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ESOP stock - Rollover to IRA or take? - Thanks for the better analysis - I agree wholeheartedly that taking the certificate at company cost is usually the best way to handle this - you have a small tax hit that year, but all future growth is at deferred cap gains rates, and no tax is due until you sell. If you die before you sell, no tax is due on it at all (other than what you paid the year you got your certificate). Since most ESOP plans ended about 1990 (when it seems that 401Ks became the best tax minimizing/cost optimization plans for companies), most people with ESOP stock have seen it rise tremendously. In my case, my ESOP stock is worth 30 times it's 'company cost'. Since I am convinced fed tax rates will never go down, and since inflation will cause you to rise into higher and higher tax brackets, I'll pay the pittance in tax and sit on the stock for a few years. BTW, my plan (and most others) allow up to five years to decide which way to take the ESOP stock after you leave/retire. If you are over 55 or 60, and the value of the stock exceeds $500,000, then you can take it after six or more years.
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