My client terminated employment June, 2005 at age 56. His balance was $3.5 million, of which $2.5 million was the value of employer company stock (cost basis of about $300,000) and the other $1 million was mutual funds. He took his distribution of his entire account balance in Sept, 2005; the $1 million rolled to an IRA and he moved the company stock into a brokerage account and paid income taxes on the cost basis only. His account balance in the Plan on 12-31-05 was $0. However, in March 2006, the employer made a safe harbor profit sharing contribution for my client of $2200 which has now grown to $2700. Will distributing the additional $2700 in his account in 2008 disqualify the NUA tax break he took in 2005?