Rollover an Employee Stock Ownership Plan
Do You Take Part in an Employee Stock Ownership Plan (ESOP)?
Do you know the best way to diversify your retirement portfolio? Many people are now investing in physical precious metals like silver and gold to diversify their retirement assets.
An ESOP otherwise known as an Employee Stock Ownership Plan cannot be compared with other, more traditional employer sponsored retirement plans like the 403b or the 401k.
Nevertheless, it is a tax-advantaged vehicle of great importance. Here I will discuss the pros and cons of the ESOP, talk about ways to safeguard retirement assets in a failing economy and find out how precious metal investing works.
The Employee Stock Ownership Plan
The ESOP works in this way:
- The employer starts a trust fund.
- The fund shares its own stocks or designates money to buy current shares. This type of plan is popular because it enables employees to buy into the company.
- The shares in the trust are allotted to the employee’s accounts, but the way that shares are allocated will differ between companies.
The ESOP operates like many other employer sponsored benefits. The employee is not entitled to benefit from the ESOP account until they secure a senior position. Employees who leave the company will receive the vested stock, but the firm will buy the stock back at the going market rate.
The Employee Stock Ownership Plan has tax advantages because the stock contributions are tax-deductible for the issuing company. The employee will not be taxed on received contributions and the contributions can be rolled-over into a qualified retirement plan such as an IRA.
Employees who rollover their distributions will avoid income tax and capital gains tax.
The Rules and Limitations of ESOP Rollovers
ESOP distribution rules vary, however, they can be rolled over into other retirement plans. Employees who have this type of retirement plan should read the plan summary to learn more about specific distribution rules.
Distributions are mandatory on the first of April after turning 70½ and penalties are imposed for taking distributions before reaching retirement age (much like the 401k).
The company may award the distributions in cash, stocks or a mixture of both. Employees can cash in the stocks irrespective.
Those who invest the ESOP proceeds into a self-directed or traditional IRA (other than ROTH) or employees who roll the money into another retirement investment plan are not liable to pay tax. Tax will be paid when the money is eventually withdrawn.
How Can Gold Protect Your Retirement?
Incorporating Gold into an Employee Stock Ownership Plan
The majority of people with an ESOP are not permitted to add gold investments to the plan. However, some may have been granted diversification rights via their employer.
This kind of pension plan will contain no ‘paper gold’ or physical gold unless you work for a gold mining company.
The Advantages of Rolling-Over an Employee Stock Ownership Plan to a Precious Metals IRA
Setup an ESOP rollover and you are firmly in control of all retirement funds. You can open new tax-free investments and consider precious metal investing.
However, those who are part of employer-funded profit sharing plans, like the ESOP will find their investment options limited. In reality, the self-directed IRA is more flexible.
ESOPs are vulnerable. If the employer goes bankrupt your contributions may be lost.
The Advantages of Dedicating a Percentage of a Retirement Portfolio to Precious Metals
Investing in gold is safe and easy. Purchase gold, silver, platinum and palladium to safeguard your retirement assets against inflation and the volatile stock market.
Gold is a superb hedge, plus there is plenty of potential for financial growth. Analysts predict further gold price hikes; hence investors are keen to buy gold.
Your date of retirement and risk tolerance will influence the amount of precious metals you buy to add to your retirement portfolio. Nevertheless, open a self-directed IRA and you receive tax-benefits on any precious metals investments.
Choosing the Ideal Gold IRA Company for an ESOP Rollover
There are many Gold IRA Companies to choose from. If you are new to researching such businesses, I have prepared these 10 Top Tips For Comparing Gold IRA Companies to help you to get started.
My 3 Best Gold IRA Companies
| Gold IRA Company | My Rating | Best For | Find Out More | |
| Best Overall | Augusta Precious Metals |  |
ZERO BBB and BCA Complaints Ever | Website Read My Review |
| #2 | Goldco |  |
High Percentage of Satisfied Customers | Website Read My Review |
| #3 | American Hartford Gold | |
Best Gold IRA Newcomer | Website Read My Review |
About the Author: Doug YoungDoug is a highly experienced professional and widely trusted authority in financial investing, commodity trading, and precious metals. With over 20 years of expertise, he helps others make informed decisions by sharing a combination of personal experience, extensive knowledge and meticulously researched information on gold IRAs, precious metals investing and retirement planning. He regularly writes news items on these topics. He has considerable experience of evaluating Gold IRA and Precious Metals Companies, gained over a period spanning more than a decade.
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