Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, September 20, 1993 TAG: 9309180012
SECTION: MONEY PAGE: A-8 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Long
What can I have this money transferred to without having to pay taxes on it? I want to put this money in a good safe plan that can be collecting interest for me until I am ready to retire.
A: Unfortunately, there is no one plan that fits every individual situation.
W. Hope Player, who is both a certified public accountant and a certified financial planner in Roanoke, said you may elect to have your portion of the distribution that is eligible for rollover treatment transferred directly to an Individual Retirement Account or IRA annuity. Or you may transfer directly to a qualified defined contribution plan if its terms permit the acceptance of rollover distributions.
You indicate the transfer will be made at the time of your husband's retirement.
To be able to recommend an investment plan suitable to your needs, Player said, it is necessary to know more about your situation. She would need to know your age at the time you receive the rollover, the age you plan to retire and the nature of your retirement plans.
Any adviser would also want to weigh your tolerance for risk before suggesting an allocation of the money among various investments.
Player recommended that you seek the advice of a good financial planner to assist you in making a final decision. You can do this at the time you are about to receive the money.
Estate value
Q: I retired at 62 and I am now 64.
I am trying to determine the value of my estate, but I do not know the impact of federal and state income taxes on three items in my estate. I know I would have to pay income taxes on gains and interest should I take possession of them now, but I do not know their value in my estate should I die before taking possession of them.
The three items are:
A 401(k) plan with my former employer totaling $50,000. Of this amount, $10,000 is my personal contribution. The other $40,000 is company contribution, interest and stock appreciation.
An Individual Retirement Account totaling $13,000. Of this amount, $4,000 is my personal contribution and $9,000 is interest and capital gains over 12 years.
Stock with a current market value of $12,000. Of this amount, $5,000 was the purchase price in 1984 and $7,000 represents capital gains to date.
Is this portion of my estate based on the current value of the three items? Or are their estate values decreased by federal and state taxes (approximately 33 percent) on the interest and gains?
A: Kenneth Prickitt, a certified public accountant with the Roanoke firm of Young & Prickitt, said your estate is based on the fair market value of your assets determined either as of the date of death or the alternative date six months later.
If your estate is valued at less than $600,000, an estate tax return is not required to be filed.
In your situation, Prickitt said, the 401(k), the IRA and the stock would be valued at market value on one or the other of those dates.
In addition to being included in your estate, he said, the 401(k) and the IRA also would be included in your income in the year of death unless you have a named beneficiary.
Mortgage refund
Q: I am writing concerning the article you had on the Money Page concerning refunds on mortgage insurance. Our FHA-backed mortgage was paid off in 1992. It was with Colonial American National Bank, which merged with Crestar Bank.
Crestar cannot seem to tell me anything. They say I am not listed on the computer. I have called Washington, D.C., and also Richmond.
The only number I had from Colonial American Bank was an account number. The government says they need a case number to claim an insurance refund, but I cannot find a case number anywhere on anything. We took the mortgage out in 1967 with Colonial American Bank and know there was mortgage insurance on it.
A: Your problem arose because you were going back to your original papers with Colonial American National Bank.
Crestar obtained your Crestar account number. It was then able to give you a case number to send to the government.
You are almost certainly due some refund. With a mortgage that old, the amount will depend on the number of defaults in the pool that contained your FHA mortgage.
Your letter to the government must include your FHA case number and the date the insurance was terminated. In your case, you must say you are applying under the MIP (mortgage insurance premium) program.
Write to: U.S. Department of Housing and Urban Development; Director of Mortgage Insurance Accounting and Servicing, OFA; ATTN: Insurance Operations Division; Washington, D.C., 20410.
Mag Poff will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke 24010.
by CNB