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Jewish World Review Jan. 25, 2000 /18 Shevat, 5760

Bruce Williams

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Will splitting stocks affect rollover?


http://www.jewishworldreview.com -- DEAR BRUCE: I have stock in a 401(k), and I am rolling it into a new 401(k) in which the stock is about to split. My question is, do I do it before or after the split? -- B.B. (e-mail)

DEAR B.B.: I don't think that it makes any difference. Just because a stock splits doesn't mean that the price will be affected immediately. If the stock is worth $100 and splits two for one, you'll have two $50 shares.

If you would feel more comfortable getting in where you would "benefit" from the split, so be it. But as far as any long-term effect, I don't see any either way.

DEAR BRUCE: In a recent column you said that you were quite unhappy with an investor who had $40,000 in a 4-percent savings account. You indicated that you can get at least 2-1/2 times that with only a little risk.

I recently retired from teaching and sold my home, and I am going to purchase a new home in my new location. I have $350,000 in a money-market mutual fund to use for this project. What suggestions can you make? -- M.A. (e-mail)

DEAR M.A.: Understand that when we talk about percentages, we use them as a common denominator. Any investment that earns 10 percent or more in interest has to be considered on the risky side, given the current state of the market.

I am more concerned with growth than I am with translating the growth back into interest to have this common denominator. For example, many of the major corporations in this country for the past year have shown growth from 12 percent to 20 percent. In order to "cash out," a portion of the securities will have to be sold. The investment then yields this kind of percentage when the growth is translated into percentage for common language. This is what I am referring too.

DEAR BRUCE: I know the laws regarding gifts of $10,000 to one person in one year. But you refer to claiming a larger gift against your lifetime exemption. I am not as clear as to what a lifetime exemption is. -- C.M. Las Vegas, Nev.

DEAR C.M.: Each person has a $650,000 lifetime exemption (it is being increased to $1 million in the next few years.) You can either use this after you die or claim against it during your lifetime to transfer the money from one person to another without taxation. You need not claim it for the first $10,000 to each person that you wish to give per year. For example if you gave $50,000 to your daughter, you would then be obliged to pay a gift tax on $40,000 or reduce your lifetime exemption by $40,000. There are appropriate IRS forms that can help you accomplish this.



Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).

Up

01/24/00: Should early retirees contribute to SEP?
01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
01/13/00: Who gets the house?
01/11/00: It all depends on size of estate
01/06/00: Check references before hiring an advisor
01/04/00: Savings bonds a bad investment
12/31/99: Out of state ain't that great
12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
12/23/99: Options good only when company's strong
12/20/99: Capital gains tax sometimes best
12/17/99: Don't give up your nest egg
12/15/99: Small-claims court no panacea
12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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