NUA Distribution at Merrill Lynch (Benefits OnLine): Step-by-Step Process

Merrill Lynch, a subsidiary of Bank of America, administers 401(k) plans for hundreds of major employers through its Benefits OnLine (BOL) participant portal. If your employer stock is held in a Merrill Lynch-administered plan, here's exactly how the NUA election works — how to find your plan cost basis in BOL, what to say when you call the retirement plan services line, how the in-kind transfer to Merrill Edge works, and what your 1099-R Box 6 must show. This is informational only and not investment, tax, or legal advice for your specific situation.

Merrill Lynch and the Benefits OnLine platform

Merrill Lynch Retirement & Benefits Solutions administers 401(k), profit-sharing, and ESOP plans for hundreds of large employers, including many Fortune 500 companies in manufacturing, energy, healthcare, and financial services. Bank of America employees, whose 401(k) is also administered through Merrill Lynch, often accumulate significant BAC employer stock through matching contributions — making NUA a common planning opportunity for long-tenure BofA employees.

The participant-facing portal is Benefits OnLine (BOL), accessible at benefitsonline.merrill.com. BOL lets participants view balances, change investment allocations, manage loans, and initiate standard distributions and rollovers. However, an in-kind employer stock distribution for NUA purposes is not a standard portal workflow. Like all major recordkeepers, Merrill Lynch's default distribution path routes all assets to cash or IRA rollover. Requesting the in-kind transfer that makes NUA work requires calling the Merrill Lynch retirement plan participant services line — not the Merrill Edge brokerage line, and not using the self-service distribution wizard in BOL.

Step 1 — Find your employer stock cost basis in Benefits OnLine

The NUA cost basis is the plan's acquisition cost — the price Merrill Lynch's recordkeeping system shows as the plan's purchase price for shares placed in your account through employer matching contributions, profit-sharing, or direct employer stock allocations. This is almost always much lower than the current market price for long-tenure employees, especially at companies with stock price appreciation over many years.

• Log in to Benefits OnLine at benefitsonline.merrill.com and navigate to your account. Locate the employer stock position under your fund list or investment holdings.
• BOL typically shows current market value, share count, and may display cost basis or "net unrealized appreciation" for employer stock positions. If a cost basis figure is shown, confirm it represents the plan's acquisition cost per share — not the current price or a brokerage "average cost."
• If cost basis is not displayed, or if you're uncertain whether the number is the plan-level cost: call Merrill Lynch retirement plan participant services and ask specifically for the "plan cost basis per share of [company name] employer stock for NUA purposes." Request the information in writing — a mailed or emailed statement showing the lot-level cost basis.
• For Bank of America employees specifically: BAC employer matching contributions have occurred at varying prices across multiple decades. Long-tenure BofA employees who joined before or shortly after the 2009 Merrill Lynch acquisition may have cost basis records spanning pre-acquisition plan history. Confirm the cost basis reflects the full historical acquisition record, not just the post-2009 period.

Step 2 — Open a Merrill Edge Individual (taxable) brokerage account

The in-kind stock distribution must go to a taxable brokerage account. Receiving the shares in an IRA — even a temporary one — permanently destroys the NUA election for those shares.

• If you don't already have a Merrill Edge Self-Directed Individual Account (a taxable brokerage, not an IRA), open one online at merrilledge.com before calling. The process takes about 10–15 minutes.
• Using Merrill Edge as the receiving brokerage is strongly preferred. An internal transfer from the 401(k) plan record to a Merrill Edge taxable account is processed more reliably than an outbound DTC transfer to a different brokerage, and reduces the risk of processing errors or delays.
• If you prefer to receive the shares at a different brokerage — Fidelity, Schwab, Vanguard — that is possible via DTC transfer. You'll need the receiving broker's DTC participant number and your account number. Expect a longer processing timeline and the need for coordination between both institutions.
• Do not designate a Merrill Edge IRA, Merrill Edge Rollover IRA, or any other tax-advantaged account as the receiving account. It must be a regular taxable individual or joint brokerage account.

Step 3 — Call Merrill Lynch retirement plan participant services

In-kind NUA distributions cannot be initiated through the BOL self-service portal or through Merrill Edge customer service. They require a phone request to the Merrill Lynch retirement plan participant services line — the specialized team that handles complex 401(k) distribution requests.

