NUA Question
Client owns company stock in profit sharing plan. Cost basis is $7,500 and current value is $75,000. Client is 45 and terminated employment. Trying to determine if utilizing NUA provides benefit to Client. Have reviewed 5 NUA Mistakes from May 2006 article. Stock transferred to taxable brokerage account will be subject to income tax…will it also be subject to additional 10% tax due to pre 59 1/2 withdrawal? If expected 2013 taxable income is $100,000, how much tax savings is possible if all stock was sold in year of transfer? What is difference between 2013 long term cap gains tax rate and income tax rate at that level of taxable income? Thanks so much.
Permalink Submitted by Alan - IRA critic on Tue, 2013-02-05 22:05
The 10% penalty for early distributions of employer stock only applies to the taxable cost basis, ie. the amount that must be included in gross income for the year of the LSD. With respect to the LT cap gain rates, would need to know if client files single or jointly.