ESOP and NUAs
An employee is a participant of an ESOP which obviously contains the company’s stock. Would the employee automatically be permitted to use NUA treatment or must the ESOP plan have permitting language to do so?
An employee is a participant of an ESOP which obviously contains the company’s stock. Would the employee automatically be permitted to use NUA treatment or must the ESOP plan have permitting language to do so?
Permalink Submitted by Alan - IRA critic on Wed, 2019-05-29 18:30
NUA should be automatic as long as the shares are deemed distributed even if they must be sold back to the plan according to the terms of the ESOP. That would result in both the cost basis and the cap gains being taxable in the LSD year. If the shares can be kept by the employee, it could be years before the employee decides to realize the cap gains.