What does it mean to a life insurance policy holder to convert from a stock to mutual insurance company?
"A stock insurance company is structured like a “normal” company. It has shareholders (that are the company's investors), who elect a board of directors, who select the senior executive(s), who manage the people who run the actual company. The directors (and thus the executives and employees) have a legal responsibility to manage the company in a way which is beneficial for the shareholders, since the shareholders are the ultimate owner of the company. A mutual insurance company is similar, except that the people holding policies are also the shareholders. That is, the policyholders are the ultimate owners of the company, and there generally aren't separate shareholders who are just “investing” in the company. These policyholder-shareholders elect the board of directors, who select the senior executive(s), who manage the people who run the actual company. In practice, it probably doesn't really make a whole lot of difference, since even if you're just a ""customer"" and not an ""owner"" of the company, the company is still going to want to attract customers and act in a reasonable way toward them. Also, insurance companies are generally pretty heavily regulated in terms of what they can do, because governments really like them to remain solvent. It may be comforting to know that in a mutual insurance company the higher-ups are explicitly supposed to be working in your best interest, though, rather than in the interest of some random investors. Some might object that being a shareholder may not give you a whole lot more rights than you had before. See, for example, this article from the Boston Globe, “At mutual insurance firms, big money for insiders but no say for ‘owners’ — policyholders”: It has grown into something else entirely: an opaque, poorly understood, and often immensely profitable world in which some executives and insiders operate with minimal scrutiny and, no coincidence, often reap maximum personal rewards. Policyholders, despite their status as owners, have no meaningful oversight of how mutual companies spend their money — whether to lower rates, pay dividends, or fund executive salaries and perks — and few avenues to challenge such decisions. Another reason that one might not like the conversion is the specific details of how the current investor-shareholders are being paid back for their investment in the process of the conversion to mutual ownership, and what that might do to the funds on hand that are supposed to be there to keep the firm solvent for the policyholders. From another Boston Globe article on the conversion of SBLI to a mutual company, “Insurer SBLI wants to get banks out of its business,” professor Robert Wright is cautiously optimistic but wants to ensure the prior shareholders aren't overpaid: Robert Wright, a professor in South Dakota who has studied insurance companies and owns an SBLI policy, said he would prefer the insurer to be a mutual company that doesn’t have to worry about the short-term needs of shareholders. But he wants to ensure that SBLI doesn’t overpay the banks for their shares. “It’s fine, as long as it’s a fair price,” he said. That article also gives SBLI's president's statement as to why they think it's a good thing for policyholders: If the banks remained shareholders, they would be likely to demand a greater share of the profits and eat into the dividends the insurance company currently pays to the 536,000 policyholders, about half of whom live in Massachusetts, said Jim Morgan, president of Woburn-based SBLI. “We’re trying to protect the policyholders from having the dividends diluted,” Morgan said. I'm not sure there's an obvious pros/cons list for either way, but I'd think that I'd prefer the mutual approach, just on the principle that the policyholders “ought” to be the owners, because the directors (and thus the executives and employees) are then legally required to manage the company in the best interest of the policyholders. I did cast a Yes vote in my proxy on whether SBLI ought to become a mutual company (I'm a SBLI term-life policyholder.) But policy terms aren't changing, and it'd be hard to tell for sure how it'd impact any dividends (I assume the whole-life policies must be the ones to pay dividends) or company solvency either way, since it's not like we'll get to run a scientific experiment trying it out both ways. I doubt you'd have a lot of regrets either way, whether it becomes a mutual company and you wish it hadn't or it doesn't become one and you wish it had."
