Skip to main content
No. of Recommendations: 0
You said:

I have about $100,000 in General Electric stock in my 401(k), constituting 1/3 of my 401(k)portfolio. I am married with one child over 18 - net estate value at retirement approximately 700K (excluding 401(k)). My wife and I will both receive pensions from our respective employers - retirement for us both in five years, both of us under 59 1/2 at retirement. I won't need the stock after retirement and want to know whether I should sell all of the stock while it is in the 401(k) when I am about to retire and place it safer vehicle within the 40l(k) and what the best overall tax strategy would be.

My thoughts:

There are many facts one would need before giving you a good answer, but here are a few of the considerations. Income tax wise you will face choices on how and when to pull the 401(k) money out. Because of likely growth since you won't need the money it is quite possible that you will leave a taxable estate upon the death of the second to die. Your net estate is currently at about 1 mill. Does your wife have any separate assets? Her assets will make the estate situation more complex. What does the 401(k) plan provide upon the death of the second to die? Many companies call for an immediate payout, all taxable. Check with the plan administrator on this. It would probably make more sense to roll the 401(k) assets into an IRA when you retire. With proper planning the 401(k) money could go through your 2 life spans and be deferred for a period of time for your child. Assuming a taxable estate you might want an estate planner to set up a bypass trust in your will to take advantage of the two credits (one for you and one for your wife) You should also consider some life time gifts. You and your wife can give 10K apiece to your child each year without gift tax consequences. You will face some decisions before you hit 70 1/2 about how you must start taking the money out. A good retirement planner can go over the pros and cons of recalculation. As to whether you should sell the GE stock this is a personal decision. It is a very good company and in a sense it is its own diversification because of all the things it does. Question: Is the GE stock, "company" stock? If so there are some tricks to pulling the stock out at retirement and paying some tax then and getting capital gains later. If it is left in the 401(k) or an IRA it will be ordinary income.

Take care.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.