Rollover ESOP to Roth IRA

Discussion in 'Financial Planning' started by Heather, Apr 20, 2008.

  1. Heather

    Heather Guest

    My company was sold and the company's Employee Stock Ownership Plan
    was terminated as a result of the sale. All participants are, of
    course, required to take distributions either in the form of a
    rollover or in cash or a combination of the two. I would like to
    rollover my distribution into a *ROTH* IRA account. I already have a
    Roth IRA account at Vanguard. I understand that I will have to pay
    taxes on the rollover this year. I have been unemployed by choice in
    2008, so this would actually be a very good year to pay additional
    taxes as so far, my earned income for 2008 is $0. I have non-IRA
    money set aside to cover the additional taxes. Hopefully I have
    already answered the questions you would ask.

    So here is my question: In the IRS literature, it says "After 2007,
    you can rollover amounts from the following plans into a Roth IRA: A
    qualified pension, profit-sharing or stock bonus plan (including a
    401(k) plan),..." I looked at the ESOP Summary Plan Description and
    it says "This Plan is a qualified retirement plan commonly referred to
    a an Employee Stock Ownership Plan." Does an ESOP qualify for the
    rollover into a Roth IRA? Is there any reason I can't?

    (IRS reference http://www.irs.gov/formspubs/article/0,,id=181213,00.html)

    Thanks for your help!
    Heather

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    Heather, Apr 20, 2008
    #1
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