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Subject:  Re: Roth: Is this an Option? Date:  4/18/1998  1:48 PM
Author:  KATinChicagoland Number:  3582 of 127530

<<i would like to make a $2000 roth contribution and then use the money to purchase employee stock options in my company which currently is privately held. the options are likely to become very valuable when the company goes public.

the problem is, after speaking to several mutual fund companies, brokers and banks, that nobody is willing to handle non-publicly traded securities.

question 1:
can employee stock options be purchased with roth contributions and does anyone know who will allow me to do this so that i can shelter potential gains on these options in a roth ira?

question 2:
if i can't do this before the company goes public, can i direct a roth custodian to purchase stock directly from the company at my option price after the company goes public?>>

Your question is a little confusing. Employee stock options can never be purchased; by definition the company grants them to employees. If you are thinking you can purchase employee stock options you are mistaken.

If you mean that you want to use IRA money to *exercise* an employee stock option that has been granted to you, that's not possible either. You can't transfer the option to the IRA, and you can't transfer the stock to the IRA after the option has been exercised.

There's no inherent prohibition against having your IRA purchase stock directly from the company, but it can't do so in connection with the exercise of an employee option, regardless of whether the company is public or not.

KAT in Chicagoland
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