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Author: kaliban Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121602  
Subject: Can one transfer non-tradable stock into a Roth? Date: 4/16/2001 3:33 PM
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I have stock in my company, which is currently a privately held corporation, and I would like to transfer $2000 worth of this stock into a Roth. Alternately, I could buy an additional $2000 worth of the stock through a Roth.

The problem is that so far I can not find an administrator to play along. Most seem equipped only to deal with publicly traded securities. How can I purchase stock in a privately held company or transfer stock in a privately held company to a Roth IRA?

Thanks,

-kaliban
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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50356 of 121602
Subject: Re: Can one transfer non-tradable stock into a R Date: 4/16/2001 4:18 PM
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kaliban: "I have stock in my company, which is currently a privately held corporation, and I would like to transfer $2000 worth of this stock into a Roth. Alternately, I could buy an additional $2000 worth of the stock through a Roth.

The problem is that so far I can not find an administrator to play along. Most seem equipped only to deal with publicly traded securities. How can I purchase stock in a privately held company or transfer stock in a privately held company to a Roth IRA?"


All new contributions to any IRA, whether Roth or traditional, must be cash; assets already in an IRA may be rolled over or transferred to another IRA. Thus, you cannot transfer stock that you own directly (i.e., outside an IRA or certain other retirement plans) to an IRA, regardless whether the stock is publicly traded or in a privately held corporation.

With respect to the purchase, I suspect (but do not really know), that that whatever rights youhave to purchase teh stock are personal to you and not ransferrable to the trustee and/or, if not publicly traded, the trustee will want an attorney opinion letter that registrationis not necessary and that the trustee is permitted to purchase the stock without the stock being registered (and which not even be true), which, in any event, would we an expense far in excess of the permitted $2000 contribution. The resident pros may be able to answer the second part of your question with more detail.

Regards, JAFO




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Author: kaliban Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50369 of 121602
Subject: Re: Can one transfer non-tradable stock into a R Date: 4/16/2001 6:44 PM
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Thanks JAFO, It is legal for any accredited investor or institution to purchase the stock and I know of several shareholders that have purchased their stock in this company using their Roth trust. However, the particular trustee that I'm aware of in connection with those shareholders no longer deals with IRA's.

Does anyone know of a trustee that would handle such a transaction?

Thanks,

-kaliban

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50376 of 121602
Subject: Re: Can one transfer non-tradable stock into a R Date: 4/16/2001 8:31 PM
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kaliban: "Thanks JAFO, It is legal for any accredited investor or institution to purchase the stock and I know of several shareholders that have purchased their stock in this company using their Roth trust. However, the particular trustee that I'm aware of in connection with those shareholders no longer deals with IRA's.

Does anyone know of a trustee that would handle such a transaction?"


WRT to the last question, no.

Your welcome. Securites law is not my forte, but if it "legal for any accredited investor or institution to purchase the stock", then it sounds like it is publicly registered. My limited knowledge of private placements and other registration exemptions suggest that "accredited investor" is a term of art and that there are limits to the number of offerees, BWDIK.

To whom did those shareholders move their IRAs after that trustee stoped dealing in IRAs? You might ask your broker, if his/her company would do this and if not, could he/she make a recommendation.

Regards, JAFO


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Author: odem Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 50384 of 121602
Subject: Re: Can one transfer non-tradable stock into a R Date: 4/16/2001 10:29 PM
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A major reason you can't find an administrator to "play along" is just that -- playing. An administrator has a fiduciary duty and what you are suggesting could open the administrator to charges and a lawsuit that he failed to perform his fiduciary duty.

You wouldn't want that, would you?

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