Q. I work for the city of Clearwater and contribute 8 percent of my salary to the pension plan. According to our human resources department, there is no Social Security taken out and I will not be eligible for Social Security benefits. Is there a way to build Social Security credits for myself without getting another job? I would like to know what I can do to improve my retirement.
A. You could qualify for Social Security by working, but the potential benefit may be so small that it would not be worth the effort. Before looking for a job or starting your own business on the side, call the Social Security office nearest you and make an appointment to discuss your situation.
Social Security benefits are substantially reduced for people who have pensions from jobs that were not covered by Social Security. Most likely you would not be eligible for a Social Security benefit based on your spouse's earnings record and any benefit you might become eligible for on your own work record would be small. But it is worth checking out, especially if you worked elsewhere and paid Social Security taxes before you took your city job.
Most likely your best bet for improving your retirement income will be saving and investing on your own. If you are not contributing $2,000 a year to an individual retirement account, start now. You have until April 16 to make a contribution for 2000. In addition, if you are married, you can contribute $2,000 to an IRA for your spouse.
If you are eligible, I recommend that you contribute to a Roth IRA rather than a traditional IRA. Contributions to a Roth are not deductible, but when you take the money out at retirement, you will not owe any taxes. You can make a full $2,000 contribution if your adjusted gross income is below $95,000 if single or $150,000 if married.
For additional savings, I suggest a taxable account invested in a tax-efficient mutual fund such as an index fund.
Q. My stocks are in joint tenancy with my sister under my Social Security number for taxes. If I die first and she sells the stocks, what will her cost basis be: What I paid for them or a stepped-up valuation at the date of death? What effect would joint tenancy have on the stepped-up basis?
A. If you put up all the money to buy the stocks, their full value will be included in your estate. That means your sister will get the benefit of a full stepped-up basis to the value at the time of your death.
In a joint tenancy with a spouse, only half the account gets a stepped-up basis. In a joint tenancy with anyone other than a spouse, the key issue is who provided the money to make the investment. If your sister provided half the money, then only half the account would be included in your estate and receive a stepped-up basis.
Q. I have two stocks I had written off as a loss because there were no quotes available and the companies were failing. They are listed on the monthly statements from my broker and the last statement showed a quoted price. I would like to sell them if that is possible. Can they be sold at zero cost? Would there be a letter or notification to the IRS?
A. Talk to your broker about selling the stocks. If you previously wrote off the loss, your current tax basis in these investments is zero. Securities sales are reported to the IRS and if you have a net gain, it will be taxable.
Q. I have a $2-million estate, most of which is in a revocable trust. I also own two certificates of deposit with my niece and nephew as beneficiaries. Are these CDs subject to estate taxes?
A. Yes. Everything counts in determining the total value of your estate whether or not it passes through probate. Assets left to a spouse or charity are then deducted. Also, as you probably know, $675,000 of your estate will be exempt from estate taxes.
Online money map
Are exchange-traded funds right for you? Nasdaq (http://quotes.nasdaq.com/asp/ETFsHome.asp) offers details about how these work and a list of the available funds. The funds are an alternative to stock-index and sector mutual funds.
_ Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731, or to huntleysptimes.com by e-mail.