"which means the current total is $548,100. Is that correct? Yep Unfortunately the ""current"" GM stock is different than the GM stock of 1989.  GM went bankrupt in 2011.  It's original stock changed to Motors Liquidation Company (MTLQQ) and is essentially worthless today.  There was no conversion from the old stock to the new stock. What do I do with these certificates? Can I bring them to my bank, or do I need to open an account with a stock company like Fidelity? See here for some instructions on cashing them in (or at least registering them electronically).  I've never dealt with physical stocks, but I presume that a broker is going to charge you something for registering them vs. direct registration, though I have no idea how much that would be. I read somewhere that I only have to pay taxes when I cash out these stocks. But are these rules any different because I inherited the stocks? You will pay capital gains tax on the increase in value from the time your father died to the time you sell the shares.  If that time is more than one year (and the stock has gone up in value) you will pay a 15% tax on the total increase.  If you have held them less than one year, they will be short-term capital gains which will count as regular income, and you will pay whatever your marginal tax rate is. If you sell the stock at a loss, then you'll be able to deduct some or all of that loss from your income, and may be able to carry forward losses for a few years as well. I did not catch that the stock you mention was GM stock.  GM went bankrupt in 2011, so it's likely that the stock you own is worthless.  I have edited the first answer appropriately but left the other two since they apply more generally.  In your case the best you get is a tax deduction for the loss in value from the date your father died." You have not lost value. It is just that the shares you owned, are now not tradable on US stock exchanges. You still have the value of your shares protected. In cases like de-listing of a stock, typically a trust (may be managed by a bank) is setup to help customers liquidate their stocks. You should try to search the relevant SEC filings for de-listing of this stock to get more details on whom to contact. Nobody here really answered your question.  The custodian of the 401k determines what funds and investment options are available within that 401k.  So if they're eliminating company stock as an option then they can absolutely make you sell out of it.    You may be able to do an in service rollover and transfer your funds to an individual ira but that's not particularly common among 401k administrators.   Aside from that I'd ask why do you want to hold company stock anyway?  Generally I'd advise against this as its imposing a ton of risk on your financial future.  If your company tanks you're out of a job, which sucks.  But it sucks even more if your company tanks and your 401k loses a ton of value at the same time.   Edit: I see you asked who benefits as well.  It may just be a situation of no benefit at all.  Perhaps the plan didn't have enough people investing in company stock to make the option cost effective.  Maybe the administrator decided that allowing people to take on that amount of risk was not in their best interest(it's not).  Could be a ton of reasons but it's unlikely the company did so out of greed.  There isn't a lot of financial benefit for them there. During a stock split the only thing that changes is the number of shares outstanding.  Typically a stock splits to lower its price per share.  Sometimes if a company's value is falling it will do a reverse split where X shares will be exchanged for Y shares.  This is typically done to avoid being de-listed from an exchange if the price per share falls below a certain threshold, usually $1.  Again the only thing changing is the number of shares outstanding.  A 20 for 1 reverse split means for every 20 shares outstanding the shareholder will be granted one new share. Example X Co. has 1,000,000 shares outstanding for a price of $100 per share.  It does a 1 for 10 split.  Now there are 10,000,000 shares outstanding for a price of $10 per share. Example Y Co has 1,000,000 shares outstanding for a price of $1 per share.  It does a 10 for 1 reverse split.  Now there are 100,000 shares outstanding for a price of $10. Quickly looking at the news for ASTI it looks like it underwent a 20 for 1 reverse split.  You should probably look at your statements and ask your broker how the arithmetic worked in your case. Investopedia links for Reverse Stock Split and Stock Split Securities or quite a few negotiable instruments can change title of ownership without any issue. Many at times the owner ship in implicit if you are holding a certain instrument. So for example in Stock its a fractional ownership in a company, this ownership transfers to the buyer from the seller without requiring any permission from the company.   In case of say Loans, One cannot transfer the loan to some one else without the Banks permission. Let's assume that the bonds have a par value of $1,000.  If conversion happens, then one bond would be converted into 500 shares.  The price in the market is unimportant.  Regardless of the share price in the market, the income per share would be increased by the absence of $70 in interest expense.  It would be decreased by the lost tax deduction.  It would be further diluted by the increase in 500 shares.  Likewise, the debt would be extinguished and the equity section increased.  Whether it increased or decreased on a per share basis would depend upon the average amount paid in per share in the currently existing structure, adjusted for changes in retained earnings since the initial offering and for any treasury shares. There would be a loss in value, generally, if it is trading far from $2.00 because it would be valued based on the market price.  Had the bond not converted, it would trade in the market as a pure bond if the stock price is far below the strike price and as an ordinary pure bond plus a premium if near enough to the strike price in a manner that depends upon the time remaining under the conversion privilege.   I cannot think of a general case where someone would want to convert below strike and indeed, barring a very strange tax, inheritance or legal situation (such as a weird divorce), I cannot think of a case where it would make sense.  It often does not make sense to convert far from maturity either as the option premium only vanishes well above $2.  The primary case for conversion would be where the after-tax dividend is greater than the after-tax interest payment. This is going to be a philosophical answer, but here it goes.  