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Subject:  Re: ESOP Rollover in Stock? Date:  1/25/2000  12:08 PM
Author:  phooley Number:  25976 of 127753

I will be receiving a distribution from an ESOP in the near future. The actuarial handling this has informed me that it will be distributed in shares of stock made out in my name.

What is the proper way of rolling this over to my IRA which I have recently established without incurring tax penalties.

My concern is that the certificates will be in my name and not a direct tranfer to my IRA.

Any help/advice would be very much appreciated. I have contacted my tax advisor, the IRS and my broker and I get a different story from each....HELP! Anyone "been there, done that?"

I did such a transfer in 1995. I wouldn't say I had any "trouble" -- but as I look at the 1099-R I received, and the Form 1040 I submitted, I think it would be better if I didn't elaborate too much on the details of what I did.

I sold the stock, and put the proceeds (actually only part of it, because this ESOP has included a "contributory" amount) in an IRA.

At the time of the distribution, my employer provided generic information, plus an accounting that explained the (maximum) amount that could be rolled into an IRA. I depended heavily on this information.

Early in 1996, I received a 1099-R. Let me just volunteer what my 1099-R looked like -- you should talk to your own tax advisor.
Box 1, Gross distribution = $(several grand)
Box 2, Taxable amount = $(slightly smaller amount)
Box 5, Employee contribs. = $(about a grand)
Box 6, Net unreal. apprec. = $(just a few C-notes)
Box 7, Distribution code = 1

All other boxes were either blank or contained "$0.00".

I eventually received a Form 5498 from the IRA custodian, showing the amount of my "Rollover IRA Contributions" for the year.

I used TurboTax or the equivalent that year, and didn't receive any unexpected mail from the IRS. But I'm a little fuzzy on some of the details. The stock had appreciated before I sold it, I think the 1099-R differed slightly from the statement I had received with the distribution, etc.

So I believe you can do essentially what you want to do, but the devil is in the details.

Your query seemed to imply you wanted to somehow end up with an IRA containing the same number of shares in the same company as what the certificate said. AFAIK, you cannot do this directly, and certainly not as a transfer.

Hope this helps,
Phooley (switching to a professional tax preparer for 1999 and future...)
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