NUA – Going All The Way
To qualify for the NUA I know that the lump sum must be a full payment completed by the calendar year, thus bringing the client’s plan balance to zero. Which plan are we talking about? Is the plan the client’s 401k balance or does this also include any pension benefits as well (my client has the option of taking a lump sum on his pension as well as the 401k). Thanks for the help.
Permalink Submitted by Ed Gunnell on Thu, 2008-09-18 11:40
NUA is only for the company stock inside the 401(k) plan. A pension plan has no NUA stock inside it.
Permalink Submitted by Alan Spross on Thu, 2008-09-18 16:24
The LSD must include all qualified plans “of one kind”. Since the 401k is a profit sharing plan, all profit sharing plans of this employer must be part of the LSD. For example, if there is an ESOP plan, it may have to be distributed as well.
As ed indicated, a defined benefit pension plan would not be affected since it is a different kind of plan, not a profit sharing plan. He could transfer the pension plan to an IRA or just leave it with the employer for a longer period without affecting the LSD for the 401k.
Permalink Submitted by Stephen Rhodes on Thu, 2008-09-18 16:45
Thanks for the clarification!