Qualified Plans for NUA Purposes
Planning on utilizing the NUA option with a client who retired this year and has company stock with low basis in his Qualified 401k plan. The guidelines state that ALL qualified retirement plans from that employer need to be cleared out prior to end of year, otherwise the preferential NUA treatment can be disqualified. Looking for clarification on what plans qualify as retirement plans:
401k – Yes
Pension (with Lump sum distribution option) – Yes
HSA – ? – need to be liquidated or moved?
Stock Options – ?
Anything I’m missing?
Thanks for the guidance!!
Permalink Submitted by mk foss on Wed, 2014-07-02 18:44
You need only look at retirement plans of the same type. So the 401k is a defined contribution plan and qualifies. The pension is a defined benefit plan and could possibly be closed out in a different year – but with the lump sum distribution feature dealing with it in the same year as closing the 401k would be best. The HSA, stock options etc are not considered.
Permalink Submitted by Brian Bishop on Wed, 2014-07-02 20:47
Excellent! Thank you for the quick response. That is what I thought, but wanted to confirm!!