hard · Certified Financial Planner Risk Management
The Okada household includes a client, age 64, who is retiring from a firm where she holds 1,500,000 in a 401(k), including 400,000 of employer stock with a cost basis of 120,000. She has no immediate liquidity needs but wants to minimize the long-term tax impact on this concentrated position.
What is the most appropriate first step for the CFP® professional?
- Convert the employer stock portion to a Roth IRA to ensure tax-free growth.
- Recommend a Net Unrealized Appreciation (NUA) distribution to a brokerage account.
- Gather additional data regarding her marginal tax rate and other income sources.
- Roll the entire 1,500,000 balance into a traditional IRA to maximize tax deferral.
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