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How to Transfer an ESOP to a 401k

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Employers typically offer their employees a Stock Options Plan for Employees, also known as ESOP, based on annual returns. These plans differ from owner-sponsored retirement plans such as 401k. Employers can maintain both plans for employees to receive large tax breaks of the ESOP plan and the diversification of 401k, with the aggregate contribution being limited to 25 percent of annual income. The transfer of ESOP shares to 401k depends on both plans to accept the transfer.

How to Transfer an ESOP to a 401k | Onefctv
How to Transfer an ESOP to a 401k | Onefctv

Step 1
Contact the ESOP program administrator by calling the number in the ESOP annual report. Explain that you want to transfer ESOP shares to a 401k plan and find out if the ESOP plan allows this. Request any necessary paperwork if the program permits the transfer.

Step 2
Contact the administrator of the 401k plan by calling the number on the statement and asking if the program accepts transfers or transfers from ESOP. The DoD allows this transaction, but the final decision is up to each administrator. Required paperwork, if any, from the administrator.

Step 3
Fill in all the paperwork, sign, and make a copy for yourself and for each of the respective administrators. Send the original documents received from the ESOP administrator by mail along with a copy of the 401k administrator’s paperwork to the ESOP administrator. Send 401k paperwork by mail along with a copy of the ESOP paperwork to the 401k administrator.

tip
The conversion to the 401k plan must be done once or for a period of fewer than ten years.

What you need
ESOP Statement
401k statement

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