Delayed inherited stock transfer to retirement accounts

Submitted by GW Milberg on Tue, 2017-11-07 18:00

After 10 years of a dispute with sibling, I will now receive stock that has been in the family for 50+ years. Upon receipt of the shares, can I transfer the original shares into 401k or Trad IRA, or both accounts, of my wife and I, at the value at time of death? Or is it current value, which is much higher now? If only 1 of the accounts, can I split between the 2017 & 2018 tax years? As share holdings increased, due to DRIP, should I keep those personally and pay the tax consequence? Or can I include those as contributions into the retirement accounts as well? Also, there was a spinoff that occurred during that time; how would that be treated in this scenario?



Submitted by Alan - IRA critic on Tue, 2017-11-07 22:34

  • Retirement plan contributions must be made in cash unless there is a rollover from another retirement plan. SInce these shares were not in a retirement plan when inherited, there is no way to contribute them to a retirement account. 
  • Since the owner of these shares passed 10 years ago, the value has likely changed substantially since then. When the shares are sold, you will need to determine the cost basis as of the date of death for the original shares, and each DRIP share will have a cost basis as of the reinvestment date. It will probably be quite a job to determine the combined cost basis of the reinvested shares since you may be looking at 40 different acquisition dates. The spin off shares will usually reduce the cost basis of the parent company by an amount that is usually available on the parent company website under the Investors Tab or similar. Now that you finally have control of your shares, a prime consideration should be proper diversification instead of continuing to hold too much in a single stock. 

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