NUA – two retirement accounts
My client has appreciated employer stock (private company) in two qualified retirement plans – an ESOP and a 401(k). He is 65 years old and has recently retired. He has not taken any distributions this year (2017).
Can he take a lump sum from the ESOP and use the NUA rules and rollover the 401(k) or does he have to take a lump sum from all plans to qualify for NUA?
Permalink Submitted by Alan - IRA critic on Thu, 2017-05-04 18:01
Certain plans are treated as single plan for LSD purposes, so if the client wants to leave the 401k in place, he needs to ask the ESOP administrator if the 401k plan must also be distributed in order for the LSD to be qualified for NUA purposes. But a 401k rollover to an IRA is considered a lump sum distribution, so client could always do the 401k rollover and ESOP distribution in the same year and use NUA for the ESOP shares.