"H B" <hobnobre[at]webtv.net> wrote in message
news:20958-46840372-195[at]storefull-3274.bay.webtv.net...

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When you meet with the planner, be sure you have a complete understanding of
"safe" investments. Safe from what? Safe from the ups and downs of the stock
market, or safe from the ravages of inflation?

Being already retired, I suspect you and I are close in age. I know that the
biggest risk in retirement is inflation eating up the purchasing power of my
hard-won nest egg. Yes, I have some conservative investments, but I also
have quite a bit in diversified equity mutual funds. The conservative
cash-type investments are for money I'll need in the next few years, but the
equity mutual funds are for money I'll need several years from now. As time
marches on, I can move some money from equities to cash. You will quite
likely need both types of investments, too.

Elizabeth Richardson

On Jun 28, 3:38 pm, hobno...[at]webtv.net (H B) wrote:
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You're doing well so far, but you need to change that mindset.

That's like never going to the beach just because you don't want to
eat seafood. Yeah there's a lot of seafood at the beach, but there's
so much more than that. That may not be the strongest analogy, but I
hope you get the point.

There are a lot of mutual funds that don't hold a single stock in
them. Don't let a great investment pass by because you have a
preconcieved (and erroneous) conception of the "type" of investment it
is.

hobnobre[at]webtv.net (H B) writes:

- quote -

Uninformed can be fixed - you're on the right path!

- quote -

That's a good way to do it - if only more people would put
some away before they saw (and spent) it - there'd be a lot
more people in much better shape.

Your situation is a bit complex, but, and granted I'm only
speculating here - it sounds like you've done quite well.

- quote -

Mutual funds can be anything from very risky concentrated,
even leveraged equity investments - to the safest 100%
treasury money-market funds.

As far as safe versus risky, that position in your employer
stock - not just stock, but undiversified stock - is more
risky than the vast majority of typical diversified stock
funds.

A good planner will listen to your concerns about risk and
explain to you a reasonable asset allocation plan - with
appropriate percentages of equity, fixed-income (that's
stock and bonds, respectively), and probably also cash
(that'd be most CDs, money market funds, etc) and maybe
even insurance products (which can make sense, but they
are actually pretty complex and easily misused and
sometimes hard to fix, so if they suggest insurance
products - annuities of any sort - definately ask here
for more advice!).

- quote -

I usually tell folks "don't just do something - stand there!"
meaning, generally, if the money's in some safe cash position
(ie. money market funds) that's almost always okay in the
short run until one has time to sort out the whole situation.
Your situation's kind of the reverse - but the advice is
still probably apt - that employer stock position is a big
risk and needs to be dealt with - and soon - but do make
sure that it's being handled by someone who is taking the
whole picture into consideration - taxes, asset allocation,
your plans and risk tolerance.


--
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HI. Thank you and the others once again. I am uninformed. But I only
"saved" when I didn't see the money first. (Money always ran through my
fingers.) It just accumulated over the decades. I made an appointment
with a planner next week. But to me mutual funds are stock, which I
don't really want. In my old age I hope to have safe as possible
investments.

The 401K savings is relatively tiny for what it is worth.

Thanks so much for saying it would be OK to run anything new by you. If
only there will be time.

<BreadWithSpam[at]fractious.net> wrote
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- quote -

situation is very complex and you sound very uninformed
regarding these matters. You need a professional financial
planner and probably a CPA to help you. Do you have a
trusted friend or relative who can help you find the
appropriate professional help? If not, try elder organizations
in your area for advice regarding financial professionals.

Good Luck
BeachBum(Jim)

Tad Borek wrote:
- quote -

Tad is right here. This applies only to your company stock but you say
it's a large part of your money. Here are a couple links to read a bit
on this. As Tad said, visiting a professional is advised, but I'll add
that it's good to get an understanding first, so when you talk to the
pro, you're not both starting at zero.

http://www.finance.cch.com/sohoApple...llover401k.asp
http://www.fpanet.org/journal/articl...p0204-art7.cfm
http://www.smithbarney.com/products_...ng/pdf/nua.pdf

One point - this is called "net unrealized appreciation". Google those
words and you'll find enough reading to keep busy. Fidelity addresses
this at http://www.fidelityresearchinstitute.com/ but it appears to be a
feature article, that will likely change to a different topic. They
offer a nice article at (good link)
http://www.fidelityresearchinstitute...ua_may2007.pdf

An idea of what numbers you're talking would help. Large numbers would
put you in a high ordinary income bracket, and the savings to convert
the stock gains to long term treatment, substantial.

