ESOP
NORMALLY WHEN MONEY COMES OUT OF AN IRA, IT IS ORDINARY INCOME.
THE ESOP’S NEWSLETTER SAID THE NUA (NET UNREALIZED APPRECIATION) IS CAPITAL GAIN INCOME.
HOWEVER, IF IT IS ROLLED INTO A IRA, HOW CAN IT BE CAPITAL GAIN? I HAVE SEEN AN OPTION R ON THE TAX FORM.
DOES THIS APPLICATION APPLY?
THANK YOU
Permalink Submitted by Alan - IRA critic on Fri, 2021-10-15 16:14
Once an ESOP is rolled to an IRA, the NUA potential is forfeited and the IRA distribution is taxed as ordinary income. For the NUA cap gains rates, the shares must go to a taxable brokerage account or be sold by the plan after distribution.