Money Management Q&As

April 21, 2006



Transferring loans between 401(k) plans

Q. I'm considering an offer to join a colleague's practice, but I still owe $10,000 on a loan that I took from my current employer's 401(k) plan. Do I have to pay off that loan before I leave my job?

A. Not necessarily. If your new employer has a qualified retirement plan, you may be able to transfer the balance from your current employer's plan-including the $10,000 loan balance-into the new plan and continue paying it off as scheduled. If you stretch out the loan or otherwise alter the original terms, though, the $10,000 could be considered a distribution and you'll owe income tax on it at your ordinary rate, plus a 10 percent early withdrawal penalty if you're younger than 59½.

Q. I'm moving out of state, and a neighbor who sells real estate wants me to list my house with her firm. She made a point of telling me that she's a Realtor, not just an agent, and she holds a GRI designation. What does that mean?

A. It means that she belongs to the National Association of Realtors, a trade organization that imposes a code of ethics on its members, and she has completed that organization's Graduate Realtor Institute program. The GRI program involves at least 90 hours of coursework covering subjects such as contract law, marketing and servicing listed properties, and finance.

While these credentials suggest that Realtors are committed to staying current with laws and trends, they don't guarantee that your neighbor's the right person to sell your home. You'd be wise to speak with a few of her clients and interview several other Realtors or agents before selecting someone. Ask friends and neighbors for recommendations of people who've sold homes in your neighborhood. Find out how long all of the candidates have been in the real estate business-preferably at least several years-whether they work full time or part time, how accessible they are, and what kind of marketing strategies their firms would use to promote your home. Pay attention to how carefully they listen to you and address your needs.

Foreign travel will be more complicated

Q. My family and I don't have passports, since the places we travel to outside the country don't require them. Are the rules going to change?

A. Yes, but the new requirements are being phased in. By the end of this year, you'll need documentation (generally a passport) for all air or sea travel to or from Canada, the Caribbean, Bermuda, Mexico, and Central and South America. Starting in 2008, the rule will cover all border crossings, air, sea, and land.

Insuring valuables in a safe deposit box

Q. I recently inherited some valuable jewelry and paintings from my favorite aunt. I'm thinking about putting them in a safe deposit box at my bank, since a few homes in my area have been burglarized. But what if someone steals the items from the bank? Would FDIC insurance cover them?

A. No-nor would the bank's insurance, most likely. Your homeowners policy may reimburse you for up to a certain amount, but check the fine print: A cap may apply to items stolen while they're away from your home. Since homeowners policies typically also limit reimbursements for certain types of property, including jewelry and art works, to fully protect those valuables you'll have to get the items appraised and add a policy endorsement to cover them for the entire value.

Do you have a money management question that may be stumping other doctors, too? Write: MMQA Editor, Medical Economics, 5 Paragon Drive, Montvale, NJ 07645-1742, or send an e-mail to memoney@advanstar.com (please include your regular postal address). Sorry, but we're not able to answer readers individually.