Join Early Retirement Today
Thread Tools Search this Thread Display Modes
ESOP rollover at retirement
Old 03-25-2009, 10:22 AM   #1
Recycles dryer sheets
Join Date: Dec 2006
Posts: 154
ESOP rollover at retirement

I know this has come up before, but I cannot find it.
What is the term for the process whereby one can take advantage of a low stock basis when rolling over an ESOP?
Specifically, I have several hundred shares of stock in an ESOP plan with a basis of $7 per share and a current value of $35 per share. I need to get out of the company stock when I retire next year and minimize the tax consequences.

theloneranger is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-25-2009, 10:26 AM   #2
ziggy29's Avatar
Join Date: Oct 2005
Location: Texas
Posts: 15,419
I believe the term you're looking for is "Net Unrealized Appreciation". Assuming you can withdraw from the 401K penalty-free, you could transfer the shares of company stock from the 401K into a taxable account -- paying ordinary income taxes on your original cost basis -- and then you can sell the company stock held for more than a year at favorable long-term capital gains rates. This is a good strategy but it needs to be done just right, because a mistake could be quite costly.

"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
ziggy29 is offline   Reply With Quote
Old 03-25-2009, 12:23 PM   #3
Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 1,183
You can research this over on the Fairmark Forum which is handled by a great bunch of CPA's. Considering the time of year that it is (April 15 fast approaching), you might just do some reading now.
crazy connie is offline   Reply With Quote
Old 03-25-2009, 04:44 PM   #4
Thinks s/he gets paid by the post
Koolau's Avatar
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 2,326
Could be wrong (and the rules could have changed anyway) but IIRC you need to withdraw your entire 401(k) at a single time to take advantage of this rule. In my case, I never considered it because the non-stock portion of my 401(k) would have been hard hit with regular income tax in a high bracket (for that year). YMMV
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Rollover? lets-retire Young Dreamers 4 08-05-2008 06:25 AM
I've got 2 million in an ESOP, I hate my job Steve O Hi, I am... 29 12-21-2007 04:36 PM
Where should we rollover 401K Tom52 FIRE and Money 5 05-24-2007 03:25 PM
State retirement plan rollover????? nun FIRE and Money 0 04-06-2006 02:33 PM
? rollover of 403b to IRA at retirement. tednvon FIRE and Money 1 05-09-2005 01:49 PM


All times are GMT -6. The time now is 04:46 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.