payment to withdrawing members
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payment to withdrawing members It really isn't an issue with any broker.
Some may tranfer with no cost and some may charge. The person withdrawing
should check it out with the broker s/he has confidence in. It might be a
good idea for the person to call several before the decision is
made.
I understand that paying withdrawing members in stock is the best option but how is this done with members that don't have brokerage accounts? Most of the members in my club are young and this is their first experience with investing. I'm sure this is common with a lot of clubs but I haven't seen this answered before. They have to open their own account. My club uses TD Ameritrade. I have only done two withdrawals so far. One member had an existing account with TD Ameritrade and the other opened an account with TD Ameritrade for the transfer. It only took a couple of days to do the transfer and they were charged no fee for the transfer since it stayed with the same Broker. John Rice ABODI Investment Club From: Robert Davenport <rdavenpo44@hotmail.com> To: club_cafe@bivio.com Sent: Tuesday, February 11, 2014 6:56 PM Subject: [club_cafe] payment to withdrawing members I understand that paying withdrawing members in stock is the best option but how is this done with members that don't have brokerage accounts? Most of the members in my club are young and this is their first experience with investing. I'm sure this is common with a lot of clubs but I haven't seen this answered before. Opening an account is easy and if it is at the same brokerage as the club the transfer is easy. I guess I don't understand the issue. The withdrawal forms their new brokerage account so what's the barrier? On Tuesday, February 11, 2014, Robert Davenport <rdavenpo44@hotmail.com> wrote: I understand that paying withdrawing members in stock is the Most brokers will not transfer stock to another broker unless the sending and receiving accounts are titled the same. If a club is using broker A and a withdrawing member uses broker B, the member will have to create an account at A, receive the stock into that account and then transfer it to broker B. This cumbersome process gives the brokers a little more protection against errors (both accidental and intentional). Ira Smilovitz
On Tue, Feb 11, 2014 at 12:36 PM, Connie Humble <chumble@sdplains.com> wrote:
thanks for the answers. We only had one person withdrawal early in the club and paid in cash. I didn't know how fast the brokerage would open up an account for a withdrawing member. Thanks again. Broker's can open an account in a day or two once you complete the paperwork. Ira Smilovitz On Wed, Feb 12, 2014 at 2:56 PM, Robert Davenport <rdavenpo44@hotmail.com> wrote: thanks for the answers. We only had one person withdrawal When we have a withdrawal we ALWAYS pay off with dollars. Bob Anderson, SFLIC Sent from my iPad
There are significant benefits for the club to tranfer shares, it really is an easy process to get departing members/brokerages to complete... And withdrawal process being slightly different but still easy. Your club should reconsider only cash departures. Just my $.02 Be Well. Irina Sent from my iPad
Yes, it is fairly easy to do a transfer. Always paying off in dollars probably means your club sold something to raise the cash. Depending on the dollar amounts involved, selling (presumably at a gain) is forcing everyone to incur capital gains. If we are talking about 10's or 100's of capital gains per person then probably not a big deal; if we're talking about 1,000's then it becomes serious. Doing a stock transfer defers those capital gains. For the transferee it will be when s/he sells the stock received in the transfer. For the remaining members in the club it will be when they make a (partial) withdrawal or sell transferred stocks.
We shouldn't let taxes control our decision making but we should be cognizant of them and at least consider the consequences.
