You will need to give direction on where each installment of your proceeds should be sent.
YOU HAVE TWO OPTIONS:
- Direct Distribution to a taxable account. You will pay income taxes on any payment from the plan that does not go into a rollover IRA or 401k plan. If you’re under age 59 ½, you will also pay a 10% excise tax on these distributions. The ESOP Trustee will be required to withhold 20% of your distribution for taxes but it is likely that your ultimate tax bill will be greater than that. Because of these immediate costs, the vast majority of our clients do not select this option.
- Rollover to another Tax Deferred Account (IRA or 401k). You may roll over the ESOP payment to a Rollover IRA or a 401(k) plan that will accept the rollover without triggering income taxes or the excise tax that applies if you’re under 59 ½ years old. If you choose to do a direct rollover, the ESOP plan will make the payment directly to your IRA or 401k and there will be no withholding, so 100% of your proceeds can be reinvested.
STEP 3
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Please note: changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
Fulton Financial Advisors and Clermont Wealth Strategies operate through Fulton Bank, N.A. and other subsidiaries of Fulton Financial Corporation and are headquartered at One Penn Square, Lancaster, PA 17602.
Fulton Financial Advisors and Clermont Wealth Strategies operate through Fulton Bank, N.A. and other subsidiaries of Fulton Financial Corporation, including Fulton Insurance Services Group, Inc. The Advisors at Fulton Financial Advisors and Clermont Wealth Strategies offer a broad array of financial products and trust and retirement services some of which are provided through ValMark Securities, Inc., and/or Raymond James Financial Services, Inc., independent and unaffiliated registered broker/dealers, Members FINRA/SIPC; and/or Executive Insurance Agency, Inc., and/or Specific Solutions, Inc., unaffiliated licensed insurance agencies; Investment advisory services offered through Raymond James Financial Services Advisors, Inc. and/or ValMark Advisers, Inc., unaffiliated investment advisory firms registered with the SEC. Raymond James Financial Services, Inc. is not affiliated with Specific Solutions, Inc., Executive Insurance Agency, Inc., ValMark Securities, Inc., ValMark Advisers, Inc., Clermont Wealth Strategies, Fulton Financial Advisors, Fulton Bank, N.A., Fulton Financial Corporation or any of its subsidiaries. Neither ValMark Securities, Inc., ValMark Advisers, Inc. nor Executive Insurance Agency, Inc. is affiliated with Clermont Wealth Strategies, Specific Solutions, Inc., Fulton Financial Advisors, Fulton Bank, N.A., Fulton Financial Corporation or any of its subsidiaries.
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