NUA
401k plan participant account incudes appreciated employer securities and mutual funds
The participant wants to transfer a portion of his appreciated company stock to a taxable brokerage account while rolling to an IRA the balance. Mutual fund balance would also be rolled to an IRA ensuring a lump sum distribution. More specifically he want to rollover the stock basis to an IRA (thus avoiding paying income tax on the basis) while transferring NUA portion to a brokerage account (avoiding LTCG tax until he sells the stock). Thus leading to no immediate taxation
From my research the IRS has blessed this strategy in a series of PLRs. My question(s) are regarding the order and method of transactions.
For example does the stock need to be distributed first (before the mutual funds) or vice versa?
Furthermore, does the ordering of employer securities rollover/transfer matter? For example, let’s say the participant has $100,000 in stock ($10,000) is basis where the remaining $90,00 is NUA. Can the $100,000 be split (90/10) in a single transaction by a IRA rollover and transfer to a taxable brokerage account? Does it matter if the stock is moved via trustee transfer vs 60 day rollover?
All help is appreciated.
Permalink Submitted by Alan - IRA critic on Fri, 2022-09-16 15:44