Company Stock

[Merr]

Is it always best to take company stock given to you in a 401K or retirement account as a one time lump sum distribution into a taxable account utilizing the tax benefit called NUA Net Unrealized Appreciation.

[Buckeye]

The concept of NUA (the possible tax savings and flexibility) was nice but it didn't fit with what I have learned to be more important which is proper diversification.

[Merr]

I understand that diversification is important. I have stock in retirement account at cost basis of $9 (10,000 shr) price today $75. I am retiring in Jan. and will only have income of the stock distribution $90,000 and dividend and interest income. I would be locking in LT Capital gains of $66 after one year If stock is still $75 when I take distribution.

I was asking if I was missing anything, because this sounds like a great deal.

[boutros]

Quote:

Originally Posted by Merr Is it always best to take company stock given to you in a 401K or retirement account as a one time lump sum distribution into a taxable account utilizing the tax benefit called NUA Net Unrealized Appreciation.

Not always best. It is a situation by situation decision. It sounds like you understand the concept. The one thing to know is that any current gains are LT even if you sold right after it was removed from the plan. Any gains earned after distribution date are aged from the distribution date.

[walkinwood]

If I leave the company before 59 1/2, can I leave my company stock in the 401-K plan till I hit 59 1/2 and then make use of the NUA?

This move will avoid the 10% penalty.