NUA
Client retired from PG in 2000 at age 61. Stock remains still at PG plan. Client claims that when he retired PG required him to remove dividends when paid. Several years ago he says they eliminated the requirement to take dividends, but he continued to take dividends out. He wants to know if he is still eligible for NUA now. My concern is that there is and will be no new triggering event and that the dividend removal has jeopardized his ability to do NUA, but I don’t know about this dividend removal policy.
Permalink Submitted by Alan Spross on Tue, 2007-09-25 04:34
If this is ESOP stock and the dividends are reported on a 1099DIV, I believe there was an old PLR in 1990 that ruled that these dividends are not considered part of the “balance to the credit of the employee”. As such, they would not be partial distributions or intervening distributions that would require a new triggering event. Therefore client could still be eligible for an LSD qualified for NUA treatment.
If these are reported on a 1099 R, then something is awry.
Permalink Submitted by Philip Caso on Tue, 2007-09-25 14:46
Alan, thak you for your reply. I found the number of a PLR that may address this topic according to another message board. I tried to access on the irs.gov site, but does not come up. Do you know how I can access the text of a PLR by number, it’s PLR 9024083
Permalink Submitted by Alan Spross on Tue, 2007-09-25 20:10
Yes, that is the one I was referring to, but I could not pull it up either. Will keep trying.
Permalink Submitted by Philip Caso on Tue, 2007-09-25 20:19
Thanks very much for the comment about 1009 DIV vs. 1099R. The client just told me he was only receiving 1099DIV’s from the plan administrator. So in the absence of 1099R’s it would seem logical to me that the IRS could never claim any non qualifying distributions were ever made and his ability to do NUA should be preserved, regardless of the PLR. So I think he’s in good shape. It’s interesting that I don’t see too much written about this issue.