UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Next Thread
Author: TVBrain 10+ Year Anniversary! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Rollover, or stand pat? Date: 6/4/2001 5:05 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
I have about $72,000 in a 401(k) with a previous employer. I didn't roll it over in to my new employers plan because it includes 450 shares of GE, which I feel over the next 20 years, is a pretty solid investment. My current plan is much more versatile, but being a Fool, I'm putting most of the money in to an index fund.
Is the GE stock a good enough reason to keep my old 401(k) are is having two separate 401(k) a bad thing?
Thanks
Print the post Back To Top
Author: gopete One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30063 of 76418
Subject: Re: Rollover, or stand pat? Date: 6/4/2001 9:44 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
TV Brain --- I'm probably a little biased as a retired GEer, but suggest you do not roll over your old 401k. Let the GE stock accumulate with dividends reinvested in the old 401k. GE is so diversified, its like a mutual fund in itself. If you have other investments in the old 401k, you can probably convert them to stock as well or you might be able to cash them out and roll that part into the new 401k. Check with the GE plan administrator on these options.
Good luck --- gopete

Print the post Back To Top
Author: PMcMullenCT Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30064 of 76418
Subject: Re: Rollover, or stand pat? Date: 6/4/2001 10:18 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
I have about $72,000 in a 401(k) with a previous employer. I didn't roll it over in to my new employers plan because it includes 450 shares of GE, which I feel over the next 20 years, is a pretty solid investment.

I don't know the details, but I recall there being something favorable about the treatment of company stock when withdrawn at retirement. Your benefits department should be able to tell your more, but there may be a tax-favorable way to remove that stock from the 401K when you retire. Can anyone familiar with this provide more?

Print the post Back To Top
Author: gahdzila One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30073 of 76418
Subject: Re: Rollover, or stand pat? Date: 6/5/2001 9:51 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
I have about $72,000 in a 401(k) with a previous employer. I didn't roll it over in to my new employers plan because it includes 450 shares of GE, which I feel over the next 20 years, is a pretty solid investment. My current plan is much more versatile, but being a Fool, I'm putting most of the money in to an index fund.
Is the GE stock a good enough reason to keep my old 401(k) are is having two separate 401(k) a bad thing?


if you're happy with the 401(k) as it is, happy with your investment choices, etc etc etc...I would vote to leave it where it is.

the only reason I can think of in favor of moving it when you're so happy with your investments would be the convenience of having all of your cash in one place (ie--in one 401(k)).

an alternate choice would be to roll the old 401(k) into an IRA...so you could buy GE stock or any index fund you want with it.

but if you're happy with it where it is, I say leave it there.

HTH,

gahdzila

Print the post Back To Top
Author: PMcMullenCT Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30074 of 76418
Subject: Re: Rollover, or stand pat? Date: 6/5/2001 9:59 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
I don't know the details, but I recall there being something favorable about the treatment of company stock when withdrawn at retirement.

Here's more:

"Here's why. When you retire, if you take a distribution of your company stock, you will pay income tax on the cost basis of the stock - that is, what it was worth when you acquired it, not what it is worth when you withdraw it."

"Say you have 1,000 shares at a cost basis of $15. When you withdraw it, the market price is $40 a share. You will pay tax on $15,000 rather than $40,000. If you sell the stock, you will pay capital gains tax on the difference between the cost basis and the sales price."

"Now, say that you rolled those shares into an IRA instead of withdrawing them. You wouldn't pay any tax when you made the rollover. However, when you sold the stock you would have to pay income tax on the full value of the stock. Keep in mind that capital gains tax, at 20%, is probably going to be lower than your income tax."

"If you roll the stock into an IRA, you don't pay tax right away so you'll have use of that (tax) money for a longer time. If you don't plan on selling the stock soon (at which point you'll have to pay tax), this could be an advantage. On the other hand, if you don't roll the stock into an IRA you may also have an advantage if you hold the stock for a longer time, if it continues to appreciate, because you benefit from the lower capital gains tax on the appreciation."

http://www.401kafe.com/commentary/feature/feature_091099.html

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
Author: gopete One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30084 of 76418
Subject: Re: Rollover, or stand pat? Date: 6/5/2001 8:04 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
PMcmullenCT --- Good response. Taking an "in kind" distribution of stock from the 401k at retirement does have the significant tax advantages that you discussed. The other point to make is that until
2010 with the new tax law, the cost basis of the stock for heirs is bumped up to the value of the owner at passing.
gopete

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Next Thread
Advertisement