72t with NUA

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L1: 72t with NUAI am retiring in December. I am 55 years old, and originally planned to use the 72t distribution beginning in January. With the decrease in the Fed Fund rate, and considering the current financial disaster, I am a little anxious about the 72t distribution.My question is this: Can I use the NUA distribution for 2009, and then use the 72t distribution for 2010 through 2015? Any help would be greatly appreciated.2008-10-05 17:15, By: patti, IP: []
L2: 72t with NUAYes, you can start the 72t anytime you want.You would take the LSD in 2009, and just hope the shares still carry enough NUA to make that election worthwhile. You may need to abort this strategy if concentration in this one stock requires that you sell it in the plan to avoid a disaster. Proper diversification always trumps a tax benefit because of the relative upside and downside of the two issues.If you stay in the 15% bracket in 2009, your LT cap gain on the NUA for the shares sold will be -0-, although the cap gain will still be in your AGI. SInce you are separating at 55, presumably from the same company that sponsors this plan, there will be no early withdrawal penalty on the cost basis of the NUA shares included in your income.If you later elect to start a 72t plan, it will have to last for 5 years, which is the longer then attaining age 59.5.2008-10-06 12:47, By: alan+s., IP: []

L2: 72t with NUAPATTI — You did not indicate if you’re talking about a 401-K or a pension. If a 401-k, then it would not make sense to set up a SEPP 72-T because you are 55 and would be “separated from service”, which would make distributions from the 401-k exempt from the 10% penalty for early distributions before 59 1/2. Of course your 401-K would have to provide for distributions like this.2008-10-06 14:10, By: dlzallestaxes, IP: []

L2: 72t with NUAIt depends on when you want to use the take the NUA distribution. If the plan allows flexible distributionseach year until age 59.5, you could set them up and defer the NUA until the year you turn 59.5, and then do the LSD using age 59.5 as a new triggering event.But if you want to distribute the highly appreciated shares first, then you will need to take an LSD which would drain the plan and eliminate the flexible withdrawal option for the other assets.If you want to do the NUA now when the LT gain rates are -0- or 15% through 2010, then a 72t plan comes into play with the other assets. If you are willing to wait until age 59.5 for the NUA, then you might explore the plan withdrawal options to get you to 59.5 without a 72t plan. 2008-10-06 15:13, By: alan+s., IP: []