Withdrawals & RMDs
Company stock in the 401(k)? Compare NUA with a rollover first
A net unrealized appreciation calculator: employees enter cost basis, market value and two tax rates to compare the NUA strategy with rolling company stock into an IRA.
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What is the NUA strategy?
When company stock is distributed in kind from a 401(k) as part of a lump-sum distribution, only its cost basis is taxed as ordinary income now. The net unrealized appreciation is taxed at long-term capital gains rates (0%, 15% or 20% depending on income2026 · IRS) when sold. Rolling the stock to an IRA instead taxes the full value as ordinary income on withdrawal.
At retirement or separation, before any rollover
Long-tenured employees of public companies often hold highly appreciated employer stock in their 401(k). At retirement, the rollover paperwork forces a choice, and a colleague or an article mentions NUA. The decision is one-time: once rolled over, the opportunity is gone.
What the client types into a search box
“should I roll over my company stock or use NUA”
How a client works through it
Enter cost basis
What the plan paid for the shares, from the plan administrator.
Enter market value
Current value of the company stock in the plan.
Enter tax rates
Ordinary income rate and long-term capital gains rate.
Compare strategies
NUA tax, rollover tax, the advantage and the NUA amount.
What lands in your inbox
When a client asks your firm to review the result, the request arrives as a contact record with their inputs and results attached, by email and, on paid plans, by webhook to your CRM.
Received
Cost basis and market value show the size of the opportunity. A low basis relative to value means a large potential saving; a high basis may make NUA unattractive. The tax rates entered show how the client expects their income to look.
When does the NUA strategy win?
NUA Strategy Tax taxes the basis at the ordinary rate and the Net Unrealized Appreciation at the capital gains rate. IRA Rollover Tax applies the ordinary rate to the whole value. NUA Tax Advantage is the difference.
The lower the basis relative to value, and the wider the gap between rates, the larger the advantage. The calculator ignores the time value of paying the basis tax now.
Results shown: NUA Strategy Tax · IRA Rollover Tax · NUA Tax Advantage · Net Unrealized Appreciation.
Basis $50,000, value $300,000
With a 24% ordinary rate and 15% capital gains rate, NUA taxes $50,000 × 24% = $12,000 now and $250,000 × 15% = $37,500 when sold, $49,500 in total. A rollover taxed at 24% on withdrawal would cost $72,000. The NUA advantage is $22,500 before timing effects.
Why should NUA questions come to your firm?
NUA has strict requirements: a qualifying triggering event, a lump-sum distribution of the entire account within one tax year, and stock distributed in kind. The tax saving can be large, and so can the mistake. Clients exploring it need coordinated tax and investment advice.
These are typically substantial, long-tenured retirees, valuable clients for both CPAs and advisers.
Follow-ups this request opens
- Confirm the triggering event and lump-sum requirements
- Plan the distribution timing within one tax year
- Decide how much of the stock to take in kind
- Plan diversification of concentrated stock
What this calculator leaves out
- Simplified comparison; time value of the up-front tax is ignored.
- Does not verify lump-sum distribution requirements.
- The net investment income tax and state taxes are not included.
- A penalty on the basis may apply before 55 or 59½ and is not modeled.
Platform disclaimer shown under the calculator: Estimates only. A simplified NUA comparison: cost basis is taxed as ordinary income now and appreciation at long-term capital-gains rates when sold; the IRA path taxes the full value as ordinary income. A 10% early-distribution penalty on the basis may apply before age 55 (separation from service) or 59½, and the distribution must be a qualifying lump sum. Consult a tax advisor.
Compliance note for firms
NUA decisions are irreversible and technical. Advice should be documented carefully under Circular 230 §10.37. Advisers should note the concentration risk of holding employer stock and follow best-interest obligations when recommending against a rollover.
Not legal advice. See our disclaimer and the guide to compliance for client calculators.
2026 figures this page relies on
| Figure | Value | Tax year | Source |
|---|---|---|---|
| Long-term capital gains rates | 0%, 15% or 20% depending on income | 2026 | IRS |
| Net investment income tax | 3.8% | 2026 | IRS |
| Additional tax on early retirement distributions | 10% before age 59½ (age-55 separation-from-service exception for plans) | 2026 | IRS |
The same values drive the calculator. Full list on the 2026 figures page.
Terms your client sees in the calculator
These definitions appear in the calculator's collapsible Definitions block, so clients don't have to call to ask what a label means.
- Net unrealized appreciation (NUA)
- The growth in value of employer stock while it was held inside your retirement plan: current market value minus cost basis. If the shares are distributed in kind as part of a qualifying lump-sum distribution, the NUA is taxed at long-term capital-gains rates when sold, instead of as ordinary income.
- Cost basis
- What the employer stock originally cost inside the plan, as reported by the plan administrator. Under the NUA strategy the basis is taxed as ordinary income in the year of distribution, so a low basis relative to market value makes the strategy more attractive. A high basis shrinks the benefit.
- Lump-sum distribution
- A distribution of your entire balance from all of an employer’s plans of the same type within one calendar year, following a triggering event such as separation from service, reaching age 59½, disability or death. NUA treatment is available only with a qualifying lump-sum distribution; partial withdrawals generally do not qualify.
- IRA rollover
- Moving plan assets, including employer stock, into a traditional IRA without current tax. It defers all tax until withdrawal, but every dollar withdrawn later, including the appreciation, is taxed as ordinary income. This calculator compares that total tax against the NUA strategy’s split between ordinary income and capital-gains tax.
- Ordinary income tax rate
- The marginal rate applied to wages, IRA withdrawals and other ordinary income. In this comparison it applies to the cost basis under the NUA strategy and to the full value under the IRA path. A large NUA distribution can push you into a higher bracket in that year, which this simplified estimate does not model.
- Long-term capital gains rate
- The lower federal rate on gains from assets treated as held long term: 0%, 15% or 20% depending on income, plus the 3.8% net investment income tax if it applies (IRS, 2026, rates as stated in this calculator). NUA is taxed at these rates when sold, regardless of how long you hold the shares after distribution.
In our glossary: Net unrealized appreciation · Long-term capital gains
Company Stock Distribution (NUA) calculator: questions from firms and clients
What triggers eligibility for NUA?
Separation from service, reaching 59½, disability or death, followed by a lump-sum distribution of the entire plan balance within one tax year.
Is the NUA taxed when distributed?
No, only the cost basis is taxed then. NUA is taxed as long-term gain when the stock is sold.
Does the net investment income tax apply?
The NUA itself is generally not subject to it, but later appreciation may be. The 3.8%2026 · IRS surtax should be checked by the firm.
Is there a penalty?
A penalty on the basis may apply before 55 (separation) or 59½: 10% before age 59½ (age-55 separation-from-service exception for plans)2026 · IRS.
Can I do NUA on part of the stock?
Yes, some shares can be distributed in kind and the rest rolled over.
What if my basis is high?
NUA may not be worth it. The calculator shows when the advantage is small.
Can I undo it?
No. Once rolled over to an IRA, NUA treatment is lost.
Which plan includes it?
Network. See pricing.
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