JOE

hobnobre[at]webtv.net (H B) writes:

- quote -

I'd suspected as such when you talked about putting so much
into cash. You very likely want to have a substantial portion
of your portfolio in equities - but absolutely not all in
just one company as you currently have. What you've got is
astoundingly risky. (and by "equities" for the vast majority
of folks, I mean equity mutual funds, not individual equities)

As Tad mentioned, there may be some very complex tax issues
associated with employer stock and I highly recommend you
talk to an accountant and/or tax attorney along with any
financial planner you find - or the FP should be able to
recommend one for you - to help deal with the potentially
huge taxes (and potentially huge tax savings should the
position in your company stock be dealt with properly).

- quote -

You can buy treasuries directly, though if you are doing so
in an IRA, you'd do it through your IRA Brokerage account.

I'm assuming you have enough that you could build a very
comfortable laddered set of treasuries at very low cost,
but it would require a certain amount of management. It
may well be worth it to just buy an appropriate bond fund,
hopefully one with very very low expenses, and not have
to pay too much attention to it other than making sure
that your asset allocation (% bonds, % stocks, etc) is
where you're comfortable. If you are only comfortable
with US Treasuries, there are bond funds which have
nothing but them, but you might consider other high
quality bond funds with competent mangagement who may
more than make up for their expense ratio by investing
in a broader array of bonds.

- quote -

Pay the taxes and reinvest the money. Those savngs bonds
are generally exempt from state income taxes and you've
effectively had huge tax-advantages all the years you had
them inasmuch as you haven't had to pay taxes on them yet
at all - Savings bonds like that are effectively a very
easy tax-deferred investing option, but when they stop
earning, you start losing ground pretty quickly. You can
probably take care of them entirely on Treasury Direct, too,
for substantial convenience.

- quote -

We don't know anything about your annuities yet but if they
are typical very high expense VAs, especially if you're well
past the end of the period where you are subject to surrender
charges, you can easily to a 1035 tax-free exchange to another
annuity which fits better into your long term plan. There
are some quite decent ones with relatively low expenses and
no surrender fees.

- quote -

Well, it's still a bit vague as a "whole story" and there's
nothing at all unreasonable about not giving too much
detail in an open forum like this, but it seems like you
have enough assets and a complex enough situation that you'd
do very well to find a good financial planner. Your situation
is not one that can be addressed by a simple "okay, kid, save
10% of your income into such-and-such a fund and come back
in 20 years". Based on the questions you started with,
it seems clear that you'd benefit from objective, knowledgable
advice. Not that crap you got from the bank (who apparently
tried to get you to roll a 401k into annuities), but real
professional advice. Even aside from your annuities and
those savings bonds, just dealing with that employer stock
is a major sign that you need either to do a hell of a lot
of self education, or to consult with someone who's already
knowledgable and experienced with that sort of thing.

You have too much at stake, with huge potential costs if
handled improperly, to either just ignore it or to fake
your way through it.

Once you've seen a pro, I do highly recommend that before
you commit any huge money or engage in any transaction that
you don't understand completey, post here and see what
the folks, some of them very knowledgable and experienced
have to say.


--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
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- quote -

Thats extremely scary.
Enron, Qwest and Lucent employees thought they'd make
a killing keeping most of their 401Ks in company stock,
which was frequently doubling.
Then bad things happened. I dont dont have a lot a
sympathy for the employees.

On Jun 27, 1:40 pm, hobno...[at]webtv.net (H B) wrote:
- quote -


That's decidedly not true. Fidelity will surely provide you with a
fee based planner who advise investment in MF's.


