NUA questions
Considering using NUA for a client that holds company stock in his 401(k). 1. The client is under 59 1/2 – does that matter?
2. The stock he holds in his 401(k) – Kraft has spun off to Altria as well. Could we use NUA for both?
Considering using NUA for a client that holds company stock in his 401(k). 1. The client is under 59 1/2 – does that matter?
2. The stock he holds in his 401(k) – Kraft has spun off to Altria as well. Could we use NUA for both?
Permalink Submitted by Alan Spross on Tue, 2008-03-25 20:45
A LSD for NUA purposes can be done for a client under 59.5, providing that there has not been intervening distributions since the separation from service. The cost basis would not be subject to early withdrawal if client met the age 55 separation from service exception.
Employer stock in QRPs that produce spin offs from such shares results in two or more issues that are still considered as employer shares because they were derived from employer shares. In that case the plan administrator should provide a separate cost basis per share for each stock. Spin offs early in an employee’s career frequently produce lower cost basis figures and are therefore more attractive for NUA since many years pass with no new shares being acquired except possibly by dividend reinvestment. Get a cost basis quote for both issues, but confirm with the plan administrator at the time that they are both NUA eligible.