Howdy! I just returned from Ed Slott’s conference in Vegas, and it was AMAZING! I do want to confirm some information from a post dated Aug 15, 2019 “USING NUA FOR AN RMD – 3 STEPS” and a follow up forum question from June, 2022 (captured below for reference) to ensure we proceed correctly realizing that order is critical with an NUA and RMD.

Client retiring in June and due to his date of birth in 1950, he will turn 73 this year and need to take his RMD.

Step 1: Distribute NUA company stock to the brokerage account to satisfy 2023 RMD.
Step 2: Do a rollover of all non-NUA investments to the IRA.
Step 3: Move the remaining NUA stock to the brokerage account

Our questions are below:
1. If they have sufficient shares of company stock for the NUA that will transfer out to brokerage account in kind, will that satisfy the RMD (is that still correct even if the basis/taxable amount is less than the RMD amount)? Can they do that all with one transfer and as you stated back in June (listed below) avoid adding a step 3? Hopefully it will avoid the 20% mandatory withholding from company plan.

2. What if the NUA does not satisfy the entire RMD requirement? Will they then be able to do a 2nd transaction prior to doing the rollover to the IRA and take the balance as a distribution?

Thank you for the clarification!

Permalink Submitted by Alan-iracritic@… on Tue, 2022-06-14 10:33
I disagree with the actual steps. Shares of stock distributed include the cost basis and the NUA per share, both of which satisfy the RMD. Therefore steps 1 and 3 can be combined into a single step. If the total cost basis and NUA satisfies the RMD, then the entire remainder of the account can be directly rolled to an IRA. While the NUA portion is not currently taxable, it does not need to be to count toward the RMD. The NUA will be taxed later on when the NUA shares are sold.