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A great strategy that I am afraid fails on two counts:

1. By taking the appreciated stock (to avail oneself of the NUA feature) you would pay the tax plus the 10% surtax on the basis of the stock. Then, you need to hold the stock for one year to get the capital gains treatment; you can not sell it immediately; otherwise the gain will be treated as ordinary income. However, I suppose you could do all of this, hold the stock & margin the account to get the cash.

2. When using the NUA feature, the taxpayer must liquidate the entire 401(k) account and recognize the income on all of it; e.g. you can not recognize the stock & rollover other assets in the account.

Sorry,

TheBadger
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