Quick Guide to Net Unrealized Appreciation (NUA)

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    NUA is the difference in value between the cost basis of company stock and its market value at the time it is distributed in kind from a plan as part of a lump-sum distribution.  The IRS offers a provision that allows for a more favorable capital gains tax rate on the NUA of employer stock upon distribution, after certain qualifying events. 

    For example:  You can roll over the portion of your 401(k) invested in company stock to a brokerage account and pay tax at more favorable long-term capital gains tax rates, as opposed to your ordinary income tax rate, when the shares are sold.

    NUA will only be declared if the cost basis of all your employer’s shares has been recorded.  Some companies do not keep a detailed report of cost basis for each share you purchased.

    One downside of NUA stocks is that these shares will not be eligible for a step-up in basis at the death of the original owner.  It is important to discuss your options with your financial advisor. Please see links for additional information.

    Work with a financial advisor who puts your needs first.

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