No. of Recommendations: 0
401(k)s, like regular IRAs, are tax defered - the money that goes into them is before taxes, and what you get out when you eventually take your distribution is taxed at whatever your income tax rate is at the time.

I've never heard of the restriction on the stock that you mention. Some brokerage companies (e.g. Fidelity) offer rollover IRA accounts that allow you to have your assets invested in all different types - mutual funds, stocks, bonds, money markets, etc. One possible reason you couldn't move assets to a rollover "in-kind" would be the case of a mutual fund not available through that company. You'd have to liquidate and transfer the cash. I would
expect the stock of a publicly traded company to be transferable in-kind. If your company is not yet public, they probably could impose whatever restriction they want on transfer of the stock...

Perhaps the restriction on the stock in your 401(k) is part of a vesting plan. When employers provide matching contributions to the account, a vesting period is often imposed. The money they contribute is not completely "yours" until the period expires several years later, with a percentage becoming vested over each year. Perhap the restriction on what you can do with the stock is on the unvested portion?

Cheers,
FelineAvenger

(Disclaimer: I'm not a financial professional, this is just a lay person's understanding of how it works...)
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement