NUA on ESOP shares
My client has and ESOP containing private company shares that contain NUA. Does it matter if the ESOP “sells” the shares internally and distributes cash to him or should he actually get a distribution of shares and then sell them back to the company?
Permalink Submitted by Alan - IRA critic on Fri, 2017-04-21 02:58
Client will need to get the answers from the ESOP plan. I believe if the plan requires the shares to be sold back to the plan or the company that there is a way to treat the shares as distributed to the client and sold by the client which would enable use of LT cap gain rates. These arrangements can vary, and only client’s plan would know the specifics and how the distribution will be reported. Client would need a 1099R showing Box 6 NUA for the distribution, but in some cases there may not be a 1099B reporting the sale.