ESOP in 401k and get NUA?

[Guest donmartin]

Client has a 401k which has an ownership interest in the ESOP consists of shares of which 98.5% is company stock (Lockheed) and the other 1.5% is a bond fund.

So the question is, does the client actually own Lockheed stock (which would allow for NUA) inside the ESOP if he has ownership of "shares" in an ESOP that in turn are a blend of company stock and a bond mutual fund?

Client meets the usual NUA rules about retiring now, at age 65. Of course to get NUA one must withdraw entire balance of 401k, put the company stock directly into a taxable account (never into an IRA), and roll the rest directly into an IRA. They must pay tax on the basis part of the company stock and when they sell stock they pay LTCG.

[Guest mjb]

1. Isnt this a Q that can be answered by the plan admin since the employee has to be given a 402(f) notice as well as a 1099-R which will list the amount of NUA and basis?

2. What does the SPD say about types of distributions available under the plan?

3. NUA is available for LSD where employer stock is issued to to the participant. Will the distribution be made in shares of stock in the participant's name?