Has anyone else noticed that tax documents are NEVER sent by the end of January? Isn't this a law or something? It always seems that tax documents are rolling in at the end of February. Of course, it could just be that I don't notice when they really come in, because I always do my taxes in April!

Recently I've had a lot of conversations about taxes and investments with people. This is in part due to the fact that we will soon be receiving those tax documents in the mail, and partly due to the fact that everyone seems to be getting pregnant (and money/the future become bigger concerns, then).

Anyway, it's my duty as an American to let you know that my experience with H&R Block last year was horrible. They're probably an okay place to get your taxes done if you don't think they're that complicated, but I used them because I had just gotten married, had returns for 3 different states, bought a house, sold some stock...

I just didn't want to deal with it. But guess what - they weren't done right. And you know you're not dealing with the best tax preparer when something like the following is uttered:

"Let me just put you down for donating $100 to a Katrina fund. Everyone donated to one at some point."

"Um, no. Everything we donated was through our Church, which in turn sent aid to the hurricane-hit areas. We just told you that, and we have records for those donations right here."

"...You sure?"

It was like the agent was making up answers to our questions without really knowing anything. And to top it off, I was lied to when choosing to invest my federal refund into an IRA account with them.

An IRA is an Individual Retirement Account, and is meant to provide you tax savings in some form or other while giving you a "nest egg" (savings) for when you hit 59 ¹/₂ years old. Two very common types are: a traditional IRA, and a Roth IRA (there are others which I won't describe). Money you put into a traditional IRA is not taxed, so it's like you reduce how much money you made last year. But when you eventually withdraw it, all your money and the interest it's earned is taxed. Hopefully you take it out when you're retired and nearly broke, so that it's taxed at a low rate. A Roth IRA is pretty much always better. There are no tax savings on the money you initially put into a Roth IRA, but when you start withdrawing when you're old and gray, that money is not counted as income and can't be taxed.

I set up an IRA through H&R Block thinking that the money would be linked to the stock market, just like my Fidelity IRA is (i.e., that the money in my account would be invested in a mutual fund or something). I was told that I would be able to set up a meeting with H&R Block to determine how I wanted it invested. I also recall being told that there would be no fees to do so. What I've learned however is that my IRA is invested in a money market account earning only 3.99% interest. That's horrible, especially knowing that the stock market in general went up about 15% in 2006. That's even worse knowing that inflation over the last 90 years has averaged 3% a year. If we continue to average 3% inflation until I'm 60, my IRA will barely be worth more (as far as what it can buy) than what it is right now ('cause it's only growing at 4%)!

There are online savings accounts and money market accounts out there right now offering 5.05% - HSBC and Emigrant Direct are two. (These kind of accounts offer interest rates that fluctuate. They invest the money you give them in CDs, Treasury Bills, and other stuff). Letting my money sit there seems like a better idea than letting it sit with H&R Block.

So I contacted them this week to see if I could get my IRA invested in something that earned a better return. Here's basically how the call went:

"Yes, I'd like to move my IRA money out of a money market account and into a mutual fund or something."

"Okay, so you want an upgrade to a brokerage account?"

"I don't know - I just want my money in a mutual fund."

"So you want a brokerage account."

"I don't know what that means."

"You want to be able to buy and sell stock and the like?"

"No, I just want my IRA money to be in a mutual fund and let it rack up interest for me."

"Sounds like you want a brokerage account."

"And if I did, are there fees associated with this 'brokerage account'?"

"Yes. There's a $30 yearly fee unless you have $10,000 in your account."

"Okay, thanks. I won't be upgrading. I'll be moving my money out of there."

So here's the deal. A brokerage account means you can decide generally where your money is invested. Some places charge annual fees if you don't have a lot of money in your account, though. Fidelity requires $2500 to avoid fees. Scottrade claims to have no fees at all (and there is no immediate mention of a minimum amount on their site).

So now I want to move my money out of the traditional IRA I have with H&R Block, but there could be penalties for doing so. Read up on them here. A cursory check of the IRS website, though, showed that I could move it into a Roth IRA without penalty. I'm not sure how that's possible, unless cheating the system is actually allowed! Save money on your taxes by putting money into a traditional IRA, then immediately move it into a Roth IRA. Sounds fair and reasonable.

So how do these companies that help you create an IRA make money if there are no fees or anything? I don't know. I'm sure it has to do with hidden fees, somehow. Hidden, but legal, fees. Yahoo Answers, don't fail me now!!! Actually, maybe they're just hoping you also use their company for other products, like buying and selling stocks, where they can charge a commission.

Okay. Back to taxes. I would recommend that you all go buy TurboTax and let them guide you home. Which of the versions do you need? Just get the cheapest, and if you need to later, upgrade for a fee. Ha ha ha.