NUA error
I have a client that has a large stock position in an ESOP that was eligible for NUA treatment. I sat on a call with him to direct the ESOP record keeper in transferring the funds to a non-qualified brokerage account. It appears now that the custodian transferred the shares to an IRA. We need to reverse the transaction. It happened about 63 days ago and we just now discovered it. Problems??? Can this be done??
Permalink Submitted by Alan - IRA critic on Fri, 2017-08-11 00:36
It will be very difficult for both the plan and the IRA custodian to cooperate to return the funds to the plan to be re issued properly. Any such attempt should be initiated by the plan, and they might do this only if they concur that the distribution error was caused entirely by the plan and therefore they could be liable for damages. Time is of the essence, and at least we are still in the same calendar year as the LSD and no tax reporting has been done. Otherwise, under IRS rules NUA is forfeited once the shares are rolled to an IRA. Is the cost basis of the shares low enough to make NUA clearly beneficial and worth this battle?