NUA
I have a client who is retired from Southern Company. He has a 401k with a lot of SO stock in it. During the discussion of NUA he said that SO has a special program where he receives the dividends from the stock in his 401k without it being a distribution. To me this sounds like a distribution thus negating his ability to do NUA. What do Ya’ll think?
Permalink Submitted by Al Fry on Mon, 2007-12-31 19:02
Well, now he either got the distrubution or he didn’t. Did he get a check and spend it?
Permalink Submitted by Alan Spross on Mon, 2007-12-31 19:51
This may well be dividend distributions from ESOP shares that are reported on a 1099DIV rather than a 1099R. If so, they are not considered intervening distributions that would negate an LSD from taking place qualified for NUA utilization. Therefore, a check up is needed as to the source of the payouts and how they have been reported.
Incidentally, as ESOP dividend is not eligible for the lower qualified dividend tax rate, but that would be evident on the 1099DIV.