Net Unrealized Appreciation (NUA) Calculator

Company stock in your 401(k)? The NUA strategy might save you a lot in taxes. See the numbers.

Net Unrealized Appreciation (NUA)
Tax on NUA (capital gains rate)
Tax on cost basis (ordinary income)
Total tax with NUA strategy
Tax if you roll over and withdraw later
Estimated tax savings with NUA

NUA rules require a qualifying lump-sum distribution triggering event. This is a simplified comparison and does not account for state taxes, the 10% penalty if under 59½, or the Net Investment Income Tax. Consult a tax advisor before executing this strategy.

What is NUA?

Net Unrealized Appreciation is the increase in value of company stock inside your 401(k). Normally everything you withdraw from a 401(k) is taxed as ordinary income. With the NUA strategy, you take the company stock out in-kind, pay ordinary income tax only on the original cost basis, and pay the lower long-term capital gains rate on the growth when you sell.

When NUA makes sense

NUA works best when: your company stock has grown significantly, your income tax rate is much higher than your capital gains rate, and you're doing a lump-sum distribution from the plan. If the stock hasn't appreciated much, a regular rollover to an IRA is usually better.

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