NUA timing

sd50 — Tue, 15 Jul 2025 18:37:29 GMT

Does NUA from a 401K needs to be executed within 12 months of separation from company?

Re: NUA timing

NCperson — Tue, 15 Jul 2025 20:41:13 GMT

@sd50 it needs to occur within 12 months - this is a very good analysis of the issues, etc.

https://www.fidelity.com/learning-center/personal-finance/retirement/company-stock

Re: NUA timing

dmertz — Thu, 17 Jul 2025 11:40:43 GMT

No, the NUA distribution does not need to occur within 12 months of separation. However, the distribution of NUA must be part of a lump-sump distribution of the 401(k). To qualify as a lump-sum distribution the entire balance in the 401(k) must be distributed within a single calendar year (one taxable year) and there cannot have been any intervening distributions between the last qualifying event (reaching age 59½, separation from service, or your death) and the beginning of the year in which you perform the lump-sum distribution. All of your distributions after the qualifying event must be in a single calendar year, with the 401(k) being completely distributed before the end of that year.

For example, if you separate from service in 2025 after reaching age 59½, you could wait until 2028 to perform the lump-sump distribution (including the NUA distribution) as long as after separation from service you take no distributions in 2025, 2026 or 2027.

See section 402(e)(4): https://www.law.cornell.edu/uscode/text/26/402#e_4

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