As a member of an Employee Stock Ownership Plan, you receive free shares of your company's stock as a retirement bonus. If you quit before retirement, your company might restrict the number of shares you can cash out. An ESOP uses a vesting schedule to measure the number of shares you've fully earned. If you quit your job before the end of the vesting schedule, you forfeit some or all of your shares. Your company could also force you to delay the sale of your vested shares for up to six years. Once you meet these requirements, you can sell off your shares and move your money into another account.
Review your most recent ESOP statement for the number of vested shares in your account. This is the number of shares you'll be able to keep after quitting.
Contact your human resources department and ask if you need to wait before you can sell your ESOP shares. Even if your ESOP shares are vested, your company can restrict you from selling them for up to six years after you quit. If so, wait until your ESOP shares are unrestricted.
Multiply your total number of unrestricted shares by your company's current share price. This calculates what you'll get for selling off your stock.
Sell off your unrestricted shares to complete your ESOP withdrawal.
Transfer the money from your sale to another retirement account like an IRA. If you keep the cash in a regular bank account, you'll owe the IRS income tax plus a 10 percent early withdrawal penalty on the entire sale. You can withdraw your ESOP money penalty-free after you turn 59 1/2. However, you'll still owe income tax on the withdrawal.
Items you will need
- ESOP statement
- Creatas/Creatas/Getty Images
- 7 Questions to Ask When Selling Your Property
- How to Evict a Tenant Who Is Selling Drugs
- Mandatory Seller Charges When Selling a House
- How Does Buying & Selling Shares Work?
- Unit Trust Vs. ETF
- How to Calculate Basis for Stocks When the Stock Splits and You Only Sell Partial Shares
- How to Stage Your Backyard to Sell
- How to Sell a Property Held in a Revocable Trust
- How Much Time Does an Executor Have to Complete the Probate?
- Vacation Property vs. Time Share