What is the purpose of an insurance? In my perspective, insurance is a way to protect yourself from risks in life you can not afford to take. Following this principle, most of the people do not have enough money to fix a Ferrari, or pay the medical expenses of a third party--so insurance against liabilities makes financial sense, but many can afford buying an equivalent car as they are insuring.  If you have enough money to buy an equivalent car, you are paying for a risk you can take yourself. Then, instead of paying the comprehensive fee which is used to pay the different accidents, the company's administrative fees and the shareholder profits; I would save your money in a separate account and use it as a self-insurance. That is at least what I do.  I even put other insurances and extended warranties, which respective risks I have decided to absorve; that way I diversify my fund. You or the broker place an order to buy the share with the stock exchange. There has to be a matching sell order by someone.  Once a match is made, you pay the money and get the share. At the end of the year, the mutual fund company sends you a statement like any other investment and it has a bunch of boxes that you copy into your tax return software.  Then you just check the box that says 'tax-exempt' and you're done. "First, you mentioned your brother-in-law has ""$100,000 in stock options (fully vested)"". Do you mean his exercise cost would be $100,000, i.e. what he'd need to pay to buy the shares? If so, then what might be the estimated value of the shares acquired? Options having vested doesn't necessarily mean they possess value, merely that they may be exercised. Or did you mean the estimated intrinsic value of those options (estimated value less exercise cost) is $100,000? Speaking from my own experience, I'd like to address just the first part of your question: Have you treated this as you would a serious investment in any other company? That is, have you or your brother-in-law reviewed the company's financial statements for the last few years? Other than hearing from people with a vested interest (quite literally!) to pump up the stock with talk around the office, how do you know the company is: BTW, as an option holder only, your brother-in-law's rights to financial information may be limited. Will the company share these details anyway? Or, if he exercised at least one option to become a bona-fide shareholder, I believe he'd have rights to request the financial statements – but company bylaws vary, and different jurisdictions say different things about what can be restricted. Beyond the financial statements, here are some more things to consider: The worst-case risk you'd need to accept is zero liquidity and complete loss: If there's no eventual buy-out or IPO, the shares may (effectively) be worthless. Even if there is a private market, willing buyers may quickly dry up if company fortunes decline. Contrast this to public stock markets, where there's usually an opportunity to witness deterioration, exit at a loss, and preserve some capital. Of course, with great risk may come great reward. Do your own due diligence and convince yourself through a rigorous analysis — not hopes & dreams — that the investment might be worth the risk." Your biggest concern will be what happens during the transition period. In the past when my employer made a switch there has been a lockout period where you couldn't move money between funds. Then over a weekend the money moved from investment company A to investment Company B. All the moves were mapped so that you knew which funds your money would be invested in, then staring Monday morning you could switch them if you didn't like the mapping. No money is lost because the transfer is actually done in $'s. Imagine both investment companies had the same S&P 500 fund, and that the transfer takes a week. If when the first accounts are closed the S&P500 fund has a share value of $100 your 10 hares account has a value of $1000. If the dividend/capital gains are distributed during that week; the price per share when the money arrives in the second investment company will now be $99. So that instead of 10 shares @ $100 you now will buy 10.101 shares @ $99. No money was lost. You want that lookout period to be small, and you want the number of days you are not invested in the market to be zero. The lockout limits your ability to make investment changes, if for instance the central bank raises rates. The number of days out of the market is important if during that period of time there is a big price increase, you wouldn't want to miss it. Of course the market could also go lower during that time. "So your goal is to sell out? If I'm understanding correctly. I say that without connotation. Since you want stock and the ability to be bought.   Your partner sounds like he wants reinvest back into the company and make it grow.   If you want ""profit"", I'd say find a different partner.   Again you personally can be profitable while still maintaining the company with a nonprofit status. Gotta pay employees." It looks like what you're calling a name change was registered as a merger that resulted in an exchange of stock.  If that's the case, then what you've been told is correct.  You've got one long-term sale and one short-term sale. Based a quick read of the Form 8937 that was filed, it looks like there were multiple entities involved in this event, more than one of which existed prior to it. https://www.mylan.com/-/media/mylancom/files/form%208937%20for%20mylan%20n%20v.pdf In this example, Client A has to buy shares to return them to Client B for his sale (closing Client A's short position).  Client B then sells the shares.  The end result is there are no shares within the brokerage clientele anymore, so Client A can't borrow them anymore.    The broker is just an intermediary, they wouldn't go out and acquire securities on their own for the benefit of a client wanting to short it, as they would be taking on the risk of the opposite position.  This would be in addition to the risk they already take on when allowing people to short sell -- which is that Client A won't have the money to buy the shares it owes to Client B, in which case the broker has to make Client B whole. Every 401(k) has managers to make the stock choices.  They all have different rates.   You want to see that fidelity or Vangard is handling your 401(k).(and I am sure others)   If you have a mega bank managing your funds or an insurance company odds are you are paying way to high management fees. So find out, the management fees should be available should be less than 1%.  They can get as high as 2%...Ouch