NUA
Hello,
Question.
When a plan participant has a triggering event (such as 59 1/2) are they able to utilize NUA with part of the stock or does it all need to be done at once? Some feedback indicates it can be done within in 1 calendar year.
Can you please shed some light on this?
Thank you for your help in advance.
Regards,
Permalink Submitted by Alan - IRA critic on Wed, 2023-04-12 15:49
A partial NUA can be done as long as the plan allows partial contributions, but the entire plan balance along with similar plans of the employer must be distributed in the same calendar year to qualify as a lump sum distribution for NUA purposes. In a case like this the participant should determine if the plan uses an average cost basis for the employer shares as most do, or if it applies different cost basis to different lots of shares. In such a case the participant should specify that the lower cost basis employer shares are distributed.
Permalink Submitted by Brian Smith on Wed, 2023-04-12 19:03
Thank you for your response to the first question. I apprecaite it! Additional question, can you utilize NUA with a portion of the stock (assuming it’s done within 1 year) and transfer company stock into a CRUT without accelerating capital gains? Thank you.