- quote -

You worry too much about taxes, to the extent that disables you from
making wise decisions. Taxes are one consideration, but you can't
freeze in place just because you have to pay taxes.

On Wed, 27 Jun 2007 15:40:20 -0500, hobnobre[at]webtv.net (H B) wrote:

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Don't be afraid of the taxes. Just manage them.
Thumper

On Jun 27, 2:40 pm, hobno...[at]webtv.net (H B) wrote:
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I believe that limit has been increased to $250k

H B wrote:
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HB-
No, not a problem really -- but if you're about to do a lump-sum 401k
rollover that includes company stock it is ABSOLUTELY CRITICAL that you
figure out the best way to take the stock portion, BEFORE setting any
gears in motion.

It's impossible to describe this in a quick post, but there's special
tax-code provision that can apply to a full distribution of employer
stock (ESOP stock) from a 401k plan. If it's a large sum, and it's gone
up in value a great deal while you've held it, you might save a lot in
taxes by making use of this special provision. The key term is "net
unrealized appreciation" or NUA. Briefly: you are able to distribute
that stock without paying tax on the full value -- you just pay tax on
the purchase price of the stock (tallied up, over all the years you
bought it within the plan). Any gains above that are taxed only when you
sell the stock, AND you pay tax at the (lower) capital-gains rates,
rather than the ordinary-income rates that apply to all other 401k or
IRA distributions. In some cases this results in very large tax savings,
but it depends on your specific case.

Your company may have some information about it, but if you google that
term you'll find quite a bit (Fidelity has a good briefing paper on it,
but I don't know if it's available on their public web site). I'll warn
you that it's a technical area of tax that gets into a lot of other
tax-planning questions, and if it's a big amount -- please do see a tax
professional in your area to run an analysis for you!

-Tad

I did buy my company's stock along with stable value and perhaps a
little in other funds in the 401K, but surely the pay out rollover
amount the investment company gives would be in cash and no stock. (I
decided to use 401k when it became available and discontinued the
automatic dividend reinvestment.) The stock fund would be treated
differently?

Or, are you saying that the other stock could be a problem, even if not
sold?

On Jun 27, 3:40 pm, hobno...[at]webtv.net (H B) wrote:
- quote -

Then you are talking to the wrong guys. Keep looking. Ask respected
friends for the name of their advisor. I can't remember the last time
I advised a client to "buy stock XYZ". It has been my experience that
most planners deal in mutual funds and ETF far more often than stocks.
There are plenty of both of these invesment types to achieve "safe"
risk tolerances.

- quote -

That's exactly why you need to talk to a professional. Having a large
position in company stock usually entails LONG TERM financial planning
to properly diversify.

For ex: I met a guy that had about $500k in non-qual. employee stock
options that sat on the options until the last minute, because he
didn't want to pay the taxes. So what happened, he exercised ALL of
his options in one year and immediately jumped to the highest marginal
tax bracket AND suffered AMT consequences. It was only after he
realized he was in over his head that he sought out professional
advice. There was little that could be done by then. He could have
spent years methodically exercising his options and saved a ton on
taxes. But fear kept him from addressing the issue in a timely manner.

- quote -

You don't need to actually buy T-bills to be invested in them. Plenty
of good bond funds and ETFs (like "TIPS"). You sound like you need
annual tax management at least as much as you need investment advice.
I agree with Bread, the company stock is enough of a daunting threat
that you may want to consider a CERTIFIED financial planner. The
savings bonds and annuities possibly fall inline with my stock options
example above.

Good luck & Get help.

"Measure twice, Cut once"

H B wrote:
- quote -


If I may hijack your thread for a moment...is all that company stock
from an ESOP/401k? And if so have you read up on all the special tax
rules with that?

-Tad

Thanks for the interest. I would like a fee-based financial planner but
all planners advise investment in stock. I have a very low risk
tolerance level.

My company's stock is indeed at least 1/2 to 2/3 of my worth. That
worries me, but the taxes on selling any worries me too.

