Employee Stock Purchase Plan

[RobandBonnie]

During the tax year I changed employers. As a result, I transferred my ESPP to a traditional IRA brokerage account. The ESPP was with CAE - a Canadian company. I received a form TSP4 which is the Canadian equivalent to a 1099-DIV. It listed my capital gains. Do I need to list my capital gains in box 2a even though I put all of the ESPP monies into the IRA brokerage account?

[TomYoung]

I assume that this pertains to US taxes, not Canadian taxes. 

I'm confused here.  An ESPP is not a "retirement program", it's a "compensation" program.  Accordingly, I'd say you didn't "transfer" the stock to an IRA, you made a "contribution", (an "in-kind" contribution), to an IRA, (maybe even an excess "contribution"). 

I looked up "Form TSP-4" and saw that it's not equivalent to a US Form 1099-DIV, it's Canada's "Electronic Funds Transfer Message Format" that pertains to Thrift Savings Plans, and there's only one "Amount" box on that form.  I'm sort of assuming that your employer determined that what you did amounted to a "disposition" of some sort and reported the compensation created by the disposition of the shares in that Amount box.

If I've characterized what happened here correctly and you were working under the assumption that the transfer of the shares would be a tax-free event, a rollover of sort, then I think that's an incorrect assumption.

[RobandBonnie]

Thanks for the reply and this does pertain to US taxes. I might have misunderstood the options I received. I thought I could rollover the ESPP like I did with my 401K. If that's not true then I would need to move that contribution out of my IRA as well if it means my contributions exceeded the 14K limit  - correct?

[TomYoung]

"I thought I could rollover the ESPP like I did with my 401K."

A 401(k) is a retirement program so that can be rolled into IRA, but an ESPP isn't a retirement program and can't be rolled in a similar fashion.

"I would need to move that contribution out of my IRA as well if it means my contributions exceeded the 14K limit - correct?"

I would say that's correct but I'm not sure at all if the "capital gains" - which I'm guessing is the compensation created by what your employer considered to be a disposition - can be ignored.  You might want to get some local qualified help here for that.  It could be that the money does need to be recognized as compensation at the time of the transfer and that compensation would add to your out of pocket cost for the shares.  If it does then there might be a way to ask the IRS to not require that treatment because you made an honest mistake, but that almost certainly would require some local assistance.

[RobandBonnie]

Thanks, I'll do that.