Thanks for your response, but I am almost at a loss for how to respond. You say that Pub. 575 Pub 575 “does not accurately paraphrase section 402(e)(4)(D) of the tax code”. There are differences between the two versions of the rules, none of which have any bearing on this situation that I can see. Pub 575 says “Because of” where the tax code says “On account of”. Pub. 575 uses the word “participant” or “plan participant” where the tax code uses the word “employee”. The tax code has some extra words that Pub.575 does not have in the “disability” “qualifying event” section. The tax code uses commas where Pub. 575 uses semicolons. For my purposes, and those of the original poster, I think there is no appreciable difference between them.
You ignore my bold italics on the word “After”, and its importance. You say “Reaching age 59½ is a single event”, completely ignoring the word “After” that the sentence starts with: “After the participant reaches age 59 1/2;” in Pub 575; “after the employee attains age 59½,” in the tax code. Words matter. Any second grader knows what the word “after” means, and knows that saying “after event abc” is a different thing from saying “event abc”. The words “Because of”/”On account of” also matter. If you’re going to claim your “qualifying event” is one of the two events that start with “because of”/“on account of”, and the IRS asks you "why are you taking this lump-sum distribution?", you better be able to truthfully answer "because of" or “on account of” that event. Those starting words must have been carefully chosen. If all qualifying events worked the same, they would all have started with the same word, not different words. Sorry, but I don’t think I can lose – before an impartial, reasonable and logical judge familiar with the English language – the argument that “after the employee attains age 59 ½” actually means after the employee attains age 59 ½. Either that qualifying event happens every new day after the employee is age 59 ½, or that qualifying event is still valid because the answer to the question “is today a day after the employee attains age 59 ½?” is always “yes”. The event does not need to happen every new day because it doesn’t expire until the participant dies and the death event replaces it. Those are the only 2 reasonable and logical ways to look at it. You seem like a logical and reasonable person. So are you telling me – in some sly, roundabout way - that I will lose that argument because the judge will be somebody in the IRS that will not be impartial, not logical, and not reasonable?
You say “IRS Revenue Ruling 83-57 describes a lump sum distribution. Note that it refers to ‘the occurrence of certain events,’ those now enumerated in section 402(e)(4)(D)”, then you quote from Ruling 83-57. And then you declare, unsupported by anything you just quoted from Ruling 83-57, ”Reaching age 59½ is a single event, not a recurring event.” Ruling 83-57 does not say that or anything remotely near that. You made that up out of thin air. Did you think I wasn’t going to actually read 83-57? Like the original poster, all I’m trying to do is get the most out of my 401(k) here by doing the right and legal thing.
Can you cite, somewhere in IRS documentation, where you get the idea that the original poster’s previous withdrawals invalidate taking a lump-sum distribution and applying NUA treatment to the company stock in the account, which would be transferred in-kind to a brokerage account? If your only rationale is the “need for a qualifying event” implied by your response to the original poster, I simply cannot accept the idea that cherry-picking some IRS words to ignore – like the word “After” in “After the employee attains age 59 ½” is a rationale that could stand on its own. I’m guessing that, like me, the original poster was not forced to take a lump-sum distribution at separation time and he did not choose to do so then, so his qualifying event could not be separation from service – he has been, for some time, no longer an employee, and he could not honestly say “I am taking a lump sum distribution now because I separate from service”. The original poster’s qualifying event was “After the employee/participant attains/reaches age 59 ½,”; he can honestly answer “yes” to that question all day every day. The IRS can’t just throw out the word “After” when they want to. I acknowledge that you have backing in the financial community – my financial advisor said the same thing you say. I don’t believe him either. That’s why I was searching the TurboTax community. My financial advisor was also totally hung up on the words “triggering event” (until I argued him off of them), which appear on nearly every financial website’s NUA section, but appear nowhere in IRS documentation that I can find. If you can’t cite where you got the “previous withdrawals invalidate using NUA” idea from – nobody has been able to yet - then the whole idea has a bad smell to it, the same bad smell that “triggering event” has.
