ADP 401(k) and NUA: Distribution Mechanics, the 2014 Empower Transition, and In-Kind Transfer Steps

ADP is one of the largest payroll and HR providers in the United States, and millions of employees have their 401(k) plans branded under the ADP name. But "ADP 401(k)" is not a single platform — it describes multiple different administrative arrangements, and the recordkeeper actually holding your money may not be ADP at all. Understanding who actually administers your plan is the first and most critical step before modeling an NUA election. This guide explains why — and walks through the in-kind distribution mechanics for current ADP Retirement Services participants. This is not tax, legal, or investment advice for your specific situation.

The 2014 Empower transition: who is actually your recordkeeper?

In August 2014, ADP completed the sale of its retirement plan recordkeeping and administrative services business to Great-West Life & Annuity Insurance Company (now operating as Empower Retirement).¹ The transaction transferred plan administration, participant accounts, and recordkeeping for the ADP book of business to Great-West. Beginning in 2014 and 2015, affected plans were migrated onto the Great-West/Empower platform.

From a participant's perspective, this meant:

• Account access moved from ADP's retirement portal to Great-West (later Empower) participant portals
• Participant statements began coming from Great-West or Empower, not ADP
• Customer service calls are now handled by Empower's Retirement Services line, not ADP
• Distribution requests — including NUA in-kind distributions — are processed by Empower, under Empower's procedures

If your plan was part of this transition, the practical implication is clear: you are an Empower participant, not an ADP participant, for purposes of the NUA election. Review the Empower NUA distribution guide for the mechanics that apply to you. The remainder of this guide covers participants whose plans remained with or moved to current ADP Retirement Services after the transition.

How to confirm your recordkeeper

Look at your most recent account statement (paper or digital). The company whose name and logo appear at the top — not your employer's name — is your recordkeeper. If it says "Empower," your plan transitioned. If it says "ADP" or "ADP Retirement Services," you are on the current ADP platform. Your participant login portal (the website URL you use to check your balance) is the most reliable signal: Empower participants log in at empower.com or mykplan.com; ADP participants log in at adp.com through ADP Workforce Now.

ADP-branded plans administered by other carriers

A second complexity: ADP's current retirement business includes plans where ADP markets the 401(k) product to employers — often bundling it with ADP payroll and HR services — but the actual investment management and recordkeeping is performed by a third-party carrier. Depending on your employer's arrangement, your "ADP 401(k)" assets might be held and administered by:

• Nationwide Retirement Solutions — a common ADP partner for small-to-mid employer plans
• Principal Financial Group — another ADP-affiliated carrier for certain plan designs
• Other insurance-company carriers — depending on the plan design your employer selected

If your employer bought a bundled ADP payroll + 401(k) product and the investment platform is managed by Nationwide or Principal, you should use the applicable custodian-specific guide for NUA mechanics: Nationwide or Principal. In those cases, the ADP Workforce Now portal may show your retirement account balance in a dashboard view, but the actual distribution authority and in-kind transfer mechanics sit with the underlying carrier.

The safest way to determine who actually processes distributions: look at your plan's Summary Plan Description (available from HR or the participant portal), which will identify the plan's "trustee" and "recordkeeper." Or call the phone number on your participant statement — not ADP's general HR support line — and ask: "Who is the recordkeeper of this plan, and who processes in-kind distribution requests?"

Current ADP Retirement Services: the platform and its limitations

For participants whose plans are genuinely administered on the current ADP Retirement Services platform (not a transitioned Empower account, not a Nationwide or Principal sub-plan), here is what the platform looks like from an NUA perspective.

Account access

Participants access retirement accounts through ADP Workforce Now (workforcenow.adp.com). This is ADP's combined HR, payroll, and benefits platform. Your retirement account appears as one module within the broader Workforce Now dashboard. Some participants also access retirement details directly through the retirement section at retirement.adp.com or myadp.com, depending on how their employer configured the portal.

Cost basis visibility

ADP's retirement portal shows your account balance and investment allocations. For NUA purposes, you need the plan's cost basis in employer stock — the price at which employer contributions were made per share over the years, not the current market value. This cost basis figure is maintained by the plan's trustee or the investment fund custodian, and it is often not visible in the standard participant-facing dashboard view. You may need to call ADP's retirement participant service line to request a cost basis report by lot (contributions by year or period) for the employer stock position.

Cost basis records are particularly important to verify if your employer has gone through any mergers, acquisitions, or plan name changes, as basis records sometimes have gaps after platform migrations. Request the full contribution history by share lot in writing before initiating any distribution.

No retail brokerage

Unlike Fidelity, Vanguard, or Schwab — which each operate both retirement plan administration and retail brokerage divisions — ADP does not have a retail taxable brokerage account product. This is the most operationally significant limitation for NUA purposes: there is nowhere within ADP's own ecosystem to receive the in-kind employer stock in a taxable (non-IRA) account.

