NUA Calculator
I don’t want free tax advise. I am looking for a NUA calculator that someone has already built so I can determine if an NUA makes sense for my client. As a CPA I have never done this so I am looking for some specific guidance as non of my peers have done this either.
Thanks
br
Permalink Submitted by Alan Spross on Sun, 2008-09-21 23:49
There are several if you Google “NUA calculator”. Following is a link to one of them. The client will have to determine what their cost basis is in the company stock by getting a quote. One of the subjective judgements that will have to be made is how long the top LTCG will remain at the current low 15% rate. It may well rise, possibly more so for those in the higher tax brackets, and increases will reduce the value of the NUA strategy. Generally, even with the current 15% top rate, if the cost basis is over 30%, NUA is probably not worth pursuing.
The other issue to be considered is that diversification should always trump tax benefits. Retaining large amounts of employer stock either in the plan or in the taxable account can be risky, since Enron and now Lehman prove that a total loss is entirely possible. Also, note that if NUA shares are inherited, there is no step up in value for the NUA portion.
http://www.eatonvance.com/retirement/java/StockRollover401k.php