Need information regarding roll over of company stock at early retirem

[Guest Kiefer , N ancy]

My husband works for a large company and for many years has had a percentage of his pay deducted to pay for stock in the company. He is considering early retirement, age 56. We have been told that we can roll the stock over to a plan under 72t for five years and be paid a certain interest rate on this money, and that we won't have to pay any capital gains tax at time of roll over. I'm having trouble verifying this. Can you be of help or direct me to where I can get accurate information.

[Guest]

Since your husband is retiring after attaining age 55, he can take his money immediately with no tax penalty. This is because there is an exception to the age 59.5 early distribution rules for employees retiring after attaining age 55. Thus, there is no need for the section 72(t), five-year hocus pocus you referred to. Enjoy your retirement!

P.S. Your husband is eligible for some nice long-term capital gains breaks if he takes a lump sum distribution which includes shares of his company stock. Find out more about this money-saving technique from a tax advisor familiar with tax-qualified plans (its technical name is "net unrealized appreciation").

[RLL]

Under what type of plan was the stock purchased? Was it a 401(k) plan? Was it a Section 423 employee stock purchase plan or other type of stock option plan? Were your husband's payroll deductions on a "pre-tax" or "after-tax" basis? Did the company provide "matching" contributions under the plan? There are different tax consequences depending on what type of plan is involved here.