Net Unrealized Appreciation Question

metaylor3 — Fri, 11 May 2018 00:39:34 GMT

I am looking for information to help me determine whether I can/should use a Net Unrealized Appreciation Strategy with my 401(K) plan.

First some background info. I am 59 and 6 months. We filed a joint tax return for and our 2017 adjusted gross Income was $74,746.

I separated from my employer June 2016, where I have a 401(K) with approximately $754K. Approximately 12.41% ($93.56K) is invested in company stock with cost basis of $43.8K. The rest is invested across 8 different mutual funds.

I am looking at the potential of rolling over the 401(K) to another employer's 401(K), or maybe even to an IRA. However, I learned that rolling over shares of company stock can be complicated because my new employer's 401(K) will not include my previous company's stock that is in my 401(K).

The advisor for my 401(K) suggested that I seek tax advice on whether Net Unrealized Appreciation (NUA) strategy might work for me. I have researched NUA but I am not clear on how it works, how I can use it as a strategy, and how to execute it. As best I can tell, NUA requires a lump sum distribution, but I don't know if this is a distribution of the company stock only or for the full 401(K).

So my questions are;

(1) What is a Net Unrealized Appreciation strategy?

(2) How exactly is it executed?

(3) Does it require lump sum distribution of the full 401(K) or can I take a distribution on the company stock only?

Any assistance and advice is greatly appreciated

Re: Net Unrealized Appreciation Question

10182601 — Sat, 13 Feb 2021 15:59:54 GMT

What should the appropriate Distribution code be in Box 7 of the 1099- R for a Net Unrealized Appreciation transaction?

Should the cost basis of the stock distributed from a 401K in such a NUA transaction be reported in Box 2A of the 1099 R?

Thanks for any help.

Re: Net Unrealized Appreciation Question

MarilynG1 — Tue, 16 Feb 2021 17:50:30 GMT

@10182601 Click this link for help with entering Net Unrealized Appreciation from your 1099-R.

topic Net Unrealized Appreciation Question in Get your taxes done using TurboTax

Net Unrealized Appreciation Question

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