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Author: gwmgwm Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75539  
Subject: Stock Withdrawal from an IRA Date: 1/6/2000 6:35 PM
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Can a stock be withdrawn from an IRA without selling it? If so, what is basis and the value of the shares withdrawn based upon?
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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17451 of 75539
Subject: Re: Stock Withdrawal from an IRA Date: 1/6/2000 6:43 PM
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I think most trustees will refuse to directly distribute stock from an IRA to the beneficiary. The reason is that it will either be against their rules or they will find it to be an extraordinary request.

In either event, I don't think an "in kind" distribution from an IRA is illegal; rather, your basis in the stock withdrawn would be equal to its fair market value on the date withdrawn and accordingly you would be charged with a distribution in that amount and would be required to pay ordinary income tax on that amount plus a potential 10% penalty.

Thus, the question, why would one bother to take an "in kind" distribution? Instead, just sell the stock and withdraw the cash.

TheBadger


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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17454 of 75539
Subject: Re: Stock Withdrawal from an IRA Date: 1/6/2000 6:59 PM
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TheBadger wrote,

I think most trustees will refuse to directly distribute stock from an IRA to the beneficiary. The reason is that it will either be against their rules or they will find it to be an extraordinary request.

I don't usually praise the "Wise", but Merrill-Lynch will let you withdraw stock from an IRA and place it in a taxable account.

In either event, I don't think an "in kind" distribution from an IRA is illegal; rather, your basis in the stock withdrawn would be equal to its fair market value on the date withdrawn and accordingly you would be charged with a distribution in that amount and would be required to pay ordinary income tax on that amount plus a potential 10% penalty.

That's correct, but the 10% penalty would only apply to folks under 59.5 who aren't taking SEPP withdrawals.

Thus, the question, why would one bother to take an "in kind" distribution? Instead, just sell the stock and withdraw the cash.

In the case of a friend of mine that does just this type of "in kind" distribution he saves the commission on the sale and the second commission on the purchase. Merrill doesn't charge him a fee for transfering the stock between accounts. (He's keeping the shares. He just wants to get the stock out of his IRA.)

intercst

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Author: Bobbcat Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17457 of 75539
Subject: Re: Stock Withdrawal from an IRA Date: 1/6/2000 7:16 PM
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He's keeping the shares. He just wants to get the stock out of his IRA.



Or in the case of some: has to take a minimum distribution and prefers to move the stock.

*Cat

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Author: bvernot Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17461 of 75539
Subject: Re: Stock Withdrawal from an IRA Date: 1/6/2000 8:01 PM
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You guys seem to know what you're talking about and you're so close to the question that I have...... Can you address the inverse of this subject? That is, can I transfer stock INTO an IRA account (of course, within the $2000 contribution restriction)? Or do I have to sell the stock from my brokerage account (commission), deposit the proceeds in the IRA, then buy the stock back again in my IRA (commission)? Seems convoluted, but then there aren't too many examples of that in the tax laws, right? Thanks, in advance, for any advise.

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17463 of 75539
Subject: Re: Stock Withdrawal from an IRA Date: 1/6/2000 8:29 PM
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bvernot asks,

You guys seem to know what you're talking about and you're so close to the question that I have...... Can you address the inverse of this subject? That is, can I transfer stock INTO an IRA account (of course, within the $2000 contribution restriction)? Or do I have to sell the stock from my brokerage account (commission), deposit the proceeds in the IRA, then buy the stock back again in my IRA (commission)? Seems convoluted, but then there aren't too many examples of that in the tax laws, right? Thanks, in advance, for any advise.

It may be one of the great paradoxes of our time, but I believe IRA contributions may only be made in cash. "In kind" contributions of securities are not permissible.

intercst

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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17466 of 75539
Subject: Re: Stock Withdrawal from an IRA Date: 1/6/2000 9:22 PM
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In a perverted sense of the law, it is unfortunately very clear, only CASH can be contributed to a regular IRA.

TheBadger


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Author: mattpam Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17473 of 75539
Subject: Re: Stock Withdrawal from an IRA Date: 1/7/2000 12:51 AM
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Salomon,Smith Barney permits stock or bonds to be
shifted to a cash account. It is of course, a normal distribution after age 59 1/2. One reason to do this is
when the security price is depressed and you expect
appreciation before long. You create a capital gain in
the cash account that can used to offset capital losses! If you had left it in the IRA and taken it out later, you would have had to pay tax at ordinary income rates on the appreciation!

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