Exxon retiree with NUA question
I am currently working with an Exxon retiree and want to be certain the plan we are discussing is feasible. Basically he wants to file to take his pension in a lump sum rollover this year, but we want to defer the rollover/NUA from his 401k until next year since he has already had a large amount of taxable income for 2014. The 401k also includes some after-tax contributions we would rollover to a Roth IRA. His retirement is 9/1/14. He will be 60 this Sept.
Am I correct that this strategy can be utilized? My concerns regarding the “triggering event” not being in the same year as the NUA distribution, and also the pension and 401k not being distributed in the same tax year have been covered in older posts but I want to make sure this currently still applies.
Thank you in advance.
Permalink Submitted by Alan - IRA critic on Thu, 2014-06-26 21:57
The intervening distribution provisions still apply, but an intervening distribution cannot occur from a plan that is not considered the “same kind of plan” as the plan holding the employer shares. My understanding is that a pension plan including hybrid plans with lump sum options is a different type of plan than a 401k profit sharing plan. But since the plan administrators will issue the 1099R for 2015, it is best to have them confirm that the pension is not the same type of plan and therefore will not affect reporting Box 6 NUA when the LSD is completed in 2015. Retiree will also need to determine if the after tax contributions (plan basis as opposed to NUA cost basis) can be attributed to other than the employee shares. If so, there are ways to isolate that plan basis to get that basis to a Roth IRA, but some methods are riskier than others. If the plan accounts for some of the after tax contributions being in employer shares, then the NUA cost basis is reduced by the value attributed to after tax plan contributions. The NUA itself per share does not change.