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NUA & 72T

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Bykburl

L1: NUA & 72TFirst I want to say thanks for all the great information sharing on this site. I am retiring next year in June when I will be 55. I am planning on building a new home and paying for it from some of my shares of stock (NUA since I have a real low cost basis, and the stock has risen a great deal). The question I had was, can I use the NUA option to get the large chunk of money I will need to build my house, and then use the 72T rule to start my 5 year withdrawals to live on. I wasn”t sure I could do both in the same year. Thanks.Ken2006-10-04 22:53, By: kburl, IP: [198.66.72.2]
L2: NUA & 72THello Ken:
Short answer — YES.
When the shares are distributed, they are sent to an after-tax regular brokerage account creating a “taxable event”” fortunately at the trustee”s basis in your shares. Then you sell those shares as you please paying predominately capital gains rates on those sales.
Totally separate, the remainderman of your deferred plan balances with your employer must be transferred to an IRA; a “non-taxable event”. Then, if you so choose, you may launch a SEPP plan on that new IRA account and/or other IRA accounts you might have.
Lastly, you need not wait until June of 2007 to actually attain age 55. You can put all of your plans into effect commencing 1/1/07; the year in which you will attain age 55.
TheBadger
wjstecker@wispertel.net
2006-10-05 07:31, By: TheBadger, IP: [72.42.66.14]

L2: NUA & 72T Thanks Badger. I didn”t know that I could start the plan before my 55th birthday. Interesting!Ken2006-10-05 11:58, By: kburl, IP: [198.66.72.2]

L2: NUA & 72TKEN :
Refer to my recent dissertaion on NUA in response to another inquiry. Basically, you can also open a margin account for those NUA shares after they are transferred from the retirement plan to your non-retirement broker, or sell them as needed. As with the other person, you have to consider other taxable income in the next 5 years to determine all of the aspects to be considered in planning.
GET A QUALIFIED TAX ADVISOR WHO IS FAMILIAR WITH NUA, AND CAN THINK “OUTSIDE THE BOX”.2006-10-05 15:24, By: dlztaxes, IP: [4.175.9.33]

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