(MONEY Magazine) – Q

I'm interested in starting a home business but have only about $7,000 to invest. Lately I've been thinking about starting my own 900 phone line. A company called Bureau One says it can help people like me set up a psychic line or dating line for $750 to $2,500, plus a percentage of each call. What do you think?

Edward Auga Chicago


Hold the phone. At first blush, and I do mean blush, it appears that anyone could make tons of money running a 900 line. I should know. I've paid jillions to finance my 21-year-old son's exploration of numbers like 1-900-GIRLSRUS. Of course, life on the chat line is not really that profitable. Bob Bentz, author of Opportunity Is Calling: How to Start Your Own 900 Business (ATS Printing, $29.95; 800-247-1287), estimates that about 80% of the lines sponsored by entrepreneurs have failed within three years.

If you have a new idea that really catches on, however, you could net up to $100,000 a year. But before paying anyone to help you get set up, do a lot more research. Start with the 900 Info Kit, published by the Interactive Service Association ($15; 8403 Colesville Rd., Silver Spring, Md. 20910), a trade group whose members include 900-line services. The kit includes the names of service bureaus that help tyros get started in the biz. We called a few and found start-up prices ranging from $500 to $2,500, plus fees of as much as $300 per month. And if you have other questions, don't call me. My son will call you.


My mutual fund just informed me that Keogh withdrawals are subject to 20% tax withholding. Does this mean that next year when I turn 70 1/2 and have to start making minimum withdrawals, the IRS will hold back 20% of the cash until I file my taxes? Why should the IRS be able to hold my money interest-free?

Owen L. Falk Lake Worth, Fla.


Now let's not boost our blood pressure. By making required withdrawals, you may not have any money withheld. The minimum distributions required of anyone 70 1/2 or older are exempt from withholding. If you expect to withdraw more than the minimum, here's a tip on how to avoid the 20% haircut: Have your fund roll over your Keogh into an IRA before you take any distributions. IRA withdrawals are never subject to withholding.


I'm 38, earn $66,000 a year, and my wife and I have three small kids. If I were to die, would my wife's income affect the size of her Social Security survivors benefit? Would the benefit be taxed?

Michael Bohannon Lawrenceville, Ga.


I'm sorry you're dwelling on such morbid things, not because it is wrong to consider The End, but because Social Security is such a pain in the neck to explain. But here goes: If you dropped tomorrow, your children would qualify for a benefit, as would your wife, because she is caring for kids under age 18. All told, your survivors would get 75% of your full benefit based on your average life-time earnings. Phil Gambino, a Social Security Association spokesman, estimates that your family would get $2,200 a month--the maximum for three or more survivors. The amount would not be affected if your wife goes back to work, because the kids already qualify for the max. If your family wasn't over the limit, your wife could earn no more than $8,040 a year without having her benefits cut by 50¢ for every extra dollar of earnings.

As for taxes, if your wife's so-called modified adjusted gross income is less than $25,000, her benefit would be tax-free. Modified adjusted gross income is adjusted gross income plus any tax-free interest plus half of your Social Security benefit. (Don't you just love tax talk?) If it's between $25,000 and $34,000, she would owe taxes on 50% of her benefit. Above that, 85% would be taxable.

--Marlys J. Harris

Money also answers your financial questions on Cable News Network's Your Money every Saturday at 3:30 p.m. and Sunday at 9:30 a.m. eastern time. Send your question, plus your name, address and phone number, to Money Helps, Time & Life Building, Rockefeller Center, New York, N.Y. 10020.