To execute an NUA election with ADP, you must first open a taxable individual brokerage account at an external firm — Schwab, Fidelity, Vanguard Brokerage, Merrill Edge, or any DTCC-connected brokerage. The in-kind employer shares will transfer from the ADP-administered plan to that external taxable brokerage via the DTC (Depository Trust Company) network. This adds 3 to 7 business days to the transfer timeline and makes the December 31 same-year lump-sum deadline meaningfully more urgent than it is for participants whose custodian has an internal retail brokerage option.

Finding your cost basis in ADP

Before initiating the NUA conversation with your plan administrator, gather the following information:

1. Employer stock ticker symbol — confirm which company's shares are held in the plan
2. Current share count — shown in your ADP portal account details
3. Current fair market value — the total current value of the employer stock position
4. Cost basis per share or total plan cost basis — what the plan paid for the shares (this is what triggers ordinary income at distribution). Call the retirement services line and ask for "the plan's cost basis in the employer stock position" or "the aggregate cost basis for the employer securities held in my account." If they provide a per-share figure, multiply by share count. If they provide a total, verify it against your understanding of the contribution history.
5. Appreciation ratio — current FMV ÷ cost basis. Use the NUA vs. rollover calculator with these figures to confirm whether NUA saves enough tax to justify the mechanics.

The distribution call: exact language to use

Once you have confirmed you are on the ADP Retirement Services platform (not Empower, not a Nationwide or Principal sub-plan), call the retirement participant service number on your most recent account statement. ADP's retirement services line handles plan distributions and will route you to a distribution specialist. Using your employer's HR department to initiate the call is acceptable, but be clear that you want to speak with someone who processes retirement plan distributions — not the general benefits helpdesk.

Use the following phrases precisely:

• "I want to take a lump-sum distribution triggered by my separation from service [or: age 59½ / disability, depending on your qualifying event]."
• "I want the employer stock portion distributed in-kind — transferred as shares to my taxable brokerage account. Not sold, not converted to cash. The receiving account is a taxable individual brokerage account, not an IRA."
• "I am electing Net Unrealized Appreciation treatment under IRC § 402(e)(4)."
• "I want to confirm that the receiving account is a taxable brokerage account — not a Traditional IRA, not a Rollover IRA, not a Roth IRA."
• "The remainder of my plan balance should be rolled directly to a Traditional IRA."

Before ending the call: ask for the distribution specialist's name, a reference or confirmation number, and an email confirmation of the transaction instructions. Request written confirmation that the employer stock will transfer as shares (in-kind) to a taxable account and that the receiving account type has been verified as taxable (not an IRA).

External DTC transfer mechanics (no ADP retail brokerage)

Because ADP has no retail brokerage, you must complete several steps before initiating the distribution call:

Step 1: open a taxable brokerage account

Open a taxable individual brokerage account at Schwab, Fidelity, Vanguard Brokerage, Merrill Edge, or another DTCC-connected firm. This account must be in your name (not a joint account, not an IRA, not a trust unless structured properly). It takes 1 to 3 days to open most online brokerage accounts. Do not initiate the distribution from ADP until the receiving account is open and funded (even a $1 deposit to activate it).

Step 2: get the DTC transfer-in information

From your new taxable brokerage, obtain:

• DTC Participant Number (also called DTC number or DTCC number) — a 4-digit code identifying your brokerage to the transfer network. For example, Schwab is 0164, Fidelity is 0226.
• Your account number at the receiving brokerage
• Any additional transfer routing instructions the brokerage requires for incoming DTC transfers

Provide these to the ADP distribution specialist when initiating the in-kind transfer. The specialist will initiate a DTC transfer of shares from the plan's custodial account to your designated taxable brokerage account.

Step 3: timeline and the December 31 deadline

The lump-sum distribution requirement under IRC §402(e)(4) requires that all plan distributions from the plan occur within the same tax year as the qualifying event. If your qualifying event is separation from service in November 2026, the in-kind stock transfer and the IRA rollover of remaining assets must both complete by December 31, 2026. Initiation of the transfer is not sufficient — the shares must actually land in the receiving taxable account before year-end.

DTC transfers typically take 3 to 7 business days after ADP processes the distribution request, and ADP's processing time for the distribution itself may take an additional 5 to 10 business days after you submit the paperwork. For late-year retirees, this means:

• If retiring in October: proceed promptly but timeline is workable
• If retiring in November: act immediately; submit distribution request within the first two weeks
• If retiring in December: urgent — contact the plan immediately after your separation date; discuss whether the December 31 deadline is achievable given processing times. Consider whether the in-service at-59½ qualifying event might allow you to execute NUA before your actual retirement date.