Find the correct phone number on your plan statement, your employer's benefits portal (HR intranet), or in the Contact section of Benefits OnLine. This number is different from the Merrill Edge brokerage customer service line. When you reach a retirement plan representative, use these exact phrases:

• "I want to take a lump-sum distribution triggered by my separation from service [or age 59½ / disability / death of participant]."
• "I want to distribute the employer stock in-kind — shares transferred to my Merrill Edge taxable brokerage account without being sold."
• "I want to roll the remaining non-stock plan balance over to an IRA."
• "I am electing Net Unrealized Appreciation treatment on the employer stock per IRC § 402(e)(4)."

Using precise language — "lump-sum distribution," "in-kind," "NUA," "IRC § 402(e)(4)" — signals that this is not a routine distribution and routes the request to personnel trained on non-standard transactions. If the initial representative is unfamiliar with NUA or seems uncertain about the in-kind mechanics, ask specifically for a "distribution specialist" or the team that handles "complex retirement plan distributions." Do not proceed with an uncertain representative — the consequences of a mis-processed distribution are permanent.

Step 4 — Address the Self-Directed Brokerage Account (SDBA), if applicable

Many Merrill Lynch-administered 401(k) plans include a Self-Directed Brokerage Account (SDBA) option — a brokerage window within the plan that allows participants to hold individual stocks, ETFs, and other securities beyond the standard fund menu. If your employer stock is held inside the SDBA portion of your 401(k), there is an important distinction to understand:

• Shares held in the SDBA are still plan assets. Despite the "brokerage account" label, SDBA shares are inside your 401(k) plan and subject to the same in-kind transfer requirement as any other plan-held employer stock for NUA purposes.
• When calling to initiate the distribution, specify that employer stock is held in the SDBA portion of the plan. The distribution team will coordinate the in-kind share transfer out of the SDBA to your Merrill Edge taxable account.
• Do not sell employer stock inside the SDBA before the distribution. Selling shares inside the SDBA converts the gain to ordinary income when distributed and permanently eliminates the NUA opportunity on those shares.
• Confirm with the representative whether SDBA shares require any separate processing steps compared to standard fund-held employer stock in your plan.

Step 5 — Confirm the distribution instructions in writing

Before ending the call, ask Merrill Lynch to confirm the distribution instructions via written documentation — email or mailed summary. This should specify:

• That the employer stock is being transferred in-kind (shares, not cash or proceeds) to your Merrill Edge Individual taxable brokerage account
• The receiving account number at Merrill Edge
• That the remaining non-stock plan balance is being rolled over to your receiving IRA (specify the IRA custodian and account number)
• The triggering qualifying event (separation from service / age 59½ / disability / etc.)
• The expected settlement timeline for both legs

Written confirmation creates a record you can use if either leg is processed incorrectly — stock sold instead of transferred in-kind, rollover directed to the wrong account, or shares sent to an IRA by mistake. Get it before ending the call.

Step 6 — Complete both distribution legs before December 31

The lump-sum distribution requirement — which is what makes NUA work — means the entire plan balance must leave the plan within a single calendar year. Both legs must settle before December 31 of the distribution year:

• The in-kind employer stock transfer to your Merrill Edge taxable brokerage account
• The IRA rollover of remaining plan assets to your receiving IRA custodian

Intra-Merrill transfers (401k record to Merrill Edge brokerage) typically settle in 1–5 business days. Rollovers to external IRA custodians typically take 3–10 business days. If you're initiating in November or December, flag the December 31 same-year deadline explicitly with the distribution representative and ask for written confirmation that both legs will settle before year-end. Plan for delays.

After initiating, verify completion in both systems: Benefits OnLine should show the 401(k) balance at $0 (or near $0 if any plan fees are pending), and your Merrill Edge taxable account should show the employer stock shares as a position. Do not assume completion — check both accounts.

Step 7 — Review your 1099-R from Merrill Lynch

Merrill Lynch will issue a Form 1099-R in January of the year after the distribution. For a correctly processed NUA election, the following boxes must be populated as shown:¹

If Box 6 is missing, or if Box 2a equals Box 1 (meaning the full fair market value appears as ordinary income — the result you'd see if the distribution was processed without recognizing NUA), Merrill Lynch has not correctly identified the NUA amount. Do not file your tax return using an incorrect 1099-R. Contact Merrill Lynch retirement plan participant services and request a corrected Form 1099-R. Keep your written confirmation of the distribution instructions as documentation supporting the correction request.

