I have a question on the rules on "net unrealized appreciation" (or "NUA") for employer stock that is held in a participant's account under a defined contribution retirement plan. The source rules are in IRC 402(e)(4).

If a retired participant has an account with such employer stock, and the participant has already started receiving "required minimum distributions" due to attaining age 70-1/2, does the participant still have the ability to obtain NUA treatment for the stock, if he takes a lump sum distribution of the stock?

(I am also interested to know: (a) if this is a straightforward issue or a tricky issue, and (B) whether there is specific authority on this point.)

The issue is whether you have a qualifying lump sum distribution here. If the employee retired previously and has received periodic payments after termination or age 59.5, this will not be a lump sum. If the employee is now terminating after 70.5 and the first distribution he is receiving after this termination is a lump sum, then this does qualify as a LSD and he should be eligible for NUA treatment.

That seems right.

I did some added research and came up with PLR 7726047. It states that a person getting several years of 70-1/2 distributions cannot later pull the remainder out of the plan, and call it a "lump sum distribution" (looking to lump sum rules that are outside of the NUA rules, but that have identical wording).