Net Unrealized Appreciation (partial rollover)

[Dobber]

401k plan participant account incudes appreciated employer securities and mutual funds

The participant wants to transfer a portion of his appreciated company stock to a taxable brokerage account while rolling to an IRA the balance.  Mutual fund balance would also be rolled to an IRA ensuring a lump sum distribution.  More specifically he want to rollover the stock basis to an IRA (thus avoiding paying income tax on the basis) while transferring NUA portion to a brokerage account (avoiding LTCG tax until he sells the stock).  Thus leading to no immediate taxation 

From my research the IRS has blessed this NUA strategy in a series of PLRs.  My question(s) are regarding the order and method of transactions.

For example does the stock need to be distributed first (before the mutual funds) or vice versa?

Furthermore, does the ordering of employer securities rollover/transfer matter?  For example, let's say the participant has $100,000 in stock ($10,000) is basis where the remaining $90,00 is NUA. Can the $100,000 be split (90/10) in a single transaction by a IRA rollover and transfer to a taxable brokerage account? Does it matter if the stock is moved via trustee transfer vs 60 day rollover?

All help is appreciated. 

[Dare Johnson]

I think the participant is a little confused about the distribution of stock with NUA.

The participant distributes the stock and pays tax on the cost basis of the shares - $10,000 in this case (this is the plan's cost basis, not his tax basis).  As long as the participant hold the stock for 1 year plus 1 day, any stock sale will be at LTCG rates with a $10,000 tax basis.  The 1099-R will list a taxable amount of $10,000 and NUA of $90,000.

Is the stock publicly traded?  If not, the participant will hold in his personal name.

I don't think there is any issue on timing of stock distribution vs. rollover to IRA.

[Cardscrazy]

Dobber, I'm kind of with Dare Johnson on this one (except that ESOP stock has no holding period requirement to get LTCG) and I was not aware you could split NUA as it was my thought that every share of stock had a cost basis that was inexorably linked to each share.  If you could please share your PLR references, that would be helpful.  As to your specific question rollover vs. transfer which should happen first, I'd say it would not matter what goes first if you can split the NUA like you say.