When you complete ten years in the Pod — meaning two consecutive seven-year terms — you unlock an extra exit option that isn’t available at the first seven-year mark. You can still redeem for cash or roll into the next Pod, but now you also have the choice to take an in-kind basket of the fund’s stocks and other marketable securities instead of cash.
This becomes possible because of the IRS “mixing bowl” rule, which prevents an exchange fund from giving you someone else’s contributed property within seven years (or you’d lose the tax deferral). By staying in the Pod for a full decade, you clear the seven-year clock, so an in-kind distribution no longer violates the rule.
Choosing the in-kind route keeps your tax deferral intact. You don’t recognize gains when the securities land in your brokerage account, and your original basis carries over. You can then hold, sell gradually, or even donate the stocks, timing future taxes as you wish. The only immediate tax at the ten-year rollover is on your share of the fund’s long-term gains from selling the fleet to refresh aircraft, which happens regardless of whether you exit or stay.
After ten years, you gain maximum flexibility. You can redeem for cash any time, roll forward to keep your aircraft benefits, or finally take an in-kind portfolio — thanks to clearing the seven-year mixing bowl rule.
Please read our full disclosures before making an investment decision.