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Old 02-01-2015, 09:17 PM   #21
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Originally Posted by kimcdougc View Post
Hi MRG. The way the NUA was explained to me is first you have to retire from a company and be 55 or older. You have to have company stock in your account. With that stock you can take an NUA on that company stock and only have to pay taxes on the cost basis as ordinary income. The amount that the shares have made above and beyond the cost basis is then taxed at the favorable capital gains rate. This is a one time deal. Since the 72T rule would not give us enough $ to live on we are doing this.

Our tax bite should be around $112,000. Hate that it is so much but worth it to get DH in a much better mental place.
You don't have to be 55 to use NUA. I was only 45 when I left MegaCorp and cashed out my company stock. I paid income taxes at ordinary rates on the cost basis and used NUA on the rest. The NUA was about 97% of the stock's value so my overall (federal) tax bite was about 15% (LTCG). I did pay the 10% early withdrawal penalty on the relatively tiny cost basis part.
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Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
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Old 02-02-2015, 10:07 AM   #22
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At least you will get it back in time. Just a major hassle.
Jim I don't understand. I'm of the impression I get overpayment back at the end of the year. Is there something else that I'm missing. Yes I understand they have my money interest free.

Is there something else that makes it a hassle? Thanks.
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Old 02-02-2015, 10:16 AM   #23
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Jim I don't understand. I'm of the impression I get overpayment back at the end of the year. Is there something else that I'm missing. Yes I understand they have my money interest free.

Is there something else that makes it a hassle? Thanks.
Just meant you need to file and get it back, nothing more. Sorry for not being clearer on this.
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Old 02-02-2015, 10:18 AM   #24
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Thanks, I'm not the most confident person about taxes. I understand. Thanks.
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Old 02-02-2015, 10:26 AM   #25
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Hmm...I just called our 3rd party retirement office for the Megacorp I work for and asked this specific question. I also asked about fed withholding on my pension. He said it was up to me if I wanted taxes to be withheld for the rule 55 401k withdraws and the pension.


Maybe it's up to the plan admin office (Xerox HR solutions just took ours over for the 401K). On the pension the rep said "it's just like a paycheck and you turn in a W-4P form if you want something different than default 20%".


I live in WA so no state tax here. Not ER yet but am 54 yrs old.
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Old 02-02-2015, 02:37 PM   #26
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With vanguard IRA can you take distributions with no taxes withheld? And if so where on vanguard do you find that to set it up for 0 taxes taken out.
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Old 02-02-2015, 05:40 PM   #27
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With vanguard IRA can you take distributions with no taxes withheld? And if so where on vanguard do you find that to set it up for 0 taxes taken out.
I took a RMD from an inherited IRA in 2014 and did not have taxes taken out. I set up the RMD on a phone call with Vanguard and the taxes were part of the discussion. Give Vanguard a call, I'm sure they would be happy to answer your questions.
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