Multiple NUA Triggering Events in same calendar year
I am looking for feedback for a very specific NUA scenario. This client turned 59.5 in July 2020 and then also separated from service in late 2020 so he had two triggering events in 2020. In January 2021, he took a partial 401k distribution and has taken no other distributions since that time. Does the disqualifying distribution in 2021 disqualify BOTH triggers that took place in 2020 or does he still retain the ability to complete NUA in 2023 because he had two separate triggering events? I believe the answer is that he is no longer eligible, but I can’t find anything that specifically states you only have 1 active trigger at a time. Any help is greatly appreciated.
Permalink Submitted by Alan - IRA critic on Tue, 2023-02-14 20:23
Regardless of which triggering event is used, client took an intervening distribution after both of them and any LSD taken now would not be qualified for NUA. In other words, the intervening distribution does not disqualify just one of the triggering events, it disqualifies both of them. To utilize NUA client would have needed to complete the LSD by the end of 2021 to allow the Jan 2021 distribution to be part of the LSD.
Permalink Submitted by Jessica DeBold on Tue, 2023-02-14 20:49
Thank you Alan, I assumed that was the answer but I just wanted confirmation.