Distribution of QES/Stock In Kind

Distribution of Stock In Kind

Unlike the full or partial redemption strategy, the C Corporation stock does not need to be liquidated and can be distributed or transferred “in kind”.  An “in kind” distribution is a payment made in the form of securities or other property, rather than in cash. A distribution in kind may be made in several different situations, including a stock dividend, inheritance or taking securities out of a tax-deferred account. An in kind distribution or transfer avoids the requirement of liquidating the stock.

With the ROBS strategy, an in kind distribution or transfer means that the stock is transferred directly to an individual or another retirement account, without first liquidating the stock into a cash state. This works for individuals that are not ready to or can’t afford to pay the value of the stock to redeem it or want to continue to hold onto the stock for tax advantages and other beneficial reasons.

The retirement plan legal documents (e.g. Adoption Agreement) must allow for the “in kind” distribution or transfer of the Employer Securities (QES). If your retirement plan documents do not currently allow for this, we can generally amend your documents to allow for this in kind method.