NUA
Our client is a long term employee with appreciated stock in his 401k. We would like to take advantage of the net unrealized appreciation rules in 402(e). We’ve been told that the company held the stock in a unitized fund structure for a time during his employment. He initially received shares outright via a Profit Sharing Plan which transitioned to a 401k unitized stock arrangement and then to a 401k that held the stock outright. The stock remains owned outright in the 401k. Can we still take advantage of NUA? If he can take advantage of NUA how is the basis calculated while he was accumulating shares of unitized stock?
Permalink Submitted by Alan - IRA critic on Fri, 2023-09-08 14:37
Yes, NUA is a possibility with a qualified LSD if the cost basis is low enough to support NUA as beneficial. The plan must track the accumulated cost basis including dividend reinvestment when the shares were purchased for either the 401k or the unitized account. Client should get a quote on the cost basis per share if interested in NUA as part of a qualified LSD and if interested verify that the 1099R for the stock portion will show the NUA in Box 6.