Word: stocking
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Dates: during 2000-2000
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Jobs' compensation history is unusual, to say the least. He's been working for $1 a year since he returned in 1997 to the company he co-founded. By then he'd already sold his Apple stock in disgust. Given all that, Woolard thinks the board got a bargain. "I tried to get him to take options when the stock was at $20 a share," he recalls, "and that stock today would be worth around half a billion dollars. So, yes, he's worth...
...once obscure tax strategy that makes the most of your 401(k) dollars is going mainstream. The move keys on an IRS provision that lets you take possession of company stock in your 401(k) plan instead of rolling it into a traditional IRA when you change jobs or retire. The resulting savings can be staggering, and thanks to the crush of corporations that juice employee retirement accounts with their own shares these days, more people than ever stand to benefit...
...nothing in it for the IRA industry. But financial planners I've spoken with endorse the strategy with such vigor that you have to worry about hype. This isn't a no-brainer. And the pitfalls include the risk that you'll wind up overly concentrated in one stock. You also have to pay a tax up front...
...winner for fat-cat execs (as usual) who are sitting on highly appreciated employer stock in their 401(k)s and don't need the money to live on. But the run-up in stock prices over the past five years means a lot of working stiffs will measure up too. If during this time you've contributed diligently to a plan--especially if your employer matches all or part of your contribution--you could easily have $750,000 or more at retirement. It's the appreciation in the company shares that matters. "We see it all the time," says...
...have $500,000 in company stock, with a cost basis of $100,000. If you are in the 31% tax bracket and take possession of the stock, you will immediately owe $31,000. But the eventual tax on that $400,000 will be just $80,000 for a total tax bite of $111,000. In an IRA rollover the total bite would be $155,000. And by taking possession, you can later pass the stock on to heirs at a stepped-up basis. Your heirs will pay capital-gains tax on the difference between the cost basis and the market...