Can terminated 401(k) participants roll over company stock to a new co

[Guest msearle]

Can participants of a 401(k) plan roll over company stock after they have left the company and begin participating in a new company's 401(k)? In other words, the previous employer's stock is down, and the separated employees don't want to cash out or roll over to IRA because they want to be able to take a loan out against it.

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[LCARUSI]

Some thoughts on this:

1) New employer probably won't accept a rollover of stock.

2) If the employer does, it clearly will no longer qualify as an employer security for ura purposes etc. (New Employer would only do it if it has a brokerage account option in its plan)

3) Best thing to do is to rollover cash and then repurchase the stock if the new plan has a brokerage account.

4) Whether or not its advisable to stick with a losing stock waiting for a recovery is another issue (might be like betting on a horse that keeps losing because it's overdue for a win)

[Guest msearle]

Thanks for the answer. By the way, does ura really stand for IRA? And, can you explain what a brokerage account is and how it works? Thanks again

[This message has been edited by msearle (edited 11-07-1999).]

[Jon Chambers]

URA stands for unrealized appreciation (a tax benefit that may apply to distributions of company stock). Brokerage accounts are pretty complex. You may want to review my article on the topic at http://www.schultzcollins.com/ (I call them Unrestricted Investment Accounts, but we are talking about the same thing.

Hope this helps!

Jon

[Guest msearle]

Thanks for the assistance.