We have a client who is considering an NUA distribution out of his 401(k) – cost basis on the company stock is about $100k and value is about $650k. He left the company a few years ago, and has been taking the quarterly stock dividends out of the 401(k) as income. The client is 41 years old – is he still eligible for the NUA election, or does the fact that he’s been taking the quarterly stock dividends as income disqualify him?

Thanks!