NUA strategy
value of 401k is approx. 200k
cost basis of the PNC stock is: $32,572
The value of the PNC stock is: $148,040
gain of $115,468
I feel this is a good NUA strategy.
a. We would rollover the difference of $52,000 to an IRA.
b. We would have the 148k of PNC stock transferred to an individual brokerage account.
c. He would pay taxes on the gain of the 115k for tax period of 2021.
d. but he would not be taxed on the whole amount in an IRA for lifetime.
Is all the above correct?
Thankyou
Doug
Permalink Submitted by Alan - IRA critic on Tue, 2021-05-04 23:25
No. For c) the NUA is not taxed until the shares are sold. In 2021, the cost basis of 32,572 would be taxable as ordinary income, and subject to penalty unless separation from service was done at 55 or taxpayer reached 59.5. For the amount rolled to IRA, taxes would not be due until IRA distribution were taken, whether or not RMDs.