Does partial Roth conversion of 401k this year lose NUA option in future years?

Home Fairmark Forum Retirement Savings and Benefits Does partial Roth conversion of 401k this year lose NUA option in future years?

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  • #74834
    AMTbuff
    Participant

    I want to convert some of my 401k pretax to Roth this year, excluding employer stock from this in-plan conversion. In a future year I plan to retire and move the entire 401k, both pretax and Roth and company stock, to Vanguard, using the net unrealized appreciation option. Does my partial Roth in-plan conversion this year interfere with NUA treatment in a future year?

    #74835
    Alan S.
    Participant

    An excellent question that few would even think to ask. The IRR would eliminate NUA if the IRR was done after the last triggering event for NUA and before the LSD year. But you still have separation from service or reaching 59.5 as future NUA triggering events. Both will erase the effect of the IRR. Therefore, you can do the IRR and still utilize NUA after you separate from service. Be sure to not include appreciated employer shares in the IRR. See QA9 in Notice 2013-74.

    • This reply was modified 1 month ago by Alan S..
    • This reply was modified 1 month ago by Alan S..
    #74967
    AMTbuff
    Participant

    Wow, Alan, that is much more definitive an answer than I ever expected. I appreciate it greatly. Thank you and Merry Christmas!

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