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Pixy: thx for shedding some more light on this issue. I have about $200,000 in company stock at a cost basis of about $78,000 in my 401K with a total of about $525,000. I am 65 and have retired from the company. The 401K still is in the hands of the company but managed for them by Fidelity. I have not rolled the 401K to a self-directed IRA yet. Question: What exactly is the procedure for "removing" or extricating the stock portion ($200,000) from the total 401K (balance of $300,000 is in Fidelity mutual funds) before rolling over the $300,000 into a self-directed IRA. Is this procedure always the best thing to do or are there any downsides? Do I understand that once the stock portion is removed form the 401K that I would have to pay ordinary taxes on the $78,000, then capital gains (20%) on any future stock sales? On future stock sales, what would be the cost basis for the gains? By the way, the stock in the 401K has been alternately languishing or going down for the past year. A slightly confused Fool who wants to take greater control of his financial future.
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