The Frank Duke PST Distribution Strategy

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For many longtime P&G employees, the Profit Sharing Trust (PST) holds decades of accumulated savings. Understanding how to access these assets in a tax-efficient way can make a significant difference in your retirement outcome. The Frank Duke Strategy is one such approach—simple in structure, but powerful when executed correctly.

What Is the Frank Duke Method?

The Frank Duke method is a two-step process that leverages the IRS’s Net Unrealized Appreciation (NUA) rules and a 60-day IRA rollback to help you maximize the after-tax value of your PST holdings. Here’s how it works:

  • Step 1: Take a lump-sum distribution from your PST after a qualifying event (such as retirement or reaching age 59½). Split the distribution by rolling most assets into an IRA, while transferring P&G shares—typically preferred shares with a low $6.82 per share cost basis—into a taxable brokerage account using the NUA provision.

  • Step 2: Within 60 days, roll back a portion of the taxable account shares (often exceeding the cost basis) into an IRA. This maneuver can offset the ordinary income tax due on the cost basis, while the remaining shares in the taxable account benefit from long-term capital gains treatment when sold.

For NUA basics, see our post: Understanding NUA: A P&G Retirement Tax Strategy

Who Can Use This Strategy?

This approach can apply to nearly all P&G employees, regardless of account size. The key factors are whether your PST contains P&G preferred shares and, if applicable, the cost basis on your P&G common shares. While preferred shares are typically the most advantageous due to their fixed $6.82 cost basis, common shares are also eligible for NUA. However, the cost basis on common shares can vary depending on your individual contribution history and investment activity, making them more situational. In some cases, a targeted use of common shares may also make sense.

Key Benefits for P&G Employees

  • Significant Tax Savings
    By shifting the appreciation in your P&G shares from ordinary income tax rates (which can reach up to 37%) to long-term capital gains rates (typically 15–20%), you can potentially save thousands of dollars in taxes.

  • Diversified Account Types
    The strategy creates both taxable and tax-deferred accounts, offering flexibility for retirement income and investment management.

  • Enhanced Flexibility
    Access to a taxable account allows for more flexible withdrawals and broader investment options compared to the PST.

  • Improved Estate Planning
    The ability to manage distributions and account types can support more effective estate and legacy planning.

Professional visual representing retirement planning and tax strategy for P&G employees using the Frank Duke method.

How the Strategy Works: A Step-by-Step Example

Let’s look at a scenario with the following key details: 5,882 P&G preferred shares, each with a $6.82 cost basis, and a current market value of $170 per share (total value: $1 million).

  • Step 1: Take a lump-sum distribution from your PST. Roll most assets into an IRA and move the 5,882 preferred shares—shares that many long-tenured P&G employees hold at the historical $6.82 basis—into a taxable account via NUA. The cost basis ($40,115 = 5,882 shares × $6.82) is taxed as ordinary income in the year of distribution.

  • Step 2: Within 60 days, roll back at least $40,115 worth of shares from the taxable account to your IRA. This offsets the ordinary income tax hit, while the remaining shares—now worth nearly $960k—are eligible for long-term capital gains treatment when sold.

This approach can result in substantial tax savings and greater control over your retirement assets.

Advanced Planning: Charitable Giving with a Donor-Advised Fund (DAF)

For P&G retirees with philanthropic goals, the Frank Duke method can be paired with a Donor-Advised Fund (DAF):

  • After executing the NUA strategy, donate appreciated P&G shares to a DAF.

  • Receive a charitable deduction for the full market value of the shares, offsetting the ordinary income from the cost basis.

  • Avoid capital gains tax on the appreciation, allowing your charitable contributions to grow tax-free within the DAF.

This combination aligns tax efficiency with your charitable legacy.

To learn more, see our article on Donor-Advised Funds and PST Planning

Important Considerations

  • Timing Is Critical
    The lump-sum distribution must follow a qualifying event (retirement, age 59½, or death) to qualify for NUA treatment.

  • 60-Day Rollback Window
    The IRS enforces this deadline strictly. Missing it can forfeit the tax benefits.

  • Precision Required
    Errors in execution can result in lost tax advantages. Professional guidance is highly recommended.

Is the Frank Duke Strategy Right for You?

The Frank Duke PST Distribution Strategy is a proven method for helping P&G retirees unlock more value from their retirement assets. But it requires thoughtful execution. At Vaultis Private Wealth, we’ve helped many P&G employees evaluate this opportunity, weigh alternatives, and carry it out with precision. If you're looking for help with P&G retirement planning, we’re here to guide the way.



Frequently Asked Questions

What is Net Unrealized Appreciation (NUA)?

NUA allows you to move employer stock from a qualified retirement plan into a taxable brokerage account and pay ordinary income tax only on the cost basis. The appreciation is taxed at long-term capital gains rates when sold.

Who qualifies to use the Frank Duke Strategy?

P&G retirees who have experienced a triggering event (such as retirement or reaching age 59½) and hold P&G stock in their PST may qualify. Timing and execution are essential.

What if I miss the 60-day rollback window?

Missing the window eliminates the ability to recharacterize the shares into an IRA, locking in the ordinary income treatment on the cost basis. Precision and timely action are critical.

Can I use this strategy if I’ve already rolled over my PST?

No. Once you’ve rolled over your PST into an IRA, you generally lose the ability to use the NUA strategy. It must be done as part of a qualifying lump-sum distribution.

How does this strategy compare to leaving everything in the IRA?

While an IRA keeps your assets tax-deferred, it also subjects future withdrawals to ordinary income tax. The Duke strategy offers the potential for lower long-term tax treatment and more liquidity.

Can I combine this with other strategies like Roth conversions?

Yes. Many P&G retirees pair this with partial Roth conversions to further manage their tax bracket in retirement. This requires careful coordination but can enhance long-term tax efficiency.

Disclosures: The information in this blog is for educational purposes only and is not intended as personalized financial, tax, or legal advice. The Frank Duke PST Distribution Strategy may not be suitable for everyone, as individual financial goals, risk tolerance, and circumstances differ. Consult a qualified financial advisor, tax professional, or legal advisor before acting to evaluate your specific situation and determine if this strategy fits your needs. Past performance does not guarantee future results, and all investments involve risks, including the potential loss of principal. Tax laws and regulations may change, potentially affecting the strategies described. Vaultis Private Wealth does not guarantee the accuracy, completeness, or outcome of this information and is not affiliated with Procter & Gamble, which does not endorse this content.