It's April 15. You're doing your taxes at the last moment and realize you forgot to take out an IRA. It's after 3 p.m., and the banks are closed.
No sweat. You run down to the IRA Store and invest $2,000 in a certificate of deposit, and maybe put another $2,000 for each of your children into growth funds.
If Lakshmi N. Sampath, president of the IRA Store Inc., has his way, soon you'll do just that. In a joint venture with a Virginia financial services firm, Financial Services Group Inc., Sampath plans to open the first IRA Store in Rosslyn's USA Today building on Aug. 1.
Sampath, a certified financial planner in Virginia, first dreamed up the idea while researching various IRAs. IRAs, or Individual Retirement Accounts, allow taxpayers to make annual investments of $2,000 -- $4,000 for working married couples -- that won't be taxed until they are withdrawn at or after the age of 60.
Most banks weren't able to give Sampath enough information about different types of IRA investments, he says, because at $2,000 a head it isn't worth their while. But those heads add up.
Since 1981, when the tax laws changed slightly to favor the IRA investment, big money began to flow into IRAs, according to Sampath.
In the Washington area alone, he estimates that $600 million in "new" money will be invested in 300,000 IRAs by April 15. And of that $600 million, 44 percent will be in Northern Virginia.
Seventy percent of new IRA investments, Sampath estimates, are made between Jan. 1 and April 15.
"Instead of going to the bank, customers will think of the IRA Store" at tax time, predicts Sampath. It's the money that's invested by taxpayers at the last minute -- the "new money" market -- that he hopes will enable him to earn his bread and butter. He expects his business to be profitable in its first year based on this market alone.
However, the biggest obstacle, Sampath admits, will be breaking people of the habit of thinking of IRAs purely in terms of their tax advantages. For his business to thrive 12 months of the year, taxpayers will have to start thinking of their IRAs like any other investment that require careful tending.
"Most people don't realize that an IRA is an investment," Sampath said.
This other market -- the "rollover" market -- is important to the long-term growth of his company, Sampath says.
Investors in IRAs, reacting to changing interest rates and rolling their IRA over into better investments, could increase the value of their account by hundreds of thousands of dollars, Sampath argues. But most taxpayers aren't such shrewd investors.
Sampath's store is stocked with a variety of investments to help customers make the switch in attitude. The types of investments to "browse" through range from stocks and mutual funds to money markets and bank certificates of deposit to oil and gas partnerships and real estate. Two licensed broker-dealers will be on hand in the store to help patrons make their investments.
When you select an IRA you pay the cost of opening and maintaining it -- typically $10 to $40, depending on the type of investment you choose. The IRA store then receives a fee from the investment institution you have chosen.
Sampath hopes to make a name for his store in the five months before the deluge of IRAs begins on the first of the year. At that time, he also hopes to open another store somewhere in Tysons Corner.
Sampath says the direction of tax policy bodes well for his idea, noting that the current tax proposal increases the spousal IRA from $2,250 to $4,000.
But certainly by the time that proposal, or some semblance of it, takes effect, he'll know whether the idea of an IRA "supermarket" will fly or founder.