All,

This will be my first full withdrawals from my club since we
switched over from bivio.

Here is my question: When I was using NCA (desktop) software
it was very easy to do a withdrawal because the valuation
dates were only 13 times a year (the 12 monthlys and the
year-end) of course there would be more if we had full
withdrawals in the course of the year but the bottom line is
NCA had very valuation dates. And it was easy to capture an
old valuation date and use it.

Now bivio sets their valuation date everynight. And we will
not complete their full withdrawal (per our PA) for approx.
2 months or 60 valuation dates from the actual date used.
(We met last night and accepted 2 full withdrawals.)

Since we need not complete the withdrawal tonight. How do I
do this? If I take the withdrawal out of cash -- you will
have a negative balance.

Also I would like to get these withdrawing partners off the
books -- because they don't want to continue to read the
message we post on club site.

Any help or suggestions would be appreciated.

Sincerely,
Kevin Gillogly
Silver Spring, MD

Kevin,

Just to make sure that I understand what you are saying.... You want to
establish the value for these withdrawals now, and pay off the
individuals in 60 days. When you enter the withdrawal in bivio, you have
to select the both the transaction date and the date you want to use for
the valuation. bivio will value the members' accounts as of the
valuation date that you pick. Select the suspense a/c rather than your
cash account for the account to be used. That will keep your cash
account from going in the red. Then, when you are ready to pay off the
individuals, you make a transfer from your cash a/c to the suspense a/c.
This will make your cash balance.

That's how you do it, but I can't refrain from saying that I think you,
your club, and your agreement are treating your outgoing members very
badly. To have them wait for 60 days, while their funds earn no income
is manifestly unfair.

Rip West
Saint Paul, MN

Kevin,

In answer to your other question, when you withdraw these partners, you
will be given the option to prohibit them from accessing or getting
email messages.

One other point, I know in the past you have used appreciated stock for
withdrawals. Did you consider that?

Rip West
Saint Paul, MN

Rip West wrote:
> Just to make sure that I understand what you are saying.... You want to establish the value for these withdrawals now, and pay off the individuals in 60 days.

That's correct.

> Select the suspense a/c rather than your cash account for the account to be used. That will keep your cash account from going in the red. Then, when you are ready to pay off the individuals, you make a transfer from your cash a/c to the suspense a/c. This will make your cash balance.

Thanks for the tip on using the suspense acct. I have not
used it in the past. We have yet to decide if we will give
them cash or appreciated stock. I tend to favor appreciated
stock -- because of what you and Jerry wrote in the past.

Of the two people leaving (full withdrawals) one is owed
$500 and the other $2200. So I was thinking of giving cash
to the $500 person and appreciated stock to $2200 person.


> That's how you do it, but I can't refrain from saying that I think you, your club, and your agreement are treating your outgoing members very badly. To have them wait for 60 days, while their funds earn no income is manifestly unfair.

Rip, I agree and I see your point. That's what we get for
using the NAIC "boiler plate" PA. At our next meeting (four
weeks from yesterday) we will finish our reveiw of our
portfolio and be ready to shift stock to the $2200 person.
And while I agree with you that we should not have them wait
60 days, I believe the club (of mostly newbies) understand
the process and therefore reviewing your work and Jerry's
work is the focus of next month's education.

So for me to make a decision right now and miss an excellent
club learning opportunity is not in the best long-term
interest of the club. So yes 60 days is too long but the
club needs to understand this process too.

Sincerely,
Kevin Gillogly
Silver Spring, MD
>
> Rip West
> Saint Paul, MN

Rip West wrote:
> In answer to your other question, when you withdraw these partners, you will be given the option to prohibit them from accessing or getting email messages.

Is there a way to do that now -- before I run their
withdrawals? I want them (and they want to be off of our
email list. No use having their inbox cluttered with club
stuff when they are leaving the club.)

> One other point, I know in the past you have used appreciated stock for withdrawals. Did you consider that?

I want us to appreciated stock. But the last time we did
that was almost two years ago. All but one of the current
members were not part of the club then. So this is all new
to them.

The final part complicating the withdrawal is we have not
done a good job of monitoring our portfolio. That is my #1
club goal for 2005. And the others are seeing the benefit of
it now that we are faced with multiple major decisions
(portfolio review and full withdrawals).

We went through our portfolio last night -- as part of our
annual review of our stocks. But we only got through half of
them. (We also have 4 stocks that have done well. So we have
some "good" problems in our portfolio.) So this will be a
slooow process for my club.

Finally, Rip, thanks for being here. You are a real treasure
for us treasurers. (Man that was a bad pun.)

Kevin Gillogly
www.bivio.com/hdic

Hi again, Kevin,

With regard to waiting 60 days after the withdrawal date to pay your
departing members, you said....
<<
Rip, I agree and I see your point. That's what we get for using the NAIC
"boiler plate" PA.
>>

I'm pretty sure the NAIC recommended PA does not say that at all. In
fact, it says.......
<<
The amount being withdrawn shall be paid within 10 days after the
valuation date used in determining the withdrawal amount.
>>

See paragraph 20 at http://www.better-investing.org/articles/web/3462

As for barring them access and keeping them from seeing emails, etc
before you have paid them off, you say....
<<
Is there a way to do that now -- before I run their withdrawals? I want
them (and they want to be off of our email list. No use having their
inbox cluttered with club stuff when they are leaving the club.)
>>

The IRS and the NAIC standard agreement [and I] consider them as
partners until they have been paid. Paragraph 16b says......
<<
The removal shall become effective upon payment of the value of the
removed partner's capital account, which shall be in accordance with the
provisions on full withdrawal of a partner noted in paragraphs 18 and
20.
>>

You offer as a reason for the 60 day delay .....
<<
So for me to make a decision right now and miss an excellent club
learning opportunity is not in the best long-term interest of the club.
So yes 60 days is too long but the club needs to understand this process
too.
>>

The suggested way that the process is supposed to work does not deprive
the membership from 'an excellent learning opportunity', nor should you
be making the decision alone. The normal process is for the club to
accept the resignations at the first meeting after withdrawal notice is
given [if it is given at a meeting, that is the meeting of acceptance].
The members should be told, then, to open an account with the club's
broker. At that meeting, a committee should be appointed to select the
best way to fund the withdrawals, including picking the stocks to use,
if that is the decision. At the next meeting, the committee reports and
the club either accepts their recommendation, or amends it. Within a few
days of that meeting the departing partners should be paid. The
selection of the securities to transfer or sell should not be arduous.
If you have losers that no longer appeal, they should be sold. If, on
the other hand, you have appreciated stocks that you still like, you can
transfer those to the departing members, and gradually replace them with
your monthly contributions, thus increasing your tax basis in those
stocks. I have been in clubs where, when the decision was difficult, the
most appreciated stocks were used, since they would soon be replaced.

So, you can offer me reasons for the delay, but you can't change my
mind. <g> I remain convinced that the withdrawing partners should be
paid off within days of the valuation date used to determine the amounts
to be paid to them. And it would be a great learning experience for your
club to grapple with that problem, discuss it, and change your agreement
and operating procedures.

Regards,

Rip West
Saint Paul, MN