Just to break even the fund will probably need to have more than $20 million in assets. By Kimberly Lankford, Contributing Editor July 31, 2007 I've had pretty good success investing in foreign stocks, and I think I would do well running a mutual fund. Where can I go to find information on how to start an overseas stock fund? -- Phil C., via e-mailUh oh! We get a little nervous when every Tom, Dick or Phil thinks he can pick stocks well enough to run a successful mutual fund. It could be a sign of irrational exuberance. On the other hand, we don't want to discourage anyone who's potentially the next Warren Buffett. The cost of starting a fund is high. Prepare to spend at least $100,000 to get your fund approved, says Steve Rogé, who launched Rogé Partners fund in 2004. Rogé advises hiring a lawyer versed in mutual fund law, as well as a seasoned third-party administrator, such as Gemini Fund Services, to draw up a detailed preliminary prospectus and to hold your hand during the application process with the Securities and Exchange Commission. It took more than four months to get SEC approval for Rogé's fund (contact the Investment Company Institute for basic information). After you get approval, you'll need legal counsel for your new fund; a board of directors; an auditor; a transfer agent for back-office services, such as settling trades; a third-party custodian to hold money; a distributor to keep track of shareholder accounts; and an administrator for SEC paperwork. Advertisement And did we mention investors? Just to break even, the fund will probably need to have more than $20 million in assets. It helps if you have rich relatives. Too good to be true? The new rules about rolling over IRA money to a health savings account seem almost too good to be true. We're ages 63 and 64 and, as I understand it, we can each withdraw money from a traditional IRA and put it into a health savings account without paying taxes on the money. If we use the HSA money to pay for approved medical expenses or long-term-care insurance, we don't have to pay tax on that, either. Is this for real? -- G.R.V., Whitwell, Tenn. It's for real, although there are limits to Uncle Sam's generosity. Under the new rules, you can roll over money from an IRA to a health savings account tax-free and avoid the tax bill altogether if you then use the money for medical expenses. But you can make such a rollover only once during your lifetime (at any age until the time you enroll in Medicare) and only up to the maximum HSA contribution for that year. In 2007 that's $2,850 for individuals or $5,650 for family coverage (plus an extra $800 if you're age 55 or older), minus any HSA contributions you've already made for the year. And, of course, you must also have a health savings account. That means you must be covered by a health-insurance policy with a high deductible -- at least $1,100 for individual coverage or $2,200 for family coverage in 2007. Advertisement As long as you meet those criteria, you can get a few thousand dollars out of your IRA to help reduce a big tax bill on an IRA withdrawal, jump-start an HSA if you're young or pay for medical expenses at any age. In addition to covering your deductible and co-payments, you can use the money to pay premiums for qualified long-term-care policies, as well as for Medicare Part B, a Medicare Advantage plan or Part D prescription-drug coverage (see IRS Publication 502, Medical and Dental Expenses). To avoid paying taxes or penalties, let the administrators of your IRA and HSA handle the transfer. Don't touch the money yourself. Spousal benefits after a divorce My husband and I are getting a divorce after 37 years of marriage. Will I be able to qualify for half of his Social Security benefits? I was a housewife for ten years and have started looking for a job. But I am worried about my future. -- Name withheld One thing you don't need to worry about is Social Security benefits. Even after you're divorced, you can still qualify for spousal benefits because you were married for at least ten years. To begin taking these benefits, you must be at least 62 years old, unmarried and not eligible for a higher benefit based on your own Social Security record or someone else's. Advertisement Like any spouse, you can receive up to 50% of your husband's full Social Security benefit at your full retirement age (which in your case is 66) or a reduced amount if you take benefits earlier. To see how much lower your benefits would be if you take them early, see the age-reduction chart at www.socialsecurity.gov. You also have the option of receiving benefits based on your own earnings history, if that amount is higher. Request a benefits estimate by calling Social Security at 800-772-1213 or use the retirement benefits calculator on the Social Security Web site. Zeros, pro and con I am 42 years old and interested in zero-coupon bonds to supplement my retirement savings. What are the pros and cons? -- Joseph Mendes, Middleboro, Mass. With your long time horizon and today's low interest rates, we'd advise against buying zeros. These bonds don't make regular interest payments. Instead, they're sold at a big discount to face value; when they mature, you collect the full amount. Their big advantage is that you know how much you'll collect a certain number of years from now. Advertisement In mid June, for example, you could have bought a U.S. Treasury zero for $341 that matures in August 2027 at a face value of $1,000. That's an annualized return of 5.4%. But inflation, which has averaged about 3% over the past 20 years, will eat up a big part of that return. "Amounts due at maturity may not have the purchasing power you thought they would," says Paul Winter, of Five Seasons Financial Planning, in Salt Lake City. And if interest rates continue to rise, as they did in late spring, zeros, unlike regular bonds, don't give you the opportunity to reinvest your interest at higher yields. Moreover, if you hold zeros in a regular account, you'll have to pay taxes each year on so-called phantom income from interest you haven't yet received. With 20 years or so to go before you retire, you'll almost certainly do better with a diversified portfolio of stocks, although they'll probably offer a bumpier ride along the way. If the certainty of zeros still appeals to you, Winter suggests this strategy: Put some money in zeros that mature in 20 years. Five years from now, buy more zeros that mature 20 years from that point, and so on. If interest rates rise, you'll be able to invest at least some of your money at higher yields. Switch beneficiaries I have Coverdell education-savings accounts for both my son and my daughter (16-year-old twins). It appears that only my daughter will attend college. Can I change the beneficiary on my son's Coverdell account to my daughter, even though I have contributed the maximum to both accounts each year? -- Tim Schroeder, via e-mail Yes. You can change the beneficiary to another family member under age 30 -- such as a sibling, parent, cousin or other relative of the original beneficiary -- without paying taxes or a penalty. Your daughter will have until age 30 to use the cash for educational expenses. But you may not need to make the switch. Unlike a 529 account, a Coverdell doesn't have to be used exclusively for college expenses. You can also use it tax-free to pay for education-related expenses -- such as tuition, uniforms, books, a computer, educational software and even tutoring services -- while your child is in a public or private elementary or secondary school. Or you can withdraw some money from your son's account for his educational expenses in high school and then make your daughter the beneficiary of any remaining funds. Stick with a 401(k) I will be 58 soon and I'm thinking of retiring. My broker wants me to roll my 401(k) plan into an IRA, but then I won't be able to withdraw any money until I am 59½. Who's right? -- K.G., via e-mail You win. If you are at least 55 in the year you leave your job, you may be able to withdraw money from your 401(k) at any time without penalty. But if you roll the money into an IRA, you're generally hit with a 10% early-withdrawal penalty if you touch the cash before age 59½. One way to access your IRA money before that age is the so-called 72(t) rule, which lets you withdraw substantially equal amounts each year based on your life expectancy. To avoid the penalty, you must make these withdrawals for at least five years or until age 59½, whichever is longer. But it would be a lot easier just to leave your money in your employer's plan, so you can get to it without penalty if you need it soon. My thanks to Manny Schiffres and Andrew Tanzer for their help this month.