NUA Tax Question
I am planning to take advantage of the NUA on some of my company stock in my 401k. I understand the cost basis is taxable income. However, with the 2014 provision that applies a 3.8% Medicare tax on investment income on those who have income in excess of $200,000 for individuals, I need to understand if that cost basis is considered investment income. Can anyone help? Thank you.
Permalink Submitted by mk foss on Tue, 2014-01-14 02:11
The cost basis that you report as part of an NUA transaction is reported to IRS as retirement income on Form 1099R. Items on Form 1099R related to qualifed plans are not subject to the 3.8% net investment income tax.