NUA age 55

Submitted by Arthur Dicker on Fri, 2014-01-03 15:27

Our client left employment with GE ten years ago at age 46. GE stock and other investments still in GE 401(k). Now she is age 56. Can she distribute GE stock and use NUA without penalty because she is now over age 55, or does she have to wait until 59-1/2 because she was not yet 55 when she left GE?



Submitted by mk foss on Fri, 2014-01-03 17:50

Unfortunately she must wait until age 59-1/2. The over 55 exception only applies if you separate from service after age 55. 

Submitted by Alan - IRA critic on Fri, 2014-01-03 17:51

  • She would have to wait until 59.5 to avoid the penalty on the NUA cost basis. The separation from service penalty waiver only applies if the separation occurred in the year taxpayer reaches 55 or later. She would also be forced to wait until 59.5 to use NUA if she took any distribution (known as an intervening distribution) from the plan after separating and prior to the LSD year. Age 59.5 would then become a new triggering event allowing a qualified LSD for NUA purposes.
  • Note that if GE spun off any companies and her plan still holds those stocks, these spin off shares would also be eligible for NUA in most cases.

Submitted by Arthur Dicker on Fri, 2014-01-03 18:51

Thank you!

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