What Are We Going To Do?
  • Show you a special tax treatment that allows you to pay taxes at capital gains rates on the shares you sell instead of—in many cases—at higher ordinary income tax rates;
  • Compare some possible consequences of putting your company stock in a taxable account or rolling over the company stock into a Rollover IRA;
  • For these two types of accounts, compare some possible outcomes when you or your beneficiary sells the company stock in the future.
Look Before You Leap

Before you proceed or consider taking advantage of the special tax treatment, answer these questions:

  1. Are you eligible to take your retirement plan assets as a lump-sum distribution*?
  2. Has the company stock in your retirement plan appreciated significantly in value?
  3. Is your company stock a significant portion of your overall investment portfolio?
  4. Do you think the company stock is a good investment?
  5. Are you prepared to pay ordinary income taxes on the cost basis of your company stock in the year you take your lump-sum distribution from your retirement plan?
  6. Regardless of the possible consequences shown here, will you seek expert help before you take any action?

If you answered NO to any of these questions, you may not be eligible for the special tax treatment, or it may not be appropriate for you.

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*Not all one-time payments qualify as "lump-sum distributions." Your retirement plan administrator should be able to tell you if your one-time payment is a lump-sum distribution