Common Merrill Lynch-specific pitfalls

Calling Merrill Edge instead of retirement plan participant services

This is the most common mistake. Merrill Edge (the retail brokerage) and Merrill Lynch retirement plan participant services (the 401(k) recordkeeper) are separate systems. Calling the Merrill Edge number — which is widely published and easy to find — reaches a brokerage team that has no access to your Benefits OnLine plan account and cannot initiate a 401(k) distribution. If a Merrill Edge representative attempts to assist by initiating transfers or suggesting workarounds, politely decline and call the retirement plan services number from your plan statement instead.

Using the BOL self-service distribution wizard

Benefits OnLine offers a self-service distribution or rollover initiation workflow. For standard rollovers and cash distributions, this works fine. For an in-kind NUA distribution, the self-service path will typically default to liquidating employer stock and rolling the proceeds to an IRA — the opposite of what you want. Do not initiate a distribution through BOL's self-service workflow without first confirming with a distribution specialist that the in-kind option will be preserved. When in doubt, call.

Long-tenure employees: verifying pre-merger cost basis records

Bank of America acquired Merrill Lynch in January 2009. For employees of companies that used Merrill Lynch as their 401(k) recordkeeper before the acquisition, and for BofA employees who have been in the plan since before 2009, cost basis records may span different recordkeeping systems. If you've been accumulating employer stock for 15, 20, or 30+ years, request a lot-level cost basis history from Merrill Lynch before initiating the distribution. An estimated or incomplete basis that overstates the plan's actual acquisition cost reduces your NUA benefit; one that understates it creates an unexpected tax bill. Get the number in writing before proceeding.

Employer stock accidentally rolled to an IRA

When Merrill Lynch processes the IRA rollover of the non-stock plan balance, there is a risk that employer stock shares get included in the rollover — either through a processing error or imprecise distribution instructions. If even a portion of the employer stock goes into an IRA, the NUA election is permanently lost on those shares.² After the distribution settles, verify that your Merrill Edge taxable account shows shares (not cash), and that the rollover IRA received only the non-stock balance. Cross-check both accounts within a week of initiation.

Stock sold automatically on distribution initiation

Some plan configurations — particularly for employer stock held in a company-stock fund rather than as individual shares — may trigger automatic liquidation when a distribution is initiated through the standard workflow. If this happens to the employer stock before the in-kind transfer is specified and confirmed, the NUA election is lost. When you call, confirm explicitly — before the distribution is processed — that the employer stock will be transferred as shares, not liquidated. Monitor the receiving account within 1–3 business days to confirm shares arrived.

SDBA shares treated as brokerage, not plan, assets

If your plan includes a Self-Directed Brokerage Account (SDBA) and you hold employer stock there, it can be easy to assume the shares are already in a "brokerage account" and skip the in-kind distribution request. They are not. SDBA shares are plan assets. Selling them inside the SDBA, or neglecting to specify them as part of the in-kind transfer, eliminates NUA on those shares permanently. Make sure the distribution instructions cover employer stock in both the core plan funds and any SDBA portion.

Missing the December 31 same-year lump-sum deadline

If the IRA rollover leg of your distribution does not settle before December 31, your lump-sum distribution spans two calendar years — which disqualifies the NUA election. This is most common when distributions are initiated in late November or December without explicitly flagging the year-end deadline. Merrill Lynch's transfer timelines are generally reliable, but year-end volume increases processing times. Initiate no later than early December if you want the distribution to close before year-end, and confirm the December 31 deadline in writing with the representative.

After the transfer: next steps

Once the employer stock appears as shares in your Merrill Edge Individual taxable brokerage account:

• The NUA amount is automatically long-term capital gains when you sell, regardless of how long you hold the shares after distribution. Post-distribution appreciation above the distribution-date price is short-term if you sell within one year of the distribution, and long-term after one year. Most situations favor holding at least one year.
• Review your post-NUA diversification strategy — tranche selling to manage the 20% LTCG and 3.8% NIIT thresholds, direct stock donation to charity, holding for the estate step-up, and harvesting in the 0% LTCG bracket during the pre-RMD window are all worth modeling before you sell anything.
• The Box 6 NUA amount is reported on Schedule D as a deemed long-term capital gain in the year of sale (not the year of distribution). See the NUA tax reporting guide for the exact mechanics — distribution year 1099-R entry plus sale-year Schedule D.
• Consider consulting an NUA specialist before your first sale. IRMAA two-year look-back, Social Security provisional income, ACA subsidy cliffs, and state tax treatment all interact with how and when you sell the NUA shares.