Bob Mann
On February 13, 2014 at 3:32 AM Irina Clements <irina39@verizon.net> wrote: Irina--Please share the benefits to the club. Heretofore, we have paid in cash as well. We have a longterm member who has submitted a withdrawal request effective December 31, 2013. We are in the process of withdrawing that member. So if it is a better way, I'd like to hear. Thanks you. Let's get out of the house! Sis Sellers From: Irina Clements <irina39@verizon.net> To: "club_cafe@bivio.com" <club_cafe@bivio.com> Sent: Thursday, February 13, 2014 2:32 AM Subject: Re: [club_cafe] payment to withdrawing members There are significant benefits for the club to tranfer shares, it really is an easy process to get departing members/brokerages to complete... And withdrawal process being slightly different but still easy. Your club should reconsider only cash departures. Just my $.02 Be Well. Irina Sent from my iPad
Having done a number of withdrawals via stock let me expand. Immediately on receipt of resignation, tell departer to obtain acct w club brokerage & provide acct #. Specify that departer cannot be paid funds until acct # received. 1. The partnership agreement has the remaining members decide how to pay out the departer. 2. The treasurer prepares a document usually spreadsheet that has 3 or 4 options for mixes of stock and cash. For example. $10,000 to departer 100 shares ticker AAA 50 shares ticker BBB 12 shares ticker CCC $75 cash OR 50 shares ticker DDD 50 shares ticker CCC $350 Note use reports to develop which stock combinations to propose to transfer. Transfer stocks locks in gains/ losses to club but gives departer new stock basis. Can be opportunity to prune portfolio, give stock watcher "his/her" stock,decrease position,etc. 3. At the next meeting members discuss & vote on options. Note my club removes access to bivio on receipt of resignation letter. Usually best to leave $100 or $50 or less if possible in combination w stock to allow for stock price fluctuations. 4. Upon decision write letter to broker explicitly stating tickers (and/or lots) #shares to departer along w departer brokerage acct#. Get notorized w signatures of all folks on club broker acct. (my club that is treasurer & asst treas. another club is treas, asst treas & pres). Important to do this correctly in accordance w broker protocol to ensure timely broker transfer. 5. Upon stock transfer execution to departer, write letter to departer detailing transactions timeframe and costs and enclosing check, withdrawal report and letter. Depending if amicable, registered return receipt. 6. Upon completing taxes the following tax.season, provide form k to departer as they have no bivio access. Hope this helps. Thank you Irina. This is very comprehensive. 1. Only transfer stocks in which the club has a gain. It is in everyones best interests to do this. Things don't work out to everyones benefit if you transfer stocks where the club shows a loss. It's better to sell those and give the withdrawing member the cash.I'd only add a couple of things. Laurie Frederiksen
Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Follow Us on Google+ Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe . All let me echo strongly Laurie's comments on identical dates for stock valuation & withdrawal. As a new treasurer, I learned at the school of hard knocks. Ask bivio /Ira and Laurie! Very responsive w a sense of urgency! No question is stupid! Seriously! Be Well. Irina Sent from my iPad
Thanks so much. Let's get out of the house! Ruthy Sellers From: Irina Clements <irina39@verizon.net> To: club_cafe@bivio.com Sent: Friday, February 14, 2014 8:34 AM Subject: [club_cafe] Re: payment to withdrawing members Having done a number of withdrawals via stock let me expand. Immediately on receipt of resignation, tell departer to obtain acct w club brokerage & provide acct #. Specify that departer cannot be paid funds until acct # received. 1. The partnership agreement has the remaining members decide how to pay out the departer. 2. The treasurer prepares a document usually spreadsheet that has 3 or 4 options for mixes of stock and cash. For example. $10,000 to departer 100 shares ticker AAA 50 shares ticker BBB 12 shares ticker CCC $75 cash OR 50 shares ticker DDD 50 shares ticker CCC $350 Note use reports to develop which stock combinations to propose to transfer. Transfer stocks locks in gains/ losses to club but gives departer new stock basis. Can be opportunity to prune portfolio, give stock watcher "his/her" stock,decrease position,etc. 3. At the next meeting members discuss & vote on options. Note my club removes access to bivio on receipt of resignation letter. Usually best to leave $100 or $50 or less if possible in combination w stock to allow for stock price fluctuations. 4. Upon decision write letter to broker explicitly stating tickers (and/or lots) #shares to departer along w departer brokerage acct#. Get notorized w signatures of all folks on club broker acct. (my club that is treasurer & asst treas. another club is treas, asst treas & pres). Important to do this correctly in accordance w broker protocol to ensure timely broker transfer. 5. Upon stock transfer execution to departer, write letter to departer detailing transactions timeframe and costs and enclosing check, withdrawal report and letter. Depending if amicable, registered return receipt. 6. Upon completing taxes the following tax.season, provide form k to departer as they have no bivio access. Hope this helps. |
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