IRA C-D's should be safe, as long as federally insured. (But only
$100,000 limit.) Government Securities should be fine, but I don't know
how to get them. I do have years of accumulated U.S. Savings Bonds
which recently have begun no longer earning interest and need to be
turned in. This is more taxes. If I cash in my 2 annuities, there will
be more taxes. I will also have Social Security in 2 years, if still
alive. I own my own condo and have few expenses or debts. That's
pretty much the whole story. Thanks.

On Jun 27, 2:05 am, hobno...[at]webtv.net (H B) wrote:
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Is there any restriction on how your 401K is set up to limit your
rollover choices? I had my 403B with TIAA and had it rolled over to a
Fidelity roll-over IRA. But I think some employers place restrictions
on employees' ability to roll these accts., a paternalistic attitude
left over from last century. You need to check with your benefits
office or read the 401K document to see if there is any such
restrictions.

If there is none, then open a roll over IRA at Fidelity or Schwab or
any number of brokerages and ask them to tell you the process of
rolling your acct. over.

Justin <nospam[at]insightbb.com> writes:

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Indeed, you can roll over that 401k into an brokerage IRA
account or mutual fund IRA account you like. It doesn't have
to be a bank at all, and may very well be better off far
away from a bank.

- quote -

He may well want some cash and or short-med term bonds to
offset the volatility of what sounds like a portfolio which
also has substantial equity exposure. To the OP - if that
"acquired company stock" is a big chunk of your assets you
may want to talk to an honest advisor about how to manage
that very concntrated exposure. Folks on this newsgroup
will be happy to provide ideas if you fill us in a bit more
on details, but sometimes dealing with acquired company stock
can be a little tricky - taxes, etc, and the cost of
consulting with a pro may save you a lot in the long run.

- quote -

I think I'd probably find another bank altogether. First they
mislead him about what he can do with the money, then they
try to sell him what are very likely (okay, there's a tiny
chance - teeny tiny - not) entirely inapporpriate and
expensive VAs.

If they made a real case for VAs other than "that's all we
have for you" I'd be curious to see how they try to justify
them for this guy.

- quote -

I'd probably lean towards a decent brokerage IRA account -
any of which will give him access to CDs (very likely
quite competitive ones) as well as a universe of other
options - including MMFs, short/med-term bonds, etc,
as well as other asset classes he may need to build
his target allocation.

Very seriously, though - if that employer stock is more
than a few percent of your net worth, some serious
thought about diversification is in order.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
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<daisy-oh[at]webtv.net> wrote in message
news:9908-46827B14-9[at]storefull-3271.bay.webtv.net...

- quote -

I think they are not seeing that your CDs will be in an IRA. Will they let
you open an IRA? Can you have any type of investment in their IRA? No, you
don't want to take your 401k or pension and put them directly into CDs, else
you would be paying income tax on the entire thing this year. You want to
open an IRA and then choose your investment. But, as someone else asked, why
CDs?

Elizabeth Richardson

On Jun 27, 10:13 am, daisy...[at]webtv.net wrote:
- quote -

In a single word: commissions. The bank, and probably the salesman,
makes more money selling variable annuities than they do by selling
CDs.

Let me suggest that you call Fidelity 1-800-FIDELITY, and ask them
about rolling a 401(k) into CDs or something similar and see what they
suggest.

Can you say why you want CDs and not, say, a mutual fund portfolio? A
CD portfolio probably will not keep up with inflation over the long
term, especially when you consider the taxes you will pay when you
take distributions. Frequently, is is possible to put together a
portfolio containing stock mutual funds, bond mutual funds, and money
market funds, or ETFs (electronically traded funds, I think) that will
do a good job of preserving your capital and give you an opportunity
for some growth. By trading off the proportions between the fund
categories, you can make the portfolio match your risk tolerance, and
you might be surprised that sometimes you can increase your return and
lower your risk by including stocks. Fidelity's web site has a risk
profile survey that can help you match your risk tolerance with
proportions. Or they could mail you a risk profile booklet if you ask
for it when you call. Fidelity also has a retirement income planner,
which might be useful to you. I presume that Vanguard also has these
available.

Dave