Unlike traditional I.R.A.'s, the Roth variety offers tax-free distributions as long as the assets have been held in the account for five years.

In the next two years, you receive $2 in tax-free distributions.

The company said the spinoff, through a tax-free distribution of stock to shareholders, should be completed by the end of the year.

He added that a tax-free distribution of stock to SmithKline shareholders "seems to be of special interest," because it would avoid payment of capital gains tax.

Like much else in the 2001 tax package, the provision for tax-free distributions from the 529 accounts was scheduled to expire in 2010.

The Roth IRA, which features nondeductible contributions and tax-free distributions.

It also allowed use of the accounts' tax-free distributions for elementary and secondary school tuition and expenses as well as for higher education.

"We define a pure spinoff as a voluntary, tax-free distribution of newly traded common shares in a subsidiary to the parent's stockholders," the authors said.

Sometimes investors receive a return of capital or a tax-free distribution of additional shares of stock or stock rights.

Harcourt General Inc. said yesterday that it planned to spin off its General Cinema theater operations in a tax-free distribution to shareholders.