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When can I move my company stock shares out of my 401(k) to a taxable equity account?

When can I move my company stock shares out of my 401(k) to a taxable equity account? I was told I could only do this in the year I take my first required minimum distribution.

401(k), Stocks
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April 2019

Generally you can take distributions from a 401k penalty free at age 59 1/2. If you take distributons prior to that you are subject to a 10% penalty (with some exeptions).  Distributions are taxed at your oridinary income tax rate for the pre-tax contributions that you made.  However, for company stock special rules apply.  The difference in value between the average cost basis of shares and the current market value of the shares held in a tax-deferred account is called Net Unrealized Appreciation (NUA) is the.The NUA is only available when the stock is originally placed into a tax-deferred account, such as a 401K(k) or traditional IRA, and is only applicable to the stock of the company for which you are or were employed. When distributing stock out of a 401(k) to a taxable account, shares of the company stock will only be charged as income on the cost basis. You can find out the cost basis from your employer. Upon selling the company stock, the NUA will be subject to capital gains tax.  NUA distributions depends on what the plan document says, generally: You must have either separated from the company, reached the minimum age for distribution, suffered an injury resulting in total disability, or you must have died.  

Ask for a copy of the plan document to find out about the distribution requirements.


April 2019
April 2019