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Author: kwint Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: Stock Options in a Roth IRA? Date: 5/19/2000 10:49 PM
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I work for a non-publicly-traded startup company.

I have some stock options in this company, which are vested but not yet exercised.

I have a Roth IRA. It contains enough money to exercise my options - that is, to buy up the shares of my company that are available through my option at the exercise price.

Like all participants in startups, I hope, assume, pray, wish, expect, and intend that any day now these options will be worth a gazillion times the exercise price, so I can become a gazillion(minus the exercise price)aire.

Unlike most participants in startups, I'm 57 years old. So my hope, assumption, prayer, wish, expectation, intention is to retire on this gazillion(minus the exercise price). Soon.

Today I had this BLINDING FLASH OF INSIGHT (or idiocy): Buy the stocks available from my stock option with $ in the Roth IRA, so the stocks end up IN the Roth IRA, so when they become worth a gazillion times the exercise price(minus the exercise price), I don't get taxed ANYTHING on those gazillion(minus the exercise price)-fold gains!

CRUCIAL QUESTION: Legally, by tax law, can one do this - that is, buy one's stock options into a Roth IRA, and hold the stocks there?

Extra credit questions:

* If the company in which I hold stock options were publicly traded, would the answer to the previous question be different?

* What ARE the rules re the kinds of investments that one can invest in with Roth IRA $?

In other words, on this matter, am I a Fool? Or am I merely an idiot?
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