In a large bowl, add sugar, yeast, nutmeg, salt, two cups of flour, and mix well. In a small saucepan, add milk and butter. Heat on low.

Add to sugar mix, and beat for 2 minutes. Add 3 eggs; beat on high 2 minutes. Stir in enough remaining flour to form a soft dough.

Turn dough onto a floured surface; knead until smooth. Place in a greased bowl, turning once to grease the top. Cover with plastic wrap and let rise in a warm place until doubled, about 45 minutes.

Punch down dough. Turn onto a lightly floured surface; divide into thirds. Roll each portion into a 24-in. rope. Place ropes on a greased baking sheet and braid. Bring ends together to form a ring. Pinch ends to seal.

Preheat oven to 350. Let dough rise in a warm place until doubled, about 20 minutes.

In a bowl, whisk remaining egg and water; gently brush over dough. Bake 30-35 minutes or until golden brown.

Remove from pan to a wire rack to cool.