Is it better to take a lump sum now or an annuity check later? Dear Liz: My former employer is offering the one-time opportunity to receive the value of my pension benefit as a lump-sum payment. The other option is to leave the money where it is and get a guaranteed monthly check from a single life annuity when I reach retirement age. I am 40 and single, and I have been investing regularly in a 401 (k) since graduating from college. I have minimal debt aside from a car payment. When does it make financial sense to take a lump sum now instead of an annuity check later? Answer: Theoretically, you often could do better taking a lump sum and investing it rather than waiting for a payoff in retirement. That assumes that you invest wisely, that the markets cooperate, that you don't pay too much in investing expenses and that you don't do anything foolish, like raid the funds early. That's assuming a lot. Another factor to consider is that the annuity is designed to continue until you die. It's a kind of "longevity insurance" that can help you pay your bills if you live a long life. Some financial advisors will encourage you to take the lump sum, since they may be paid more if you invest it with them. Consider consulting instead a fee-only financial planner who charges by the hour - in other words, someone who doesn't have a dog in this particular fight. The planner can walk you through the math of comparing a lump sum to a later annuity and help you understand the consequences of both paths. This is a big enough decision that it's worth paying a few hundred bucks to get some expert advice. Capital gains on home sale profit Dear Liz: My wife and I are trying to sell our home, which has been our primary residence for six years. I am very concerned about the $500,000 capital gains exclusion. As I understand it, the exclusion would mean we wouldn't have to pay taxes on our home sale profit. But we are confused about this exemption being tied to the "Bush tax cuts" that could expire Dec. 31. If we sell our home after that, could we lose the exemption? Answer: No. The law creating a capital gains exemption for home sales went into effect May 6, 1997. It's not tied to the tax cuts approved during President George W. Bush's tenure that are set to expire at the end of the year. So people who live in a home for at least two of the previous five years will still be able to avoid paying capital gains on their first $250,000 of home sale profit (or $500,000 for a married couple). Another tax you won't have to pay is a new 3.8% levy on what's called "net investment income." Some emails circulating on the Internet falsely claim that the tax, which is scheduled to kick in Jan. 1, is a real estate sales tax. In reality, it's a potential tax on home sale profits that exceed the capital gains exemption limit, as well as on other so-called unearned income, including investment and rental income. If your home sale profit doesn't exceed the capital gains exemption limit, you won't owe the new tax. If your profit does exceed the limit, the excess amount would be added to your adjusted gross incomes to determine whether you'd have to pay it. The 3.8% tax would be levied only on people whose adjusted gross incomes are more than $200,000 for singles and $250,000 for married couples. Website rates 401 (k) plans Dear Liz: I just turned 65 and have left my job for a part-time position. My 401 (k) is being transferred to a new investment company that I've never heard about before. Their fees seem to be lower. Is there a website where I can compare different firms? Answer: There is. BrightScope at http://www.brightscope.com analyzes and rates the 401 (k) plans of more than 46,000 companies. The ratings take into account total plan cost, investment options and the company match, among other factors. You find the ratings by entering the name of your employer, rather than that of the 401 (k) manager. If you investigate and decide you're not comfortable with the new investment manager, you should have the option of rolling your account into an IRA, since you've left your old job.