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 Last week, Ann from Ohio needed help with her 401k and ESSOP settlement (see: AskTaxMama Issue #188, Health or Wealth) This week, we get more guidance. <Tax Pro Responds> Stan Pearlman of Flushing says: While ESSOPs are allowed to be rolled into a brokerage IRA account, if the party wants to maintain the stock, the plan administrator might have to be contacted to see if they allow the stock to be first sold. This type of transaction should always be done on a third party basis and the place from where the money is coming out needs to be made aware this is a qualified transfer. I am lead to believe type code O is what should appear on form 1099-R. While the advice that was given is sound, unfortunately Ann did not specify whether she had any children or heirs she wanted to protect, nor what her prognosis/life expectancy was. As you know this can greatly impact what her options are. If this is the case, I would recommend she speak to a good elder care attorney to cover all her options. Stan Perlman Good Points, Stan, In fact, if there is a consideration about Ann's life expectancy, an IRA is the worst place to have assets upon death. So, yes, elder care and estate planning are issues to consider. Best wishes, Eva Rosenberg Your TaxMama  |
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