An excerpt from:
http://www.obliviousinvestor.com/should-i-rollover-my-401k-into-an-ira/"Does Your 401(k) Include Employer Stock?
If your 401(k) includes employer stock that has significantly appreciated in value from the time you purchased it, you’d do well to speak with an accountant before rolling over your 401(k). Why? Because under the “Net Unrealized Appreciation” rules, you may be able to take a lump-sum distribution of your 401(k) account, moving the employer stock into a taxable account and rolling the rest of the account into an IRA.
Why would such a maneuver be beneficial? Because, if you roll the stock into a taxable account, only your basis in the stock (i.e., the amount you paid for it) will be taxed as a distribution. The amount by which the shares have appreciated in value (the “Net Unrealized Appreciation”) isn’t taxed until you sell the stock. And even then, it will be taxed at long-term capital gain tax rates (currently, a max of 15%) instead of being taxed as ordinary income.
In contrast, if you roll the stock into an IRA, when you withdraw the money from the IRA, the entire amount will count as ordinary income and will be taxed according to your ordinary income tax bracket at the time of withdrawal.
Example: Martha recently retired from her job with a utility company. She owns employer stock in her 401(k). The stock is currently worth $100,000. The total amount she paid for the shares was $42,000.
If she rolls her entire 401(k) into an IRA, when she withdraws that $100,000, the entire amount will be taxable as ordinary income.
If, however, she rolls the employer stock into a taxable account, she’ll only be taxed upon her basis in the shares ($42,000). And when she eventually sells the shares, the gain will be taxed as a long-term capital gain (at a maximum rate of 15%) rather than as ordinary income.
Remember, though, that holding a significant amount of your net worth in one company’s stock is risky—especially when that company is your employer. Be careful not to take on too much risk in your 401(k) solely in the hope of getting a tax benefit in the future."
So match your 401k, and then collect your employer stock in it (if any), or make your own business that allows it's stock to be accumulated inside a 401k plan while still a few micro-pennies/share until they blossom into hundreds per share with your companies increase in earnings.
Then you only have to deal with future new and unfolding Fed policy changes of "Max $300 Million 401k distrubution withdrawal limits".
What do you think of this approach?
