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Second, and by far the better way, is to invoke the "Company Stock Rule". Basically, the Company Stock Rule allows you to take your company stock out of your retirement account when you retire, and pay ordinary taxes on only the average cost basis for the stock; ie, the value of the stock when it was put into your account. You can see that if this has been over a long career, this cost basis could be very low, meaning taxes owed would be very low. Then, later, when you sell the stock, you will pay capital gains tax on the gains above the cost basis. And, of course, the capital gains tax rate is much lower than your marginal rate.

I find this intriguing. My company does all its match in company stock. Can someone point me to a link where this is explained more fully. Sounds like a great deal to me. And, a way to reduce the normal income tax bite of the 401(k).

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