Ask ADP to provide an estimated processing timeline in writing before you commit to the NUA path. If the timeline is too tight, a specialist can help assess whether any alternative approach preserves the opportunity.

Common ADP-specific pitfalls

Assuming you are on ADP when you are actually on Empower

This is the most common mistake. An employee who has been with their company for 15 years might have joined when the plan was administered by ADP and not have checked the administrator since the 2014 transition. If your plan migrated to Empower and you call ADP's general HR support line to initiate an NUA distribution, you will be sending paperwork to the wrong institution — creating delays and potential year-end deadline problems. Confirm your recordkeeper by looking at the top of your most recent account statement before making any calls.

Using ADP Workforce Now payroll features to initiate a retirement distribution

ADP Workforce Now is a combined HR platform. Your payroll stub, W-2, and time-off balances live there. So does your retirement account dashboard — but the retirement account dashboard in Workforce Now typically provides a read-only view that links to your actual retirement platform (which may be ADP's retirement portal or an underlying carrier's portal). Attempting to initiate a distribution or in-kind transfer request through the payroll or HR modules of Workforce Now will not work. You need to call the retirement services line directly or navigate to the specific retirement distribution section, which is a separate workflow from standard HR functions.

Not opening the taxable brokerage account before initiating the distribution

Several participants have initiated the in-kind distribution call to ADP without first having a taxable brokerage account open and ready to receive shares. ADP's distribution system requires the receiving account information at the time of request. If you provide an IRA account number (because that's the account you have open), the shares go into an IRA — permanently destroying the NUA character of the stock. Open the taxable brokerage account first, obtain the DTC transfer information, then make the distribution call.

Providing an IRA account number as the receiving account

This is the irreversible NUA mistake. If the employer stock lands in a Traditional IRA — even accidentally, even if you intended a taxable account — the NUA election is permanently disqualified. All future distributions from the IRA will be ordinary income. There is no mechanism to reverse an IRA receipt of formerly NUA-eligible stock and restore the LTCG character. Be absolutely explicit with the distribution specialist that the receiving account is a taxable individual brokerage account and not an IRA. Confirm the account type twice before signing any distribution paperwork.

Cost basis gaps after plan transitions or employer M&A

ADP-administered plans sometimes serve employees at companies that have themselves gone through mergers, acquisitions, or ownership changes. If your employer was acquired, merged with another company, or changed plan administrators in the past, cost basis records for employer stock contributed prior to the transition may be incomplete or estimated. A missing or incorrect cost basis creates two problems: (1) inaccurate NUA savings projections, and (2) a misreported 1099-R Box 6 at distribution. Request a full contribution history in writing before executing — and if cost basis is estimated or missing, work with an NUA specialist to verify or reconstruct it using Form 5498 history and employer records before the distribution occurs.

Worked example: mid-size manufacturer on ADP Retirement Services

Robert worked for 26 years at a regional manufacturing company that uses ADP for payroll and a current ADP Retirement Services 401(k). The plan has always made employer matching contributions in company stock. Robert is separating from service at age 62 and has confirmed, by checking his most recent statement, that the plan is administered by ADP Retirement Services — not Empower, not Nationwide.

Robert's first step: Confirmed the plan recordkeeper is ADP (not Empower) by checking his statement header and verifying his login portal is the ADP retirement section within Workforce Now.

NUA path: Robert calls the ADP retirement services line, uses the exact NUA language above, and provides his pre-opened Schwab Individual taxable account (DTC 0164, account #XXXXXX). He initiates in early October, giving himself eight weeks before year-end. ADP processes the in-kind share transfer via DTC in six business days. The remaining $340,000 in mutual funds rolls directly to a Schwab Traditional IRA. Robert's 1099-R shows Box 1: $780,000, Box 2a: $62,000, Box 6: $718,000.

Tax outcome: Robert recognizes $62,000 as ordinary income in 2026 — at 22% bracket (retirement year, before full pension and Social Security), that is approximately $13,640 in federal tax. The $718,000 NUA appreciation sits in his Schwab taxable account as shares; when sold over time, it qualifies as long-term capital gains at 15% federal (approximately $107,700 total federal LTCG tax). Total federal tax on the employer stock: roughly $121,340.

IRA rollover path: If Robert had rolled the full $780,000 to an IRA, all future distributions would be ordinary income. At an effective 24% rate over time (pension, Social Security, and RMD income stacking): approximately $187,200 in federal tax on the stock portion.

Estimated NUA savings: ~$65,860 federal. State tax outcome depends on Robert's state — no-income-tax states capture the full advantage; CA, NY, and NJ residents would see smaller savings since those states tax LTCG as ordinary income.²