NUA Calculator
Calculate potential tax savings using the Net Unrealized Appreciation strategy for employer stock in your 401(k). Compare NUA vs regular rollover.
Your Company Stock
Enter details about your employer stock in your 401(k)
Total Shares of Company Stock
Cost Basis Per Share
What you paid / was contributed
Current Price Per Share
Fair market value today
Cost Basis
$25,000
Current Value
$100,000
NUA
$75,000
Understanding the NUA Strategy
Massive Tax Savings
NUA lets you pay long-term capital gains rates (0-20%) on stock appreciation instead of ordinary income rates (up to 37%).
Triggering Event Required
You need a qualifying event: separation from service, reaching 59 1/2, disability, or death to use NUA.
Lump Sum in One Year
You must distribute your entire 401(k) balance within one calendar year. The stock goes to a taxable brokerage account.
Immediate Tax on Basis
You pay ordinary income tax on the cost basis right away. The NUA portion is taxed as LTCG when you sell.
How NUA Works: Step by Step
Triggering Event Occurs
You separate from your employer, turn 59 1/2, become disabled, or the account owner passes away. This is required to use NUA.
Distribute Your Entire 401(k)
Within one calendar year, you must distribute your entire 401(k) balance. Employer stock goes to a taxable brokerage account. Other assets can roll to an IRA.
Pay Tax on Cost Basis
You immediately owe ordinary income tax on the cost basis (what was contributed/paid for the stock). This is usually a smaller amount than the current value.
Sell Stock: Pay LTCG on NUA
When you eventually sell the stock, you pay long-term capital gains rates on the NUA (appreciation) - even if you sell immediately. Any additional gains after distribution are taxed based on holding period.
Example: The Power of NUA
1,000 shares | Cost Basis: $25/share | Current Value: $100/share
Cost Basis Total: $25,000 | Current Value: $100,000 | NUA: $75,000
Regular Rollover
Tax at 24%: $24,000
(Full $100,000 taxed as ordinary income)
NUA Strategy
Cost Basis (24%): $6,000
NUA (15% LTCG): $11,250
Total: $17,250
Tax Savings: $6,750 (28% less tax!)
When Does NUA Make Sense?
NUA Is Often Better When:
- +Large appreciation (high NUA vs cost basis)
- +High ordinary income tax bracket (24%+)
- +Low long-term capital gains rate (0% or 15%)
- +Need access to funds (no 10% penalty on NUA)
- +Planning to sell stock soon anyway
- +Want to leave stepped-up basis to heirs
Regular Rollover May Be Better When:
- -Low appreciation (cost basis close to value)
- -Low current income (expecting higher rates later)
- -Want to continue tax-deferred growth
- -Planning to hold for many more years
- -Do not have cash to pay the upfront tax
- -State taxes LTCG at ordinary income rates
NUA Frequently Asked Questions
What happens if I sell NUA stock immediately?^
Even if you sell immediately after distribution, the NUA portion is taxed at long-term capital gains rates. The cost basis is taxed at ordinary income rates. Any additional gain after distribution would be short-term capital gains if sold within a year.
Is there a 10% early withdrawal penalty on NUA?^
The 10% early withdrawal penalty only applies to the cost basis portion if you're under 59 1/2. The NUA portion is NOT subject to the 10% penalty, making this an attractive option for early retirees.
Can I do NUA on stock from any company?^
No - NUA only applies to employer stock (your employer's publicly traded stock held in your 401k). It does not apply to mutual funds, ETFs, or stock from other companies.
What if my employer stock has lost value?^
If your cost basis is higher than the current value (a loss), NUA does not apply - there is no 'unrealized appreciation.' In this case, a regular rollover to an IRA is typically better.
Can I roll over some stock and use NUA on the rest?^
No - you cannot split NUA on the same employer stock. It's all or nothing for NUA. However, if you have employer stock in multiple accounts or from different contribution sources with different cost bases, consult a tax professional about your options.
Important Disclaimer
This calculator provides estimates for educational purposes only. NUA is a complex tax strategy with strict requirements and timing rules. Mistakes can be costly and irreversible. We strongly recommend consulting with a qualified tax professional or financial advisor before implementing an NUA strategy.
Diversify After Your NUA Distribution
Once you've taken advantage of NUA, consider diversifying your concentrated stock position with a Gold IRA. Physical gold can provide stability and inflation protection for your retirement portfolio.