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In either event, I don't think an "in kind" distribution from an IRA is illegal; rather, your basis in the stock withdrawn would be equal to its fair market value on the date withdrawn and accordingly you would be charged with a distribution in that amount and would be required to pay ordinary income tax on that amount plus a potential 10%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

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