options or after-tax options. Some of the popular options available under each class are

Pre-tax (tax-deferred)

  • Traditional (Pre-tax) 401k
  • Traditional IRA

After-tax

  • Traditional (After-tax) 401k
  • Roth 401k
  • Roth IRA
  • Brokerage account-based individual investment options such as stocks, bonds, funds etc.

Traditional (Regular) 401k – Pre-tax and After-tax

These are available through an employer sponsored plan. The plans typically offer a pre-tax 401k but they may also offer an after-tax version as well. The employee usually signs up (or automatically signed up at a certain level of contribution by some employers) when hired. Usually the employer matches the amount contributed by the employee at a certain rate (dollar-to-dollar, 50 cents on the dollar etc.). As the name suggests, contributions to pre-tax account are made from pre-tax dollars and after-tax from after-tax dollars. There are limits on the amount that can be contributed to these accounts. Together (pre and after-tax), the contribution could not exceed $17,500 in 2014. The limits are set by IRS and could change every year. Key point to note here is that the limit – $17,500 – does not include the amount contributed (matched) by the employer. But, there is a limit to the total amount contributed by both employer and employee – $52,000 – for 2014. I would like to know a company that contributed that generous $34,500 for the employee!

When time comes for withdrawals (distribution) from these accounts, taxes are to be paid on the the money withdrawn from the pre-tax account at the prevailing income tax rate at the time of withdrawal. In contrast, only the earnings (capital gains) are taxed at the applicable capital gains tax rate at the time of withdrawal from an after-tax account. However, both these accounts are subjected to mandatory withdrawals (probably at a certain percentage) beginning at the age of 70.5. Optionally, withdrawals may start at age of 59.5. If the withdrawals happen earlier than age 59.5, then they have to be one of the ‘qualified’ events – such as first time home purchase, etc. – if not, then the withdrawal will be hit with a 10% penalty on top of any applicable taxes. In contrast, if the withdrawals do not start at age 70.5, then there may be a late withdrawal penalty of up to 50%.

It is also important to note that the traditional 401k plans are subject to the Highly Compensated Employee (HCE) rules set by the IRS to ensure equitable retirement account contribution opportunities to all employees in a company. In 2014, an employee that earned $115,000 per annum was considered a “highly compensated employee” and may not be eligible for full contributions to their 401k account under certain conditions. But it should be noted that making a $115,000 per year itself doesn’t necessarily disqualify an individual from contributing to their 401k. In combination with several other rules, the IRS determines whether the employer satisfies (or passes) the HCE test and hence making the contributions of the employees eligible.

Roth 401k

Roth 401k is a similar (employer-sponsored) plan as the 401k plans discussed above. The contributions are made using after-tax dollars. The contributions count towards the annual limit applicable to the pre-tax and after-tax 401k accounts. So in all, employee and employer contributions to pre-tax, after-tax and Roth 401k accounts, cannot exceed $51,000 in 2013.

An important difference here is that, there are no income limits applicable to the contributions. Any employee can contribute to this plan as long as it is offered by the employer. Another key difference is that the ‘qualified’ (if the Roth 401k account is at least 5 years old) withdrawals from this account are completely tax-free – for both contributions and earnings.

Traditional IRA

Traditional IRAs are opened and maintained by individual investors, outside of an employer sponsored program. Traditional IRAs have a contribution limit of $5,500 for the year 2013. As with 401k plans, the contribution limit may change every year. The contributions made to traditional IRAs are fully tax-deductible, if the income stays within $95,000 for joint filers and $59,000 for single filers. If the income is within $115,000 for joint filers, then a portion of the contributions are tax-deductible ($69,000 for single filers). Beyond $115,000 ($69,000 for single filers), contributions are not tax-deductible. The limits are much higher for joint filers where only one spouse is offered an employee-sponsored retirement plan.

Withdrawals from this account must start beginning at the age of 70.5 (optionally may start at age 59.5, without penalties). Withdrawals will be taxed as regular income at the applicable tax rates at the time of withdrawal.

Roth IRA

Roth IRA is much like traditional IRA but with some important differences such as the following.

Contributions to Roth IRA are made with after-tax dollars only. They are not tax-deductible. Withdrawals are completely tax-free, including any earnings accrued on the contributions as long as the withdrawals happen after a certain period of the contributions being held in the account (5 years in 2013) and that the withdrawals happen after the usual penalty-free timeline of age 59.5.

However, the contributions are subject to the limits – both income limits and the amount that can be contributed. Together with contributions to Traditional IRAs, the amount contributed cannot exceed $5,500 in 2013. Joint filers are not eligible to contribute if the earned income exceeds $188,000 in 2013. However they are eligible for partial contributions if the income is in between $178,000 and $188,000. Full contributions can be made if income is less than $178,000. The corresponding limits are $112,000 and $127,000 for single filers.

