Money Management Q&As

March 4, 2005

Mutual funds' holdings; partner's disability; bond yields

Keeping a close eye on a fund's portfolioQ I own shares in a mutual fund that only sends me information about its portfolio every six months. Is there a way I can get a more up-to-date list of its holdings?

A Yes. Thanks to a recent change in requirements, the fund must file a complete list of its holdings every quarter with the SEC. The reports are available to the public through the Commission's Electronic Data Gathering, Analysis, and Retrieval System (EDGAR). The more-frequent portfolio information should make it easier for investors to monitor whether a fund is conforming to its stated investment objective.

Tax breaks on community propertyQ My wife and I recently moved to a community property state, and we want to leave all our assets to each other. We know that when a spouse dies, normally only his or her half of jointly owned assets gets stepped up in value-meaning that they're valued at the market price on the date of death, rather than at the asset's original purchase price, which reduces any capital gain on a future sale. But we've read that all assets held as community property get a full "step-up." What can we do to take advantage of this tax break?

State laws and the nature of your holdings may involve complications, though. Therefore, it's essential to consult an estate-planning attorney before proceeding.

Borrow from a pension to pay off a home loan?Q When I bought my new home recently, my uncle lent me money to help with the down payment needed to qualify for a low-interest first mortgage. Now I'd like to pay him off by taking a loan from my pension account. Would the regulations allow a 10-year term?

A Yes, assuming the amount you borrow doesn't top $50,000, isn't more than half the value of your account, and will be repaid in equal quarterly (or more frequent) installments. Normally the maximum pension loan term is five years, but an exception applies for loans made to acquire a home. Your pension loan qualifies, since you're using the money to replace funds originally borrowed for this purpose.

Finding a former employeeQ We've been unable to get in touch with a former employee regarding her account in a pension plan that's being terminated. How should we proceed?

A Write a letter to the employee asking her to contact you about her benefits, and ask the IRS to forward it to her, if possible. Your letter must include the following statement: "In accordance with current policy, the IRS has agreed to forward this letter because we do not have your current address. The IRS has not disclosed your address or any other tax information and has no involvement in the matter aside from forwarding this letter. Your response to this letter is completely voluntary."

The IRS requires the employee's Social Security number to search its records. The agency will send your letter in its own envelope to her last known address but won't give you any information about her whereabouts or even whether the letter was delivered. Call your local IRS office for details.

The Social Security Administration (800-772-1213) offers a similar letter-forwarding service. It requires either a Social Security number or identifying information to help find the number-date and place of birth, father's name, and mother's full birth name.

The SSA imposes a $25 fee when the purpose of the letter is to inform the missing person of a right to money or property. The IRS makes no charge for this service.