Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next
Author: tjfields Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Retirement plan distribution Date: 1/16/2002 5:29 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I have a few questions regarding a retirement plan distribution I received after I left a job. First, the story. Then, the questions.

Approximately 3 months after leaving a job, I (to my great surprise) received a company stock certificate as a "lump sum payment" of a portion of my retirement account. In the letter, it explicitly states (in bold, even) that "Unlike a distribution from a 'qualified' retirement plan, distributions from this plan may not be rolled over to another plan." This plan was entirely funded via employer match, and contained nothing but company stock.

The total value of the plan at the time of "reckoning" was $6105.45, then they witheld federal (approximately 27%) and state taxes from this amount. The remainder was used (evidently) to purchase 359 shares at $11.68, which was subsequently sent to me.

The letter ends with "The amount of this disbursement will be reported to the IRS and you will receive a 2001 W2 from [Company Plan Administrator] in January of 2002"

Am I correct in interpreting this whole shenanigans as follows?

1) There was a cash liquidation of this account, which was (evidently) W2 income and taxed at that rate.
2) What remained after these taxes was used to purchase those 359 shares.

If so, it seems to me that my cost basis in this is stock $11.68. However, the monkey wrench in this is that the original source of funds in the account was an employer match and this is clouding my thinking into thinking the cost basis should be zero.

Anyone with any insight?

T.J.




Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

Clorox Isn't Cleaning Up
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement