NUA Triggering event 59.5
I have a client who retired in his early 50’s. He has low basis stock that is currently eligible for NUA in his 401k as he has never taken a distribution. He will be 59.5 next year essentially hitting his last triggering event during his lifetime. Can he rollover all assets but the company stock this year, then defer the growth on the company stock until RMD age, and elect to utilize NUA at that time?
I have read that after a triggering event you have only until the end of that year to utilize NUA, but have read other posts on this forum suggesting that is not the case. Am I misunderstanding how the triggering event is applied?
Thank you for clearing up my confusion.
Permalink Submitted by Alan - IRA critic on Tue, 2023-05-30 23:52
Yes, client still qualifies for NUA as long as an intervening distribution is not taken in any year following the latest triggering event, age 59.5 in this case. A distribution taken anytime in the LSD year is not treated as an intervening distribution. However, to carry out this distribution strategy the plan must also allow partial distributions before the LSD year.