How are distributions from my Employee Stock Ownership Plans (ESOP) treated?
A distribution from an ESOP is taxed similarly to a distribution from any other retirement plan. They are subject to regular income taxes plus a 10 percent penalty if you are under the age 59-1/2. A difference of ESOP plans is that the value of the stock that you use for tax reporting purposes may be different than the current market value of the stock. If you receive a distribution and don’t want to be hit by any taxes and penalties, you may roll 100% of the gross distribution into an IRA within 60 days of the date of distribution.
