First, I’m not looking for legal advice, just an explanation of what the basic rules are about this tax treatment.
I have a small balance remaining in a former employer’s ESOP plan. In November, since I no longer worked there, I moved all of my 401K money out of the company plan and into an IRA with another company that had a better deal and better service. Now I’m trying to do something about these approximately 75 shares of company stock remaining. Looking at their web site, I see a description of a special tax treatment called “Net Unrealized Appreciation (NUA),” in which one gets taxed *now * on the original cost basis of the stock instead of the current market price,with the appreciation being taxed as capital gains when the stock is sold. The current cost basis is about 10% of the current market value, so I’d prefer to do that.
Unfortunately, neither the web site nor the “advisors” at my former employer seem to be able to clearly explain what the rules for doing this are. One of the “advisors” at first told me that they were not allowed to explain the term to me, nor to explain the process of how one took a distribution under this option. Then they talked in circles for about a half hour until I got a headache. FWIW, this is a financial services company that has a rep for giving small investors very poor service, so I’m not really surprised. The really knowledgeable people were most likely off helping gazillionaires and don’t have time for small fry like me.
I’ve googled, and also searched the IRS web site, and have not found much help there, either. I would have thought that *somewhere * the rules would be stated, as in, “To be eligible for NUA tax treatment, the following conditions must be met: A, B, C…” However, I’ve not been able to find this anywhere.
Is there anyone out there who can either explain this, or point me to a place where I can find this out? FWIW, I am over 59 1/2, and have not taken any other distributions from a retirement plan, just moved them from one plan to another.