There are many financial issues that apply to a small group, relatively speaking, but for those for whom it applies, there’s some savings to be had by being aware. This is one such topic. Net Unrealized Appreciation (NUA) applies to company stock held in one’s qualified retirement account (such as 401(k)) and is the difference between the market value and the cost within the account. This often missed rule allows you to take the company stock out of your account and pay (regular) income tax on the original cost. The remaining difference is treated as a long term capital gain. This difference in tax rates can be huge for those who have loaded up on company stock in their retirement account especially if the shares have had a large run up in value. A bit of googling and I found a Company Stock Distribution Analysis Calculator which offers some further details and a nice calculator to see your potential savings (FYI – the site for this calculator went down. I will track down another, if I can.)
JOE
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- Money Merge Account Analysis Pt 20
January 20th, 2010 at 5:38 am
[...] a transfer from the 401(k) to their IRA and the same caution exists for conversion to a Roth. Net Unrealized Appreciation refers to the gains on company stock held within your 401(k). The rules surrounding this allow you [...]