Employer Stock Question
I have a client that has employer stock in his 401k. The stock has a basis of $28 per share and is currently worth $5 per share. Is it possible to sell the stock today and buy the stock back tomorrow and have a basis of $5 per share to be used in future years for NUA purposes?
Permalink Submitted by Alan Spross on Mon, 2008-06-09 21:51
Not if the buyback is done through a brokerage window or permitted transfer between investment options. NUA can only be created by original contributions to the plan by employer or employee. Dividend reinvestment is the only source of existing plan assets that can contribute to new NUA shares. Other existing plan assets cannot be used to purchase or re purchase employer shares eligible for NUA under Sec 402((e)(4).
Good strategy though if it was permissible.