Free money for staying put.

th9 Free money for staying put.I am officially an Alaskan once more: The state has determined me eligible to receive the 2014 Permanent Fund Dividend.

During my previous residence here (1984-2001) we used to joke that the PFD checks paid for our obligatory visits to visit family back on the East Coast. Now that I’m on a tighter budget, I’m going to follow the sage advice of Liz Weston: Keep 10 percent for whatever you want, and send the rest where it can do some good.

In my case that means 90 percent will wind up in my Roth IRA. The rest? We’ll see.

How much money are we talking? The ballpark estimate for 2014 is $1,800. That’s a lot of money just for staying put.

The fund was created back in 1976 as a constitutional amendment, in order to keep all the oil income from disappearing. (Hint: The legislature spent all $900 million of the initial lease money within a few years.) The rule is that at least 25 percent of all mineral income gets placed in a “permanent” fund to produce income for future generations.

The money gets spread across a broad range of investments, with an eye toward a 5 percent annual return. Annual checks are based on a five-year rolling average of markets worldwide, which meant that dividends dropped during the recession. While the 2008 check was a record $2,069, the 2012 check was $878.

Still: A lot of money for plugging in your car – and in some places you don’t have to do that. (Hey there, Southeast! Soggy enough for ya?)

The money folks don’t really know what the check will be, but $1,800 is the best guess for now. The fund’s current value is approaching $50 billion. More specifically, it’s $49,660,400,000 – bigger than any endowment fund, private foundation, or union pension trust, according to the Alaska Permanent Fund Corporation.

Let’s go shopping!

Every autumn local merchants turn themselves inside out to get the recipients’ attention. And well they should: As of Tuesday evening 502,228 Alaskans had applied.

Imagine that each of them turns out to be eligible to receive at least $1,800. That’s a giant chunk of money available for the picking, even if some recipients choose to put the money into the University of Alaska College Savings Plan, or donate it all through the “Pick/Click/Give” program, or wind up having the money garnisheed.

(About that last: Late one August night in 1999 a smash-and-grab artist bashed in the windows of my car, hoping to find something valuable. A few minutes later the police showed up, summoned by a too-pregnant-to-sleep neighbor who happened to be looking out the window. Thanks to the miracle of garnishment I ultimately received a check for $200, the amount of my deductible.)

No doubt some of those dividend dollars go to online shopping. But warehouse stores, airlines, clothiers, restaurants, furniture stores, and auto and snowmachine dealers wouldn’t keep putting those ads out if they didn’t bear fruit.

Here’s hoping that some parents go the college savings route; it’s a 529 plan so the money can be used at any school, not just the local university system. I also hold out hope that the PFD checks will be put into savings or invested in retirement plans.

But not too much hope. Those snowmachine ads are mighty tempting.

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10 Comments

  1. How cool is this!! Alaska PAYS you to live in the state. I only get tax bills from my state. MAN that is a large fund and seems to be getting bigger every year…

  2. ImJuniperNow

    Hmm. So now when people say “You couldn’t pay me to live in Alaska” we can reply “Yes, we can!”

  3. How totally cool. If we had something like share-the-wealth in California, we would all be SENDING the state a check for $$$$ every year. Congrats to Alaska for in the future thinking.

    • Donna Freedman

      It sure is a big shot in the arm to local retailers each year. For me, it’ll be a nice push toward maxing out that Roth IRA ($6,500).

  4. Had no idea the dividend might be that big this year – will go a long ways towards bills and the emergency fund…

  5. Catseye

    I’d read about this fund a few years ago and thought it was a great idea. Arkansas needs to start something similar. Lord knows, the average Arkansan could use it! We are one of the poorer states and the job opportunities here suck. Ask me how I know this. ;o)

  6. The Roth IRA is a great place for most of the funds. Your older self will thank your younger self for being so wise! And, anyway, who really needs more stuff?

    • Donna Freedman

      I’d love to use some of it to replace the capital I dipped into to visit my daughter and then my dad. But it’s much smarter to put it all toward retirement — and after all I’m still saving it, just not in the bank.

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