Inheriting and ESOP
I have a client that has an ESOP plan that holds non-publicly traded stock. Are there any potential pitfalls if a non-spouse beneficiary were to inherit these funds? NUA? Trying to determine if a rollover to an IRA would offer more flexibility for the beneficiary at the time of death.
Permalink Submitted by Alan - IRA critic on Thu, 2015-03-05 23:01
A beneficiary has the same NUA options as the employee, but obviously the use of NUA is more complex than an inherited IRA, particularly the decision making right after inheriting the ESOP. One of the requirements to utilize NUA would be a qualified LSD from all plans of similar type from that employer. Meanwhile, the current cost basis % of the shares vs the client’s diversification needs will be a constant issue that requires monitoring.