Permalink Submitted by Alan - IRA critic on Wed, 2018-03-14 21:42
A direct rollover can be requested just as would be done for a 401k plan. However, ESOP shares are also eligible for NUA treatment as part of a qualified lump sum distribution. Many ESOP shares are highly appreciated. In that case the ESOP shares would be transferred to a taxable brokerage account. Further, some ESOPs require the shares to be sold back to the company or the plan, but the appreciation (NUA) would be taxed at the lower LT cap gain rate right away rather than when you eventually decided to sell the shares.
Permalink Submitted by Alan - IRA critic on Wed, 2018-03-14 21:42
A direct rollover can be requested just as would be done for a 401k plan. However, ESOP shares are also eligible for NUA treatment as part of a qualified lump sum distribution. Many ESOP shares are highly appreciated. In that case the ESOP shares would be transferred to a taxable brokerage account. Further, some ESOPs require the shares to be sold back to the company or the plan, but the appreciation (NUA) would be taxed at the lower LT cap gain rate right away rather than when you eventually decided to sell the shares.