The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  http://boards.fool.com/note-of-caution-some-employees-would-up-with-esop-11190070.aspx

Subject:  Re: 401k to IRA Date:  8/25/1999  11:39 AM
Author:  telegraph Number:  13437 of 75383

Note of caution: Some employees would up with ESOP (Employee Stock Ownership Plan) stock that would up in their 401K plans (as most ESOP plans ended when the feds changed the tax rules for companies). If this is the case, you do not want to roll this over into an IRA when you retire, but wait(up to five years by fed rules) to take it at the company cost and pay tax on that. Keep it a year, and pay only 20% cap gains. Rolling it into an IRA may hit you with 28% or higher tax bracket.

However, it if was stock your money bought, then most 401K plans will sell everything, and transfer cash to another rollover IRA.(with no big commissions to pay). Also, if you are retiring from company, consider lightening up very significantly on company on stock. Too many people have 25% or more of assets in company stock - too risky for retired people to have that many eggs in one basket. This is perfect opportunity to diversify if the company stock is in a 401K - no transaction cost or tax payments to move to something else.
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us