Retiring - 401K NUA and estimated taxes

[JRB0]

I'm looking to retire this November.  I plan to take an NUA distribution from my 401K in December with like-kind transfer of 401K company stock to company stock in a brokerage account (no stock sales).  I'm already making estimated tax payments for 2024.  The NUA cost-basis will more than double my income for 2024.  I plan to hold the stock for at least a year before any is sold from the brokerage account.

Can I pay the increase in taxes due to the NUA in my final quarter estimated tax payment and not spread the increase over the entire year?  How do I reflect that in the required forms?   Is the one-large-quarter estimated tax covered by IRS Form 4972?  If so, I don't see how that works.

I'm interested in getting TurboTax Live for the upcoming year, tax year 2024, to handle the unusual situations I'll be in, but I don't see where to get that info - either I can't find it or the website isn't working for me.

[dmertz · Accepted solution]

"Can I pay the increase in taxes due to the NUA in my final quarter estimated tax payment and not spread the increase over the entire year?"

Yes, but to avoid an underpayment penalty you might need to annualize income on Schedule AI of Form 2210 to reflect that the income was received in Q4.

Form 4972 is for calculating the taxable income to be included on your tax return.  It has nothing to do with when during the year the income is realized or how or when you pay your tax liability.

[JRB0]

I appreciate the answer, thank you, it has been very helpful.

It's nearly time for me to perform the NUA transfer.  I have some follow on questions:

1) If I purchase TurboTax - Live Assisted, will live assistance be able to handle the NUA tax situation or would that require Live Full Service?
2) Does the purchase of Live Assisted or Full Service cover the current tax year or one year of assistance? In other words, if I paid for Live Assisted TurboTax today, December 2024, would that only cover tax assistance for 2024 taxes, or would that cover the remaining 2024 tax year and suggestions for 2025 taxes until December 2025?

I searched the FAQ and other TurboTax pages, but could not find either answer.

[dmertz]

I certainly hope that any of the TurboTax assistants would be capable of handling this.  Since you plan on not selling any of the shares for at least a year, for 2024 it involves nothing more than the entry of the 2024 Form 1099-R that will be reporting the distribution from the 401(k).

I imagine that any assistance for 2025 would be independent of assistance for 2024.  Just make sure that you keep a record of the cost basis of your NUA shares.