Are you an employee who owns your corporate employer’s stock inside a company 401(k), employee stock ownership plan (ESOP), profit sharing plan, or other qualified employer-sponsored retirement plan?

If so, you should start thinking about what to do with the stock when you retire or leave your employer. Your decision can have big tax consequences.

Most people don’t think about it and simply roll the assets from their employer retirement plan into an IRA or a 401(k) with their new employer (if they’re changing jobs). Doing so is a simple rollover that has no tax consequences at the time.1

But when you later sell the stock, you’ll have to pay tax on the proceeds at ordinary income tax rates, which can be as high as 37 percent (and could be going higher).2 This is so even though sales of stock are ordinarily taxed at capital gains rates, which are 0, 15, or 20 percent for stock held more than one year.

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