The former midfield favourite, who came through the ranks to make nearly 400 appearances for the Reds, is assisting Warren Joyce as the youthful squad competes in the Barclays Under-21 Premier League, Lancashire Senior Cup and Manchester Senior Cup.
"Nicky is with the reserves," confirmed Sir Alex Ferguson. "He's completed his badges and is just getting a bit of experience with us so there's every chance of that [him going into management].
"He's had a few opportunities to take on jobs but wanted just a wee bit of a chance to revisit the training ground again to get himself back into sync, which we're happy to do because he was a fantastic servant to us.
"I don't know what his long-term future is but, in the meantime, he's helping out with the reserves."
Reds defender Tom Thorpe told MUTV that it is a bonus for the younger players to work with a former star of Butt's calibre.
"It's brilliant," Thorpe enthused. "Especially when a player with a lot of experience comes back and has done it from an early age. He was at the club for quite a while and has gone through to the first team. It's great for him to pass on his experience and different ways of playing with different styles."