NUA – One Trigger Event for Multiple 401(k)s?

Submitted by Chris Dime on Thu, 2022-12-08 22:24

If someone has 3 old 401(k)s from 3 different employers. Will one triggering event (say turning 59.5 or leaving that 3rd employer) allow them to do NUA on all 3 401(k)s?

Are there any rules that say “only NUA on most recent employer” or “only one 401k per trigger event?”

*lets just assume there were no distributions in any of them



Submitted by Alan - IRA critic on Thu, 2022-12-08 23:44

  • Triggering events for a qualified LSD for NUA purposes apply separately to each plan. If the event is separation from service, that applies only to the plan you are separating from. However, reaching age 59.5 obviously applies to all plans, so if you are using age 59.5, that should qualify for the LSD for each of the plans. After your most recent triggering event for each plan, any distributions you take must be in the LSD year, or you will have taken an “intervening distribution” that erases all your triggering events. In intervening distribution from one plan does not affect the other plans. 
  • NUA can be overrated v. just doing an IRA direct rollover. Generally, you should be looking at a cost basis of no more than 25% of current value, but there are exceptions like needing the funds in the near future for expense needs.

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