ESOP Distribution

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singledigit12b
Posts: 12
Joined: Tue Feb 17, 2015 9:56 pm

ESOP Distribution

Post by singledigit12b »

I just received paperwork from the retirement department of the company I work for that would allow me to diversify 25% of my company ESOP this year (I turn 55 this year). I do want to take this opportunity to roll the 25% portion to a IRA. My ESOP account consists of 100% company stock. When I retire I want to take advantage of the NUA treatment of stock in this account. My question is will my taking the 25% distribution now alter the cost basis for the remaining portion of the ESOP. Thanks.
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tarnation
Posts: 2470
Joined: Thu Apr 26, 2007 12:36 am

Re: ESOP Distribution

Post by tarnation »

singledigit12b wrote:I just received paperwork from the retirement department of the company I work for that would allow me to diversify 25% of my company ESOP this year (I turn 55 this year). I do want to take this opportunity to roll the 25% portion to a IRA. My ESOP account consists of 100% company stock. When I retire I want to take advantage of the NUA treatment of stock in this account. My question is will my taking the 25% distribution now alter the cost basis for the remaining portion of the ESOP. Thanks.
Depends. If they use avg cost, then no. But if they identify lots based on when you acquired it, then yes.
Question, have you considered taking your diversification amount as in-kind distribution?
You may find this helpful.
https://dl.dropboxusercontent.com/u/77776/TaxOnESOP.pdf.
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