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I have borrowed from my 401k plan severial times. The moneys you loan yourself is just like any other loan and you can do with it what ever you wish. If you exercise your options then resell your stock, your profits would be a taxable event.

The question that I would have is:

1. Why do you want to exercise your options?
If you mother just want the profits, you can buy the stocks and then sell them in one transaction with no moneys put up on your part. This is a taxable event. I don't no of any way to shelter this event from taxes. My wife's son who works for SBC just did such a transaction. Talk with US West HR Dept. on how to do such a transaction.

If you mother just wants to take ownership of the stock, then she may have to find the money in her 401k.

2. Does she have to exercise her options now?

I believe that the best source for any info on what your mothers option are, would be a visit to or a call to USWest HR Dept.
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