Individual investment options outside of IRAs

Information about these are available aplenty. An individual investor may choose to invest in a lot of different vehicles depending on their interest and level of risk-tolerance. In the interest of keeping this discussion focused on IRAs and their role in making up an individual investor’s options of investment, let us skip getting into the details of this section.

Investment Precedence

Deciding on where to put the money depends on a few factors, starting with the percentage of income one is comfortable setting aside for investment. Probably the next biggest factor is whether the investor anticipates falling in to a higher or a lower tax bracket come retirement season of life. Finally, assuming an interest in after-tax investment, a key factor of whether the investor sees it prudent to stay out of IRAs (freedom of withdrawals without penalties), with the knowledge that investments outside of IRAs do not typically come with FDIC protection.

With a strategy to take full advantage of the employer’s match on 401k and based on interest, either maximize on pre-tax or after-tax investments, following order of investment seems to make the most sense to me.

Pre-tax investment (anticipation of being in a lower tax bracket at retirement)

This means that the investor should focus more on getting the most deductions from all the contributions to IRAs during the years in employment. Keeping that in mind, investing in the following order of precedence may make more sense.

  1. Take full advantage of the employer-match to 401k and max-out on the pre-tax contributions to 401k.
  2. Open a Traditional IRA and max-out on the contributions
  3. At this point, any investment would have to be after-tax. Since we maxed-out on both 401k and IRA options, any investment from this point on would most likely have to be from an individual brokerage-based account, outside of the IRAs.

After-tax investment (anticipation of being in a higher tax bracket at retirement)

Here, the focus should probably be more on the after-tax options but at the same taking advantage of any freebies such as an employer-match to the 401k plan.

  1. Take full advantage of the employer-match to 401k. Does the employer offer a Roth 401k? Max-out contributions all into the Roth 401k. But note that the employer’s match will have to go into the regular 401k (pre-tax) account. If no Roth 401k is offered, max-out on the after-tax contributions to 401k. If no after-tax option is available on the plan, contribute to regular 401k (pre-tax), just enough to get the full match offered by the employer.
  2. Open a Roth IRA account and max-out on the contributions there.
  3. If there is still money left to contribute (assuming employer’s plan only has the pre-tax option), either max-out on 401k or operate on the outside independently with a brokerage account.

Conversion to Roth IRA

Whether due to a change in expectation of an investor falling into lower tax-brackets in future or exercising an option of transferring an IRA when switching employers, a potential smart move at any point is to convert traditional 401ks and traditional IRAs to Roth IRAs. This kind of conversion can be done once a year. However, when doing that, there may be a potentially huge tax bill due, depending on how deep into the investment timeline the conversion is made. The tax bill could be split between the year making the conversion and the next. But, if the tax is paid for by the monies involved in the conversion, that will be counted as ‘distribution’ and hence, depending on whether the conversion is made after age 59.5 or before, a penalty may be applied. A preferable option would be to foot the tax bill from external funds, in which case, there would be no penalties and the investor could reap all the benefits from moving the monies into a Roth IRA.

Disclaimer: I’m not responsible for any consequences resulting from taking any of the suggestions in this blog.

Krishna Janmashtami

Krishna Janmashtami or Gokulashtami is celebrated in large parts of India as the birthday of Krishna, one of the central figures in the great epic – The Mahabharatha.

When?

Gokulashtami falls on the 8th day of Krishna Paksha in the Shravana Maasa (month) of the Hindu Calendar. This usually falls in the month of August or September of the Gregorian Calendar.

Food

People celebrate this festival with a lot of special dishes depending on the region in India. Different types of Avlakki (flattened rice) is prepared such as GojjavlakkiMosaru (Yogurt) avlakki and Sihi (sweet) Avlakki. Many fried delicacies are prepared that are mostly based on rice flour. We make Chakli and/or Tenkolalu as examples of fried dishes. Payasam (also known as Kheer) is usually prepared as a sweet dish.

In popular culture

Krishna Trivia

  • Krishna means ‘black’ in Sanskrit
  • Krishna has a sister – Subhadra – who weds Arjuna, the great archer in Mahabharatha
  • Krishna grows up among the cow-herding clan ‘Yadava’
  • Krishna is married to Rukmini and Satyabhama among 6 other wives. He saves the lives of 16,000 Gopi (cow-herding ladies) from a demon named Narakasura and (marries?) hence referred to in popular culture as someone who had 16,000 wives.

