NUD vs NUA
During a discussion with a stock broker, he mentioned the concept of NUD which would step down the basis in employer stock. He didn’t have any information to share or confirm this concept. Has anyone heard of this type of planning?
During a discussion with a stock broker, he mentioned the concept of NUD which would step down the basis in employer stock. He didn’t have any information to share or confirm this concept. Has anyone heard of this type of planning?
Permalink Submitted by mk foss on Thu, 2009-02-12 19:17
I don’t see that there’s any kind of planning to be done with NUD.
If the company stock is worth $72 and the plan cost is $32, you have $40 of NUA. You could elect to receive the stock (if all other requirements are met) and pay tax on the $32 value.
If the plan cost is $32 and the stock is worth $20, you would prefer to pay tax on the $20 and forgo receiving the stock
Permalink Submitted by Tom Brattain on Thu, 2009-02-12 20:58
If the plan’s cost basis is significantly above the current value, if the plan permits, you can sell the stock, then repurchase it as soon as the plan provisions permit (no 30-day wash sale rule in qualified plans). This “steps down” the cost basis to the current value and any FUTURE appreciation from this point could create an NUA situation.