What happens if I want to rollover a pension plan with employer stock that has net unrealized appreciation to an IRA?
Here is how employer stock that has NUA works: You have a choice. You can take the stock and pay ordinary tax rates on your cost basis, rather than its fair market value. You wind up deferring the tax on the NUA. When you sell the stock in the future you get to use long term capital gain rates (currently either 5% or 15% depending upon your ordinary rate.) on the NUA component. Any appreciation that takes place after the distribution will be taxed at either short term or long term capital gains tax rates depending on your holding period. If you choose to rollover the stock into an IRA, you are foregoing the special tax treatment and no tax would be due on the distribution rolled over to the IRA. However, when you take any distribution from that IRA, it will be taxed at ordinary rates.
Related Questions
- What happens if I want to rollover a pension plan with employer stock that has net unrealized appreciation to an IRA?
- What is the difference between a 401K (Employer plan), a 401K Rollover and a Self-Directed Real Estate IRA?
- Can I rollover my employer sponsored plan (example: 401k, 403b, TSA, etc.) to my IRA account?
