Ask Terry Questions ESPP account transfer to Roth IRA

ESPP account transfer to Roth IRA

By Terry Savage on March 26, 2018 | Investments

I worked for a company with an Employee Stock Purchase Program. I have since left the employ of said company and it seems I must liquidate or transfer the stock I own. I was hoping to transfer the stocks (instead of liquidate) into a ROTH IRA I had previously created several years ago. I am not 100% sure, but do not believe the ESPP account is any sort of deferred account. Current market value of the ESPP account is about $13,500. Is this transfer limited to the annual Roth Contribution Limits? If so, do I need to split these assets into two accounts to meet these limits? How does one determine the number of shares transferable to the Roth (current market value when transferred?) I am over 50 and should be under the Roth income phase out AGI for 2018.

Terry Says

This s a very complicated tax question and I am going to suggest you talk both with the company's finance department -- AND a qualified tax advisor.  The reason I say this is that there are rules about holding periods for stock in an ESSP.   The sale must be considered a "Qualified Disposition" -- and must follow specific rules. And there are tax consequences upon the sale, which you undoubtedly understand. I sincerely doubt that your company will allow you to "transfer" your ESSP shares into anything else -- or any other method of holding them -- except for placing them in your own name in a brokerage account (which could be at Schwab or Fidelity or Vanguard).   Beyond this, I can't speak to the specifics of your situation.

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