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L1: ConfusedI have 401k and qualified employee rertirement plan (pension).If Iseparate frommy job at age 54, can I roll over the pension lump sum amount to an IRA specifically to do a 72t and avoid the 10% tax penalty? Will I be taxed for rolling over the pension lump sum amount to an IRA?I intend to use the balance of my 401k to pay off my debts and do not care if I pay 10% tax penalty.Thanks for your help.2010-05-20 23:45, By: wyzzy, IP: []
L2: ConfusedWhat is your date of birth ? If you can wait until you reach the calendar year in which you will BECOME 55 to retire from your firm, then you can take any amount of distributions from your 401-K WITHOUT THE 10% PENALTY, as long as your emploter’s plan permits it. Furthermore, check with your employer’s HR Dept or retirement plan administrator(s) to see if your 401-K plan, and/or pension plan, include employer stock. If so, ask for the NUA figures because you can save a LOT of taxes if these shares have appreciated significantly in value since your employer purchased them for you in your plan as his contributions. What is the value of each of these plans for you ?P.S. Get professional assistance from a qualified tax advisor or financial planner experienced in retirement planning.2010-05-21 02:22, By: dlzallestaxes, IP: []

L3: ConfusedRegarding NUA, can I reallocate my 401K to my employer’s stock nowand quit in less than year and have the sale of the stock as long term capital gain regardless of any appreciation?2010-05-21 14:56, By: wyzzy, IP: []

L4: ConfusedNO. That’s not how it works.Many employers make THEIR contribution and/or matching funds into employer-sponsored plans by buying or transferring company stock. That is what this provision applies to.You cannot take YOUR contributions and buy company stock, because that will not qualify for this provision.2010-05-21 17:26, By: dlzallestaxes, IP: []

L4: ConfusedI agree with the answer, but not the explanation of why it will not work. NUA can be acquired on company shares purchased with either regular deferral money by the employee or bymatching shares purchasedby the employer. It would not apply to shares purchased in a self directed brokerage window that many plans offer.In addition, NUA onlyincludes appreciation after share purchase. If there is no appreciation, there is no NUA. Thereforeyou would not get the LT cap gain rateunless there was shareappreciation IN THE PLAN prior to distribution of the shares. If you change you current investment direction now to the max allowed for the company share option,AND you have gains prior todistributing the shares, you would have some NUA. But most NUA is built up over many years, not in a very short period unless yourcompany is a small start upthat just takes off. Finally,since with NUA you owe the taxes on the full cost basis in the year of the LSD, NUA is most viable if your cost basis is 30% or less. But if you plan to sell all the shares right away,that 30% could be much higher and still make sense. Finally, the cost basis portion issubject to penalty unless you meet the age55 separation or one of the other penalty exceptions.2010-05-21 23:47, By: Alan S., IP: []