Plan Rollover into IRA

L1: Plan Rollover into IRAjim-this may not apply to you but if it does,it could save you big money. these questions will determine your situation
1-are you going to receive stock of YOUR company (e.g.from an ESOP) when you retire? if not,read no further
2- are you going to receive this stock in the year in which you “separate from service”i.e.leave the company by retiring
3-is the cost basis in YOUR company stock that you will receive low compared to it’s market value? If i ans 2 are yes and 3 is “pretty low”, then you may be eligible to take all or some of the stock out without rolling it into an IRA and also not paying taxes on the MARKET VALUE of the stock at time you get it. Instead , if the cost basis-which your company can give you-is low enough,you can use the Net Unrealized Appreciation (NUA) method of taking the stock. In this scenario, you pay taxes, and the 10% penalty if under 59.5, on the COST BASIS only and then pay long term capital gains on any shares sold in the future. As you can see , the lower your cost basis, the more the NUA makes sense. Bu using this method, you do not have the NUA’ed stock in an IRA thus are not subject to any of the IRA restrictions such as having to use 72t to get money before 59.9 w/o the 10% tax penalty. Also,if your cost basis is low enough, you will save substantially on taxes compared to an IRA. Caution-this is little known but old section of tax code so many CPA’s and others in fin services do not know about it. Many of my clients have used it for years and it works well,especially for the younger retirees because you don’t have to be stuck in a fixed 72t for long periods of time. If confused, don’t worry, just find someone who knows about it and they can help you see if you qualify and if so, is it a viable alternative for you. good luck2005-12-11 14:50, By: john, IP: [24.182.94.66]

L2: Plan Rollover into IRAI agree that there are planning opportunities using NUA rather than a long term SEPP, or as a front end distribution to shorten a future SEPP.
Also, note that as long as the company stock is distributed from the plan as a qualifying lump sum distribution, there is no requirement that it be in the year of separation. It can be considered distributed using separation as a triggering event as long as there are no intervening distributions. In other words, it could sit in the plan for a couple years, then be distributed along with any other plan assets of the same or similar plans as an LSD, and NUA benefits would still apply.2005-12-12 22:46, By: Alan S., IP: [24.116.165.157]