No. of Recommendations: 0
Greetings, Chris, and welcome. You wrote:

<<1. She has to base her withdraws on the accounts values as of 12/31/99 totals.>>

That is correct.

<<2. She is using my older brother as joint whatever (she is widowed) so their joint life expectancy from the irs tables is 26.2 (calculating my 40 something brother as a 60 year old.) She would have to take 1 devided by 26.2 to get the percentage of assets to withdraw from the accounts to be cool with the irs.>>

She must use the age she will be as of 12/31/00, and that of her non-spouse beneficiary may be no more than 10 years younger. In this case, she will use age 71 for herself and 61 for your brother. The life expectancy factor in this instance is 25.3 instead of 26.2. She must also decide whether to use a recalculation, term certain method or hybrid method, all of which may affect how the IRAs must be paid out at her death. All the more reason she should see an estate planner familiar with these issues.

<<3.When she retired, she left the assets in her 401k plan at the same brokerage firm that took care of them while she worked and it's mostly stock in the company she worked for, stock in companies that merged and then split with her company, a vanguard mutual fund and a very small (6k) ira.>>

She must also begin MRD from the plan, and the plan may dictate the method. She must check with the plan administrator to see what's allowed.

<<My main question is that my mom really just wants to remove some stock in the percentage in #2 from the plan, get the certificates, and hold it just like the other certificates in the safe deposit box. I can't find out if this is kosher or not anywhere. I think it sounds ok, because assets are coming out of the 401K, are no longer are growing tax-deferred, and it seems to me that she wouldn't have to pay taxes on them until the shares were sold. But there can't be a loophole this big, can there? >>

That loophole does exist. She may even fare far better if she takes all those shares and pays taxes on them now because she only pays taxes on their basis, not on their value. Then, if and when she sells, she may use capital gains rates for the gain. That could very well be best for her and her heirs. For details, see my article "Taking Stock" at

All in all, you should urge her most strongly to see an estate planner/tax advisor familiar with these issues. She only gets one chance here, and if she does it wrong, she can cost herself and her heirs some big bucks. Unless she enjoys giving Uncle Sam more than she has to, then getting some good advice is well worth the price.

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