Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 13, 1991 TAG: 9104150341
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Medium
A: The tax ramifications depend on your age and what you do with the money. Any funds you withdraw from your pension contribution will be taxed as ordinary income. If you are younger than 59 1/2, you will pay a 10 percent penalty as well. The only way to avoid this is to roll over the money into an Individual Retirement Account within 60 days.
Jean Stiff, pension and benefit manager at the GE plant in Salem, said both you and the company made contributions to the retirement plan. You have the right to withdraw the share of the money you paid into the program. But, she said, your monthly pension payment will be reduced accordingly.
Stiff said she will be glad to discuss your situation if you call or come to the plant. Or you can call an employee benefits line at GE's home office in Schenectady, N.Y. That office can calculate your monthly pension benefit with and without withdrawal. The toll-free number is 1-800-432-3450. Stiff said you will have to provide your Social Security number in order to obtain the information.
Q: My husband and I have a certificate of deposit at a local bank that we put in at 9 percent in 1986. It was put in for five years and will mature in July of this year, when it will have to be renewed or taken out.
We are living on our Social Security and interest from CDs. We are both retired; I am 74, and he is 86. We have no children. We need all the interest that we can get.
Interest rates in this area have really dropped. They are about 6 percent at this time. I surely wish that we could get as much interest or more when we have to renew in July.
A: John Parrott, a certified financial planner with Wheat First Securities, suggested that you split your savings among different types of investments if possible. Some money should be readily available in bank certificates and bank money market accounts for emergencies.
When your certificate matures, Parrott said, you might consider investing in Triple A-rated mortgage-backed securities such as a Ginnie Mae bond. These currently pay about 9 percent with income distributed monthly. The underlying mortgages are insured by an agency of the federal government. This type of investment is safe in that the income is insured, but the value on the secondary market fluctuates inversely with interest rates. If you had to sell because of an emergency prior to maturity, you could either take a loss or earn a profit.
Another alternative, he said, is to buy a very strong corporate bond rated AA or AAA. Parrott said bonds issued by such highly rated companies currently pay close to 9 percent. Again, the value of the bond will fluctuate on the secondary market although that will not affect the interest.
Q: Enclosed is a copy of a stock certificate that belonged to my grandfather. I found it while going through old family papers that I was reviewing. I have been trying to construct a family history. I don't believe it's worth anything, but I wish to see how it relates to my family. I have exhausted all resources at the Roanoke City Library.
A: You are correct in your assumption that the stock certificate has no value.
The librarian for J.C. Bradford & Co. in Roanoke said the records show that Mountain State Coal & Gas Syndicate of West Virginia went out of business in the 1920s or 1930s. There was no successor company.
Your grandfather bought 10 shares, representing an investment of $1,000 of the $2 million in capital stock, so he was not a major shareholder in any case.
by CNB