NUA / RMd
I retired Jan 13 2018. I want to execute the NUA in 2019. I continue to receive wages as part of retirement package thru August 2018. It would be more tax favorable if I can execute Nua in 2019. I am 71 years old .My birthday was April 6.Can I wait till 2019 or will RMD affect this? I thought you can delay initial RMD till April of the following year?
Permalink Submitted by Alan - IRA critic on Sun, 2018-07-08 21:00
Yes, you have a significant planning opportunity here. Your required beginning date for RMDs is 4/1/2019 and if you delay the 2018 RMD until 2019 you wlll have to take 2 RMDs in 2019. However, if you do your qualified LSD in 2019, both the taxable cost basis and the NUA itself qualifies for your RMD, therefore it is very likely that the distribution of employer stock that you intended anyway will also cover the 2 years of RMDs. Be sure not to take any distributions from the plan this year since that would destroy the NUA potential. Finally, note that if you have any after tax balance in the plan, things get more complex because the plan accounting would probably apply the after tax amount to reduce your taxable cost basis, but if you prefer you might benefit from rolling the after tax amount to your Roth IRA instead. Please advise if you have an after tax balance for more info.
Permalink Submitted by Gil Shifrin on Mon, 2018-07-09 18:17
Thanks for the quick response. I do not have any after tax amount. I will roll over the non company stock in my 401K to an IRA. I will move all of the company stock in the 401K to a new taxable account. I will do all of this in 2019 prior to April 2019. Thanks again.