Tuesday, October 12, 2010

Tuesday Q&A Series – Investments Outside Rollins

This week’s question comes from Kelly who is 48 and a Rollins Financial client. She has questions regarding her investments outside of her current accounts at Rollins Financial.

Q. I enjoy knowing that someone is looking after my accounts and being able to call with questions/concerns about them. One question is can you handle my current retirement account (401k) with my employer for me? I would like to know it is being handled in the same manner.

This is a very good question and one that we are frequently asked. It is always good for our clients that we know and understand what is going on in your accounts held outside of Rollins Financial. This allows us to make sure that you are diversified accordingly, and to give advice on changes that should possibly be made to benefit you.

Unfortunately, we can only determine whether we can actually manage the outside accounts on individual basis.

Through Fidelity (which is the largest 401(k) provider), we have the ability to directly manage some 401(k) accounts through a service called “BrokerageLink.” If your 401(k) plan is at Fidelity, this could be the way to go. 

If your retirement account (401k, 403b, etc.) is held elsewhere, we can definitely help you review the options and the accounts at the very least, and we still may be able to manage the funds. In any case, we will obviously help point you in the right direction on investment options and contributions.

**Note** - If you have left a previous employer, remember to rollover your old retirement accounts. The process is quick and painless, and it insures that your retirement accounts are working for you and not just sitting idle paying fees for your old account.

Q. I inherited some old stock certificates from my relatives. What should I do with them?

This is something that we run across quite often and is always a good question. The best thing to do is to put the certificates in your account for many reasons.

First, from a “safekeeping” perspective, putting the certificate into your account guarantees that it is secure. We have seen numerous individuals lose stock certificates over the years through fire, theft, or just being misplaced. When this happens, the transfer agent (company responsible for handling certificates) must be contacted and the shares must be replaced. This sounds simple, but there is a standard fee of 2-3% of the value of the certificate. If the certificate is worth $100,000, you are now paying $2,000 - $3,000 for its replacement. Writing a check to pay a fee for a lost stock certificate usually wakes people up rather quickly.

Second, from a tax perspective, the fewer the number of investment accounts you have; the less likely you are to make mistakes and omit something come tax time every year. Thus dividends or even selling the stock can cause problems later if you have not reported the transactions as required by the IRS. By placing the stocks in your current account, the dividends and transactions are included on the 1099's you get from Schwab/Fidelity. It is easier to call one place - Rollins Financial - to get the information come tax time than 10 different places.

Also, the stocks have a cost basis that will affect the tax ramifications of selling them. The sooner you receive help to determine the correct basis – whether purchased, gifted to you, or inherited – the easier it is to find the correct basis.

Finally, whether you intend on holding the shares forever or want to sell them to reinvest in other investments, we can help you make informed decisions regarding the stock.

**Note** - If you wish to just hold them, we can place them in an “unsupervised” status which essentially means that they are held in the account at the custodian, but Rollins Financial does not charge you for that stock(s). We do this as a courtesy service for our clients to help them consolidate their assets. If you have a question about utilizing this service for some old stock certificates, please let us know.

Kelly, I hope the answers above are helpful to you, and we certainly thank you for your questions and for being a client. We are always looking to help our clients make the best financial decisions possible with their investments at Rollins Financial and elsewhere.

We encourage our clients and readers to send us questions for our Tuesday Q&A series at contact@rollinsfinancial.com. And as always, we hope you will keep Rollins Financial in mind when seeking professional advice on financial planning and investing.

Best regards,
Robby Schultz

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