I took a qualified NUA distribution when I rolled over my retirement assets after a job change. After more fully analyzing the tax benefits, I think it would be better to have rolled those funds into an IRA with the rest of my funds given the 10% penalty and only modest appreciation. I am within the 60-day window for indirect rollovers…would it be possible to “unwind” the NUA distribution in full or in part by selling the shares I received and rolling those funds to an IRA (I have not done any other indirect rollovers this year)? If so, would the allowable rollover amount be the amount of the gross distribution?
Yes. Within 60 days you can roll over some or all of the NUA shares in-kind or you can sell the shares and roll over the sales proceeds. In either case you would be rolling over the value that the shares had on the date distributed, regardless of the value on the date of the in-kind rollover or the amount of the proceeds from the sale.
There is no limit on the number of indirect rollovers of distributions from the type of employer plan from which you could have received a distribution of NUA.
While an in-kind distribution from an IRA must be rolled over in-kind (same-property rule), that rule does not apply to distributions from non-IRA employer plans. From IRS Pub 590-A:
Sale of property received in a distribution from a qualified plan. Instead of rolling over a distribution of property other than cash, you can sell all or part of the property and roll over the amount you receive from the sale (the proceeds) into a traditional IRA. You can’t keep the property and substitute your own funds for property you received.
Yes. Within 60 days you can roll over some or all of the NUA shares in-kind or you can sell the shares and roll over the sales proceeds. In either case you would be rolling over the value that the shares had on the date distributed, regardless of the value on the date of the in-kind rollover or the amount of the proceeds from the sale.
There is no limit on the number of indirect rollovers of distributions from the type of employer plan from which you could have received a distribution of NUA.
doesn't an NUA have to be in-kind, and then the shares rolled into the IRA within 60 days ?
i.e. you can't sell the shares.
cc: @TaxGuy28
While an in-kind distribution from an IRA must be rolled over in-kind (same-property rule), that rule does not apply to distributions from non-IRA employer plans. From IRS Pub 590-A:
Sale of property received in a distribution from a qualified plan. Instead of rolling over a distribution of property other than cash, you can sell all or part of the property and roll over the amount you receive from the sale (the proceeds) into a traditional IRA. You can’t keep the property and substitute your own funds for property you received.