Should you invest in the stock of your own company through your 401(k) or other retirement plan? It makes perfect sense because you’re effectively betting on yourself.
To sweeten the deal, you might be able to buy the stock at a substantial discount. Go right ahead, but don’t put all of your eggs in one basket.
Best of all, you may be in line for a future tax bonanza.
Strategy: When you’re ready to retire, keep the payout in the form of company stock. Don’t convert it to cash or other securities.
Here’s why: Thanks to a giant loophole in the tax law, you only have to pay tax on the original cost of the stock. In other words, there’s no tax due on the appreciation in value—called the “net unrealized appreciation” (NUA)—that has occurred from the time you acquired the stock. The payout comprising the company stock is 100% tax-free until, if ever, you sell your shares!
Icing on the cake: Any subsequent gain on the NUA is treate...(register to read more)