Money Management Q&As

Skipping this break could make sense

In your column of Oct. 6, you explained that taking a distribution of company stock shares from a retirement plan can greatly cut the tax due on any unrealized appreciation. Does it ever make sense to skip this tax break?

Sometimes. If you're apt to be in a lower tax bracket in retirement, you may do better to roll the stock shares into an IRA and pay the tax later. The same applies if you need to sell shares soon after distribution-for example, to diversify the portfolio by reinvesting the funds in other stocks.

Another way to limit junk mail

I receive a lot of annoying advertisements on the office fax machine, many from certain repeat offenders. Is there a "do not fax" registry that I can sign up with to limit these fax attacks?

Unfortunately, no. The Junk Fax Prevention Act of 2005 does prohibit advertisers from sending unsolicited ads without an invitation or permission from you. But like the National Do-Not-Call Registry for telephone numbers, it makes certain exceptions for businesses with which you already have relationships. Worse, according to the fax law you don't even have to buy anything from a vendor to establish a business relationship; simply asking for information does that. Even so, the advertisers must include a notice that you can opt not to receive additional faxes, plus contact information so you can make that request. Your request must meet certain requirements spelled out in the Prevention Act. If it does, the advertiser must stop sending faxes not later than 30 days after receiving your request. For additional details and instructions on how to report violators to the Federal Communications Commission, go to http://www.fcc.gov/cgb/consumerfacts/unwantedfaxes.html.

When a lender won't cancel PMI

I've been paying for private mortgage insurance since buying my home two years ago. A recent inheritance would allow me to pay off extra principal and bring my equity up to 30 percent of the home's value when I bought it, but the bank says I'd still have to keep the PMI. How's that possible?

The lender can insist that you keep the PMI if you don't have a good payment record (which means you made one or more payments at least 30 days late within the last 12 months, and one or more payments at least 60 days late in the 12 months preceding that). The same goes if the house is now worth less than it was when you first took out the mortgage; if you have another lien on the home; or if the lender, Freddie Mac, or Fannie Mae classified your loan as "high risk." If none of those exceptions applies, the bank must allow you to drop the PMI.

Easing an executor's investment stress

My brother, who'll be the executor of my estate, is generally a responsible investor but tends to get nervous when stock prices start dropping. If I die during a shaky market phase, I'm afraid he may panic and make costly sales or other overly conservative decisions. To avoid this, should I include investment directions in my will?