I have shares of my employers ESOP that allows for NUA. My basis is approximately 10% of the current value. I have compared NUA with rolling the balance into an IRA and doing a back door Roth for a percentage of it. The PV of the future estimated tax payments for the two approaches are surprisingly close, but the NUA model massively simplifies our taxes later in life when simplification matters. It also is a benefit to our daughter, that we don't leave her with significant Inherited IRA RMDs.
My question relates to qualifying for NUA treatment. I diversified on two different occasions, the first at age 55 and the second at age 60, by selling and rolling a percentage of the shares into a 401k. I am close to retirement and would like to take advantage of NUA tax treatment on the balance. I have the option of doing an in-service distribution at age 65, I am now 66. However, I believe I used the 59.5 trigger option and won't qualify for the NUA treatment for an in-service distribution. I may use the 'termination' trigger option when I formally retire in about 18 months. I'm hoping not to qualify for the 'death' trigger. Our ESOP does not permit non-active employee ownership, so the sale will defintely happen, it's only the tax treatment that is TBD.
I am disappointed that I wasn't familiar with NUA when I did rollover at 60, but there is no unwinding it and I still have another shot at NUA.
Am I understanding NUA correctly? Are there any other considerations or landmines that I need to avoid to disqualifying myself? Any knowledge or experiences would be appreciated. Thanks.
My question relates to qualifying for NUA treatment. I diversified on two different occasions, the first at age 55 and the second at age 60, by selling and rolling a percentage of the shares into a 401k. I am close to retirement and would like to take advantage of NUA tax treatment on the balance. I have the option of doing an in-service distribution at age 65, I am now 66. However, I believe I used the 59.5 trigger option and won't qualify for the NUA treatment for an in-service distribution. I may use the 'termination' trigger option when I formally retire in about 18 months. I'm hoping not to qualify for the 'death' trigger. Our ESOP does not permit non-active employee ownership, so the sale will defintely happen, it's only the tax treatment that is TBD.
I am disappointed that I wasn't familiar with NUA when I did rollover at 60, but there is no unwinding it and I still have another shot at NUA.
Am I understanding NUA correctly? Are there any other considerations or landmines that I need to avoid to disqualifying myself? Any knowledge or experiences would be appreciated. Thanks.
Statistics: Posted by gregwils — Wed Dec 27, 2023 12:11 pm — Replies 0 — Views 25