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Employer stock in-kind creates interesting possiblities. Each individual has to run the numbers himself:

-1- Taking the stock as a taxable event....
You will pay income tax on the COST basis, not the appreciated value. If under 59 1/2, you will also pay the 10% penalty. However, upon sale of the stock you will pay capital gains rate instead of your marginal tax rate. If you intend to hold onto the stock for a long time and you believe the stock will go up in value, this may be the better way to go.

-2- Taking the stock as a rollover....
No taxes, no penalty. You can sell whenever you want with no taxes to buy something else within the IRA. However, when you take distribution, it will be at full marginal tax rate, not the capital gains rate.

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