Question

In order to take advantage of Net Unrealized Appreciation treatment, which of the following requirements must be met?

1. The stock must be held for one year from distribution
2. The distribution must qualify as a lump-sum distribution
3. The distribution must not be rolled over into an IRA

  

1 only

   

2 and 3

   

1, 2, and 3

Answer 1

Answer-

The correct Option is 2 and 3 The distribution must qualify as a lump-sum distribution and the distribution must not be rolled over into an IRA.

The requirement is that within one year on must distribute the entirety or lump-sum distribution of the vested balance held in the plan, including all assets from all of the accounts sponsored by the same employer.

The Net Unrealized Appreciation (NUA) is only available when the stock is placed into a tax-deferred account, such as a 401(k) or traditional IRA, and is only applicable to the stock of the company for which one is employed and cannot be rolled over.

Option 1 is incorrect. The stock need not be held for one year from distribution