A cardinal rule of journalism is understanding what you're writing about. Last week's column on variable annuities fell short of this rule in one regard, which caused a few annuity brokers and financial planners to choke on their bran flakes.

I apologize for causing the mess at the breakfast table. An incorrect statement I made concerning commissions brokers receive for selling annuities was brought to my attention by about a dozen callers and e-mailers. According to regulators, brokers typically receive commissions of greater than 5 percent. In error, I translated that to mean an investment of $10,000 would put less than $9,500 of your money to work.

That's wrong in most cases. Unlike a mutual fund investor who pays a comparable upfront commission, all $10,000 of a variable annuity buyer's money usually goes to work. The insurance company pays the brokerage firm and/or the broker the commission out of its own pocket, then recoups its expense from the fees annuity investors pay annually. Depending on how the contract is written, the commission will be recovered out of any, some or all of the following: the mortality and expense risk charge; administrative fees; and surrender charges if the investor cashes in the annuity early.

Sorry for my error. However, even though investors don't pay the commission upfront, they still pay it over time.

Several callers took issue -- some more strenuously than others -- with the tone of the article. They said variable annuities can be more appropriate than my prose and the headline indicated.

"Variable annuity contracts can be appropriate for some people under very definable circumstances. Be alert that your adviser is recommending them appropriately based on your need and then matching up the proper contract provisions to address that identified need," says Robert Fragasso, president of the Fragasso Group, a Downtown investment advisory firm.

There was much ado last week about state tax reform. A commission created by Gov. Edward G. Rendell recommended substantially lowering the state's corporate net income tax while a group of conservative Republican legislators proposed instituting a gross receipts tax on businesses and doing away with the state sales tax and school property taxes.

As Harrisburg's sagacious instruments of the will of the people ply their trade, here's a piece of taxing trivia: According to several sources, Pennsylvania appears to be the only state in the union that does not allow taxpayers to deduct contributions to 401(k) and IRA plans before calculating their income tax bill. Throw $5,000 of your wages into a 401(k) plan this year and you'll pay $153.50 in state taxes on the contribution, based on Pennsylvania's tax rate of 3.07 percent. Meanwhile, the same contribution will save you $1,250 on your federal return, assuming you're in the 25 percent tax bracket.

The good news is that Pennsylvania won't tax 401(k) contributions -- or the earnings on them -- when you make withdrawals. For IRA accounts, including 401(k) money rolled into an IRA, you will pay state taxes on the earnings if you make a withdrawal prior to turning 59¹/₂, says Parker/Hunter Senior Vice President Bill McDonnell, head of the Downtown firm's retirement planning unit. That's better treatment than you'll get from other states that impose personal income taxes. They typically tax the contribution and earnings portions of retirement account withdrawals.

Moreover, state lawgivers may be letting us off easy at 3.07 percent. If Pennsylvania allowed the deductions like other states, there's a good chance the state would be charging higher tax rates when your retirement contributions came out of your account than when they went in.

The anomaly is just one of many factors Pennsylvanians have to consider when deciding where to retire.

For example, if Pennsylvanians decide to leave the state, they may have to pay taxes on their retirement contributions twice if they move to a state that taxes retirement account withdrawals. Conversely, out-of-staters who move to Pennsylvania after retiring can escape taxes on retirement account contributions coming and going.

However, income taxes aren't the only way the state tax man gets in your pocket. Even though Pennsylvania takes it easy on seniors when it comes to income taxes, the same may not be true when it comes to their overall tax bill. Depending on where you choose to live, property taxes, sales taxes and other levies rendered to your state can make any savings on income tax look like small change.

Take inheritance taxes. If you die before reaching 59¹/₂, your IRA account won't be subject to state inheritance taxes, McDonnell says. However, die any older and inheritance taxes will take a slice out of your IRA account, he says.

Choosing where to retire is a little more pleasant than choosing when to die. But it's still a complicated decision. Before making a down payment on your retirement villa, "it's a good idea to visit your tax adviser or financial planner," says Jane Bernardini, an estate planning adviser with Yohalem Gillman & Co. in New York City.