NUA
If a 68 year old retired person has taken a few adhoc distributions from their 401k plan over the last 3 years, can they still use the NUA strategy on the stock and roll the rest to an IRA this year??
If a 68 year old retired person has taken a few adhoc distributions from their 401k plan over the last 3 years, can they still use the NUA strategy on the stock and roll the rest to an IRA this year??
Permalink Submitted by Alan - IRA critic on Wed, 2014-01-15 17:33
No, because those distributions are “intervening distributions” since they occurred between the latest triggering event (retirement or age 59.5) and the year of the lump sum distribution. A qualifying LSD must directly follow the triggering event without other distributions in the years in between. The plan administrator should therefore refuse to enter any NUA on the 1099R.
Permalink Submitted by [email protected] on Fri, 2014-01-17 17:50
I have a follow up to this question about distributions. Agree on the ad hoc distributions. What if the participant holds all company stock and has taken only dividend payments as distribution from the plan over the years? Does that also disqualify the participant from NUA treatment? If not and NUA is accomplshed and the participant dies with company stock in their non-qual brokerage account do the heirs receive ste-up value for the stock held. Thank you very much
Permalink Submitted by Alan - IRA critic on Fri, 2014-01-17 18:20
If the participant received a 1099R for the dividends they would be intervening distributions. If the owner of NUA shares passes, there is no basis adjustment for the NUA per share, but there is for any gains generated after the distribution.