Stories

Kamsa

Krishna was born as the eighth son of Devaki and Vasudeva. Kamsa, Devaki’s brother overthrew their father and occupied the throne of Mathura in a coup. He had a curse that he would be killed by Devaki’s son, so afarid of that he started killing children borne by Devaki. However the 7th and 8th children of Devaki were secretly moved to Gokul to the house of Nanda and Yashoda where Balarama and Krishna grew up respectively. Later on, Krishna, with the help of Balarama killed Kamsa.

Maakhan Chor

Krishna grew up as a mischeivous kid stealing Maakhan (fresh butter) from homes in Gokul along with his friends. In order to keep the butter away from him, people started to keep the earthen pot containers of butter tied up closer to the ceiling. Krishna, along with his friends made a human pyramid to reach the pot of butter near the ceiling and stole them anyway. He would then be reprimanded by Yashoda after the neighbors complain of his antics.

In some parts of India, people in a community get together to form a human pyramid to break an earthen pot filled with butter enacting pranks of Krishna, followed by singing and dancing.

Sudhaama

Sudhaama comes from a poor family and was childhood friend of Krishna. Sudhaama’s family would be in a lot of trouble due to poverty and his wife pushes him to ask for help from Krishna who would then be a powerful military leader in the kingdom of Dwaraka. After reluctantly agreeing to go seek Krishna’s help he visits Krishna. It is generally a common practice (at least in India) to get something as a gift when visiting someone close, specially after a long time to show how much they are cared. When Sudhaama met Krishna, he didn’t have much to take as a gift and he offers pretty much all he could get, a fistful of flattened rice, as a token of friendship. Pleased with the gesture, Krishna honors and helps Sudhaama.

Krishna Costumes

Costumes of Krishna are worn by kids specially little ones (toddlers). Bright colored dresses with flute in hand and a crown adorned by peacock feather is one of the typical costumes.

Cornucopia

Advancement in technology has enabled us to accomplish so much in our world today. Yet it is not something that is very mature. Many facets of our lives today are benefiting from various technologies, including the food we eat and how we produce it. When it comes to technologies centered around food production and supply, one of the more controversial ones is GMO (Genetically Modified Organisms).

Why is it controversial? The GM seeds are genetically engineered to produce nutrient rich and herbicide resistant foods among other supposed traits. Better yields and weed resistant crops are among the benefits claimed by companies producing GM seeds. On the other hand, there are many seemingly overlooked dangerous negative externalities – good old nature, responding with what are called as ‘super-weeds’ in response to increasingly potent herbicides and as a consequence of taming them, potentially dangerous chemicals making their way into our water sources – streams, rivers and soil, perhaps leading to an endless vicious cycle.

And then there are the unknown consequences in humans with the modification of something so fundamental as food. Is it possible that as a consequence of consuming genetically modified food, someday there might be new carcinogens that we discover? How good are the studies that seem to paint a neutral or favorable picture for the companies that stand to gain the most out of these technologies? How sound are the policies that seem to approve the use of increasingly potent herbicides and pesticides?

It also seems outrageous that someone can patent something so basic to human life as a ‘seed’. It invokes fears of where this might lead to eventually. What is most interesting is that some of the companies that use GM ingredients in their products are not ready to be transparent in their practices namely identifying that their food products use GM ingredients. After all consumers should be free to make their own conscious and informed decision about what they would want to buy.

While it is important to incorporate technical methods in agriculture/food-production in general and benefit from technology with solid grounding, it seems like a writing on the wall that the powerful forces of capitalism drive some of these companies to perhaps overlook the consequences in order to thrust a potentially under-cooked technology into market in hopes of quickly offsetting the often huge research capital involved in developing such technologies.

Fortunately there are organizations that do the necessary due diligence in these matters and offer great insights into the practices of such companies. The Cornucopia Institute has some nicely compiled scorecards of how many of these companies/brands fare when it comes to some of the basic food products. They have some great graphics (constantly updated) that clearly indicate the brands/companies that would rather not label that their food contains GM ingredients. For an average consumer who likes to make an informed choice of what to buy, it is a great starting point, for it is due to the choices of such consumers that corporations typically tend to respond eventually.

Blood and Firestone

First time I heard about Charles Taylor and the heinous acts of violence he perpetrated was when I watched the movie ‘Lord of War’. All too often, it seems that criminals like him are not alone in mechanizing such killing machines. Usually, there are other entities involved, either through direct or indirect facilitation or inaction.

Today I came across an investigation by Pro Publica and Frontline about how the global corporation ‘Firestone’ supplied resources to Charles Taylor and seems to have played their part in the Liberian massacre. Why would they do it? Liberian Rubber! Such a shame…

Something to keep in mind when shopping for those next set of tires.