NUA | Ed Slott and Company, LLC

NUA

One of our clients tried to initiate an NUA strategy with company stock in her 401k plan. When she received the stock certificates they were made payable to her IRA. The investment company that issued the certificates would not take them back and re-issue them payable to her. They are claiming the request was to issue the certificates payable to the firm. Is there a way for her to still do the NUA strategy and deposit the certificates into a non-qualified account?

Not without the cooperation of the plan administrator. The IRS has ruled on several occasions that once employer stock is held in an IRA account for even a miniscule length of time, the NUA option is lost. Therefore, it appears the only solution for this is to determine why the shares were made payable to the IRA in the first place, then develop the best approach to get the plan to re issue them. At least with a direct rollover format, there is no 60 day time limit to roll over the funds to an IRA in the event these efforts are unsuccessful. And that would have to be done in the event the plan administrator would not budge, in order to prevent a full taxable distribution from the plan.
 

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