NUA Question
I have an NUA question.
I have an ESOP through my employer. I left the company at age 50 and rolled a portion of my ESOP into my current employer’s 401(k) when I was age 57. I’m 62 now and have a balance still in the ESOP. Can I take the current balance of my ESOP and complete the NUA strategy on that amount even though I did a partial rollover of my ESOP 5 years ago? Can I complete the NUA strategy on the money I rolled into my 401(k) 5 years ago since I still own the company stock inside the 401(k) or am I not allowed to do that? Thanks in advance.
Permalink Submitted by Alan - IRA critic on Wed, 2022-05-18 14:59
The shares rolled into another plan at 57 will not qualify for NUA, and that rollover would also have disqualified you from making a qualified LSD, but you acquired a new triggering event upon turning 59.5, so you are still qualified for an LSD from the ESOP for the remaining shares in the ESOP. However, if you also have a 401k plan still in place, you must include that in your LSD as well because it is considered the same type of plan as the ESOP. Finally, if you have been receiving dividends under Sec 404(k) on the ESOP shares, these will not disqualify you for the LSD.