Mari-Louise Messuri, Billerica, Mass.

A:

You’re right about private industry. Once a worker is vested in a pension, a spouse of more than one year can’t be dropped without his or her written consent, says attorney Marcia Fidis of Pasternak & Fidis in Bethesda, Md. But the Retirement Equity Act that took effect in 1985 doesn’t cover federal, state and local government pensions, which may have different rules.

No one will ever know why your dad cut out your mom, or whether he realized he was doing so. Had he lived until 60, her consent would have been required. But prior to 60, armed-service reservists can decide by themselves whether to provide a survivor’s pension for a spouse.

Your dad had two chances to say yes. One was in 1979, after the law first made it possible for a reservist under 60 to protect a spouse. He got a mailing about it but didn’t respond to the offer. His second chance came in 1992, during an open enrollment period. (Normally, reservists are offered the survivor’s option when they qualify for a pension after 20 years of service.)

Choosing the benefit would have reduced your dad’s own pension, had he lived. He was probably gambling on lasting to 60, as most reservists do. Had he won his bet, that higher pension would have looked pretty good. But I think he should have talked it over with your mom. The price of losing the bet was high. Q: My father recently came across two one-year $500 certificates of deposit that he bought for my sister and me in 1984. They were issued by Goldome Bank, which was acquired by Manufacturers Hanover Trust, which has since merged with Chemical Bank. Is there any way we can redeem these CDs?

Kira Watson, New York, N.Y.

A:

“Sure,” I said to myself, confidently. Your father has his purchase receipts; he has the account numbers; banks keep records; someone owes him $1,000.

Little did I know. Here’s a situation report, after some 30 phone calls: (1) Chemical searched its records with no success. It says that Manufacturers bought some Goldome branches but not yours. (2) Your branch closed. Its assets could have gone to a bank operated by one of two bank holding companies – KeyCorp or First Empire State Corp. – but both say they didn’t buy that branch, either. They searched for the CDs under your father’s name and drew a blank. KeyCorp is still looking under the names of you and your sister.

Five years after the CDs went unclaimed, the money should have been turned over to New York’s Office of Unclaimed Funds, but the state has no record of it. The Federal Deposit Insurance Corp. says that some account holders cash their CDs and forget about it – although your father says he didn’t. Ask for a trace by the FDIC’s Northeast Service Center, Office of the Ombudsman, 111 Founder’s Plaza, Hartford, Conn. 06108. Q: I received a notice from GE Capital Mortgage Services telling me how much interest I can save on a house I bought for my divorced daughter in Nashville. It’s called a BiSaver plan and costs $379 upfront. As Isee it, this plan costs me more over the first five years, not less. Isit a ripoff?

Ira Jackson, Columbus, Ohio

A:

If this is a ripoff, lead me to it. Yes, you pay more money each year. But you use it to pay off your mortgage faster, which lowers your total interest cost.

The BiSaver calls for biweekly payments. Instead of $484 a month you pay $242 every two weeks, deducted automatically from your bank account. That comes to 26 biweekly payments a year – $484 more than your loan would normally cost. But the extra $484 is used to lower the mortgage principal, which reduces the interest owed. No matter when your daughter sells (the average homeowner holds her mortgage for 7 years), you’ll have built more equity – and paid less interest – than if you had continued to pay on the normal 30-year schedule.

Around 40 percent of all mortgage lenders offer biweekly payment plans, costing $350 to $400 upfront, says Richard Cancelliere, president of Mortgage Management Corp., which provides biweekly plans to lenders. Many lenders also charge $1 or more for each payment, so GE’s BiSaver – with no such charge – can be viewed as a bargain. Q: My husband recently accepted a position with the Department of Defense in Germany. He didn’t have an Individual Retirement Account with his former employer and became a federal employee too late in the year to join their program for 1994. Can he put $2,000 into a separate IRA and deduct it from our 1994 income? I took $750 I had accrued in the Wyoming state retirement plan and rolled it into an IRA. Can I add $1,250 more and deduct it in 1994? Our gross income will probably be $44,000.

M.D., Germany

A:

IRAs are so confusing it’s a wonder anyone gets them right. Three rules affect your contributions: (1) No deductible contribution (maybe) if you’re covered by a pension plan – and your husband is covered by the basic federal plan. The only thing he’s not eligible for this year is the voluntary savings contribution. (2) No deductible contribution (maybe) if your spouse is covered by a plan. If you were covered by Wyoming in 1994, you’ve struck out twice.

But even if you’re in a plan, a married couple can put up to $2,000 each into a tax-deductible IRA if their combined adjusted gross income is less than $40,000. There’s a partial deduction for incomes between $40,000 and $50,000. If your $44,000 is adjusted gross, you can each tax-deduct $1,200 for 1994, according to Tom Ochsenschlager of the accounting firm Grant Thornton. The money that went into your rollover IRA doesn’t count toward your annual contribution. Send your questions to Jane Bryant Quinn, Newsweek Focus: On Your Money, 251 West 57th Street, New York, N.Y. 10019