Net unrealized appreciation and time lmit
on 9/2009 There was an article written by Ed Slott about Net unrealized appreciation , some of the factors, and the closing of a supposed loophole by the IRS
In this article , there were qualifiers, to take advantage of the rollover of appreciated stock into a brokerage account, and the capitol gains advantage on the growth of the stock after initial distribution this was described as a triggering event, such as separation form service, reaching 59.5 death or disability.
My question to this is, if an employee retires, leaves his company stock with his employer in his 401k, and then, after 10 years decides to move the stock to take advantage of the capitol gains benefit, is it still available , or has the window closed due to the fact that it was not a triggering event?
Permalink Submitted by Alan - IRA critic on Wed, 2017-01-18 15:55
As long as the employee has not taken any distributions, referred to as intervening distributions, the employee can still do the lump sum distribution and use NUA. The triggering event here was separation from service, or if later reaching 59.5 is another triggering event. For example, if employee separated at 56, then took a distribution from the plan, that would be an intervening distribution and would void NUA. However, at 59.5 employee has a new triggering event which again restores the ability to use NUA. Therefore, if you look back from the present year by year, if you come to a triggering event before you come to a distribution, then NUA can still be applied. There is no time limit, except the start of RMDs are intervening distributions, so the last possible year to do the LSD is the year of the required beginning date for RMDs.