Hello,
I had previously inquired on this forum (7-10-17, “NUA and residual account balance”) about a client of mine who used the NUA strategy in 2016, when she separated from service with P & G. I was concerned because in 2017, she received a notice from the P & G retirement plan that she has a residual account balance as the result of trailing dividends. My concern was that these dividends blew the lump sum distribution in 2016 and negated the NUA. At the time, we determined that there was no IRS guidance on this issue and made a plan to take the residual balance as a distribution in a later year (not consecutive with the NUA), just to avoid highlighting the situation.
I have recently visited this forum again and discovered a separate discussion related to my issue (discussion: NUA and Dividend Payout from 401K, 4-28-15, with a followup on 7-3-17) where a PLR is mentioned. I believe this 1999 PLR. [www.irs.gov] addresses my issue on page 4, in the third paragraph (which refers to the issue described on page 2, last paragraph, #2) – that the LSD is not affected by the dividend distributions being received after the participant’s separation from service and attainment of age 59 1/2. Am I correct in applying this PLR to my client’s P & G situation?
Thank you in advance for your assistance on this.