Dear John: I’ve worked at Budweiser for over 20 years and I have a 401k retirement plan invested in Bud stock. A lot of us have taken loans against the 401ks. We know InBev, which has taken over the company, doesn’t have a 401k for employees. Could you please tell us what we’re looking at? N.D.
Dear N.D.: The good news, of course, is that the value of your holdings went up substantially when Anheuser-Busch, Bud’s owner’s name, was acquired. But since that money is tied up in a tax advantaged retirement plan, it’s like being rich but not being able to pay your bills.
I contacted both Budweiser and InBev and got the same answer – neither had really thought about your situation. But now that you’ve asked, I hope the companies are working on the dilemma.
Of course, if InBev keeps the plan going everything will stay the same.
Avery E. Neumark, partner with the Rosen Seymour Shapss Martin & Co accounting firm in New York, says the firms probably won’t make changes to the plan right away. “In my experience, usually it’s two years or so before anything happens,” he says.
If InBev doesn’t do any of the above and the Budweiser plan is terminated, then your loans will be deemed a distribution and you’ll have to pay tax. Hopefully it won’t get to that – especially now that you and I have brought up the issue.
Dear John: I recently rolled over a 7-month CD at a bank that’s rumored to be in trouble. This CD is for one of my children. Is it safe? J.M.
Dear J.M.: Yes, yes, yes.
Even if the bank is not around when the CD comes due, the money will be sitting safely on the books of whichever financial institution takes it over. The Federal Deposit Insurance Corp. guarantees every depositor for up to $100,000.
Your question gives me a chance to address something – the $100,000 rule. That limit applies to all of your accounts at one bank.
John and Susan Smith can co-own one account and be covered for $100,000 each. That’s $200,000 coverage in case the bank fails. But if the couple have another account with, say, $40,000 in it, the amount would exceed the $200,000 per couple (or $100,000 for an individual) coverage. So if the bank fails they’d be out $40,000.
But there are ways around this limit.
Let’s say John and Susan Smith co-own one account and are covered for $200,000. John Smith can have an account on his own and get another $100,000 coverage. Susan Smith can do the same.