Lump Sum Distribution/NUA Qualifying Events

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L1: Lump Sum Distribution/NUA Qualifying EventsJust looking for confirmation.
Person retired at age 55. Starting taking monthly distributions from qualified company plan at that time. She is now 60 years old (will be 61 this year) and wants to do a Lump Sum Distribution – part IRA transfer and part NUA.
She has taken distributions in 2008. Since she is over 59 1/2, there are no restrictions surrounding doing the LSD – other than needing to do it all one calendar year – correct?
2008-03-13 12:09, By: Kim, IP: [24.172.244.211]

L2: Lump Sum Distribution/NUA Qualifying EventsThere could be a problem besides completing a proper LSD.
The LSD must be in a year that follows a triggering event without intervening distribution years. The last triggering event here was attaining age 59.5. If she attained 59.5 in 2006 and then took any distributions in 2007, then the 2007 distribution would be considered an intervening distribution and disqualify the LSD. The 2008 distribution would not be a problem in itself other than the fact that it results in the LSD having to be done in 2008 also.
The only new triggering event she would have is total disability or death, and those arenot pleasant options. Or as some people have done, return to work and separate again to create another triggering event via separation from service.
2008-03-14 20:32, By: Alan S., IP: [24.116.165.60]

L2: Lump Sum Distribution/NUA Qualifying EventsThank you Alan. I think I”m confused here. Let me try this:
1) Retired at age 55
2) Birth month is July. Therefore, she turned 59 1/2 in January 2007.
3) She took 12 (monthly) distributions in 2007
4) She is now 60 years old. Will be 61 in July 2008. She has taken 3 (January-March) distributions.
You stated:
The LSD must be in a year that follows a triggering event without intervening distribution years
“Must be in A year”. Does that mean that it does not to be the next year triggering an event – it just has to be in a year after the event that didn”t have a distribution?
Bottom line……..
1) Is there ever an opportunity for her to do a LSD other than death/disability- part IRA transfer and part NUA?
2) If yes, am I understanding that even though she has taken distributions out of the qualifed plan in 2008 – if the LSD gets totally completed in 2008 – that will work – or –
3) Since she”s taken a distribution already in 2008 from the qualified plan, she can not do the LSD until 2009?
Thanks ago for all of the wonderful expertise provided on this Site.
2008-03-15 11:21, By: Kim, IP: [4.89.132.126]

L2: Lump Sum Distribution/NUA Qualifying Events1) Is there ever an opportunity for her to do a LSD other than death/disability- part IRA transfer and part NUA?
No, because 2007 had intervening distributions after the triggering event and it is obviously too late to do the LSD in 2007.
2) If yes, am I understanding that even though she has taken distributions out of the qualifed plan in 2008 – if the LSD gets totally completed in 2008 – that will work – or –
IT would have worked if she had not taken any distributions in 2007, except prior to the 59.5 date.
3) Since she”s taken a distribution already in 2008 from the qualified plan, she can not do the LSD until 2009?
She cannot do the LSD at all now, unless she becomes disabled per the IRS definition of disabled. It was those 2007 distributions that caused the problem. Only out I can see is if she returned to work and generated another separation from service date, which would be new triggering event.
*** Note that there is another limited option to use NUA, but is is usually not worth it. Under the limited option, if the distribution is NOT a qualified LSD as stated above, NUA can still be used, BUT it is limited to only those contributions that were employee contributions, and excludes employer contributions. That would result in a reduction of the NUA available, ie the employer would enter a much lower figure in Box 6 of the 1099R. It may still be worth getting a quote on this basis, since a qualified LSD is not available here.2008-03-15 13:21, By: Alan S., IP: [24.116.165.60]

L2: Lump Sum Distribution/NUA Qualifying EventsThank you again.Even though it”s not good news.
The “triggering event” of turning age 59 1/2happened in January 2007. So from what I understand, itwas basically the monthly distributions of February – December 2007 that”blew this” for her? and the distributionsso far in 2008 are just icingon the “blew it” cake?
If she had NOT taken any distributions from February 2007to thepresent- she would be able to do the LSD/NUA?
2008-03-15 16:09, By: Kim, IP: [4.224.252.139]