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Author: AncienGO One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76420  
Subject: Re: Stock Options in a Roth IRA? Date: 5/23/2000 11:32 AM
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I'm afraid I have bad news. Or at least an opinion you won't like.

First, the disclaimer: I'm an engineer, not a tax expert.

It won't work. The problem is this: you and your Roth IRA are two different entities. You own the Roth, but you can only manipulate it at arm's length. What you can do with it is limited by the rules of your particular trustee. You (or more precisely, the trustee) probably can buy CDs, stocks, bonds, *publicly traded* (note the emphasis) options, and maybe even real estate or other kinds of hard assets. But typically they must be assets that the *trustee* (again, note the emphasis) can buy for you.

Your option at your employment, on the other hand, is granted to *you* and only exercisable by you. And when you exercise it that establishes your cost basis. The next time it changes hands -- even if it goes to the Roth IRA you own -- is the sale, a taxable event. I'm pretty sure the only way to get those shares into your Roth is if your trustee accepts deposits into IRAs in share form, and then you can only do it $2000 a year in market value at the time of deposit.

It really wouldn't matter whether the shares were listed or not, so long as their value can be established somehow. It's their "fair market value" that counts.

Sorry to burst your bubble. Maybe a tax lawyer out there can figure out a way to accomplish what you're trying to do. But I doubt it. Good luck with the retirement plans.

Bob
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