NUA
#1 if a client moves stock to a regular brokerage account either this month (Nov 07) or in Dec 07 does the tax have to be paid by 12/31 or can it be paid by 4/15/08?
#2 he also has MFs in the same account, can they be moved to an IRA as is or do they have to be liquidated and cash moved to the IRA?
#3 where can i find extensive info on NUAs or someone who who is an expert?
Thank you.
Permalink Submitted by Alan Spross on Wed, 2007-11-21 22:18
The tax can be paid in April, but to be sure to avoid under reporting, he may need to send in an estimate on 1/15/08 unless his payments meet one of the safe harbors.
I assume you are referring to a 401k here. Assets other than employer stock can be transferred in kind to an IRA, if the IRA custodian will accept them. For MFs, it depends on what they are, but showing the IRA custodian a 401k statement should enable the custodian to indicate which investments can be transfered and which ones must be sold first in the plan.
The key to qualifying for NUA is that the employee must be eligible for a qualifed lump sum distribution. Qualification is triggered by either a separation from service or age 59.5, but the NUA transfer can be done in later years if there are no intervening distributions between the triggering event year and the year of the LSD.
Attached is a link to an extensive article regarding NUA issues:
http://www.fidelityresearchinstitute.com/pdf/nua_may2007.pdf