2

If someone has appreciated assets like shares or equity of a privately held company and they want to transfer those into a tax-deferred retirement account like an IRA or 401k, is that possible?

If so, how does that work with the annual contribution limits? Are the limits calculated on the basis or on the current FMV?

3

Regarding 401K (Roth, Regular, or Post-tax) can only be funded though your payroll.

Now onto the IRA, a good document is IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs). it includes several times that contributions must be in cash:

Individual Retirement Account

An individual retirement account is a trust or custodial ac- count set up in the United States for the exclusive benefit of you or your beneficiaries. The account is created by a written document. The document must show that the ac- count meets all of the following requirements.

  • The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.

  • The trustee or custodian generally cannot accept con- tributions of more than the deductible amount for the year. However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount.

  • Contributions, except for rollover contributions, must be in cash. See Rollovers , later

...

When Can Contributions Be Made?

As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). Contributions must be in the form of money (cash, check, or money order). Property cannot be contributed.

Although property cannot be contributed, your IRA may invest in certain property.

But what about Roth IRA?

What Is a Roth IRA?

A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined next). It can be either an ac- count or an annuity. Individual retirement accounts and annuities are described in chapter 1 under How Can a Traditional IRA Be Opened?

the rest of that section have to do with can you contribute, how to convert an IRA to a Roth IRA

Non-cash items can be purchased and held by the IRA, they can be rolled over into an IRA, and they distributed, but all contributions must be in cash.

  • Good citation of "Contributions must be in the form of money (cash, check, or money order)." – g491 Jan 16 '18 at 16:19
2

It sure would be nice if the $5K I invested in AAPL in 1981 could be moved to an IRA while only paying tax on $5,000 instead of the $855K that it's currently worth... but no. An action like this rebases the money, and you could only transfer $5500 (or $6500) of the current value into the IRA1, and would first have to pay taxes on it.

As far as a 401(k), you couldn't do it anyway, since that's only for earned income from your employer.

1 Ignoring the fact that deductibility phases out at a certain income level (based on your income and filing status).

  • 1
    Does it matter whether it's a Roth or traditional IRA? – g491 Jan 16 '18 at 2:04
  • @g491. No. (I'd love to be proven wrong, though.) – RonJohn Jan 16 '18 at 3:16

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