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[[When you leave a company that has an ESOP program, you can take the stock with you or
"cash-out" and roll this into an IRA.]]

Or, you can generally do either. Its not an all or nothing situation. You should be ablt to keep the stock, and roll that stock over to an IRA rollover account. Most all brokers will accept that stock.

[[ If you want to keep the stock, and are less than 59 years old,
what options do you have?]]

As noted above, you can roll the stock over to an IRA rollover account with a brokerage firm. This is not an uncommon situation.

[[ Can you do a "direct" rollover of stock to an IRA?]]

Direct? You meant moving the shares directly from your employer to your IRA rollover account? That I'm not sure about. Check with your broker. I believe that the answer is no, but things change every day. But this would NOT be a tax law restriction, but would instead be a restriction imposed by your company or your new broker.

[[ If not, would you be
subject to the 10% penalty for early withdrawl?]]

Not necessarily. If you take the stock certificate and roll that over (within 60 days of receipt) to your new broker and IRA rollover account, you would not be subject to tax or penalty on that distribution.

[[ Would it make more sense to pay the taxes/penalty
on a stock which has increase substantially (3X) over the life of the ESOP?]]

In general, I prefer to pay taxes later than sooner. If you want to keep the stock, you should be able to find a way to do so, and get it into your new IRA rollover account. Select a broker and speak with him about this issue. They'll most likely be very happy to help you with the transfer of the stock (if the stock is what you want to keep).

If you take the funds and pay the taxes/penalties, you could see up to 50% of the funds fly away in the form of taxes (depending upon certian other circumstances) it could cost you a LOT of money.

Hope this helps...
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