401 K Funds

Q: My brother died in 1982 and left his estate to his wife in a trust that was to distribute income earned from his assets over her remaining lifetime. She died in 1997, and at that time I came into possession of the stocks that he had willed to me but were to remain in the trust to give his widow income. What is my tax basis in these shares? The value when my brother died in 1982, or when his widow died? --A.N.

Checked on your 401(k) retirement plan mutual funds lately? The year isn't even two months old, but markets have been so volatile that performance of popular 401(k) stock funds is all over the map. Indeed, the performance gulf between the best and worst funds in The Times' regular tally of the largest 401(k) funds is a whopping 34 percentage points year-to-date. Of course, 401(k) assets are supposed to be long-term assets.

Q: My daughter just graduated from college as a chemical engineer and has started working for an oil company at a very good salary ($54,000). She is buying a new car but, because she has a limited credit history, the two lenders we consulted added three percentage points to their normal car loan rate. That's even with me, her father, as a loan co-signer.

Economic growth was once a sure signal that more Americans would be collecting regular paychecks, but those days may be gone forever, financial pundits say. Internationalization, technological advances and a more thorough effort to maximize the bottom line are creating new and less permanent relationships between employers and employees.

How safe is your company pension? Changes in the business climate, troubles at the Pension Benefit Guarantee Corp. and an increasing shift toward uninsured pension plans have made this question far more difficult to answer. Yet the answer is vital to Americans whose main source of retirement income is likely to be their company-sponsored plan. "You take the person who is currently employed and 40 years of age.

QUESTION: Recently you said that shares of stock given as a gift to another carry as the tax basis the original price, plus brokerage fees, paid by the giver. Does this same principal apply to commercial and residential real estate?--P. R. K. ANSWER: Our tax experts say yes, the general principal still applies. However, the issue is too complicated to leave it with such a simple answer. To begin with, let's review the rules governing taxes and gifts.

Health insurance and pension plans will become more easily available to millions of Americans and simpler to take with them when they switch jobs, thanks to a pair of complex bills nearing enactment by Congress. The goal, Treasury Secretary Robert E. Rubin said Thursday, is to give Americans more security "as they move from job to job in a changing economy."

The largest U.S. mutual funds--popular with investors and often found in company 401(k) plans-generally weathered the first quarter better than the average domestic fund. Here are the largest funds, in order of first--quarter performance, as well as a selection of funds common in Southern California 401(k) plans. Included are returns for other periods and their categories and "star" ratings from Morningstar.

Sometimes the best investment insight can be gained by following what the experts do, not what they say. Consider the case of Morningstar Inc., a Chicago research firm that has gained a solid reputation for rating individual mutual funds. If you heeded Morningstar's recommendations liberally and bought every fund with a superior five-star rating, you would wind up with more than 150 holdings spread across virtually every investment category.

Q: I cannot figure out how much Social Security I am entitled to get. I began drawing benefits on my own account at age 62. I am now 65 years old and newly widowed. They tell me I am entitled to full widow's benefits. Yet when my sister, whose husband is still alive, turned age 65, she did not get full spousal benefits because she had begun her own benefits at age 62. It doesn't make sense to me. --R.B.