By: Tim Hayes Financial Advisor - posted in: Financial Planner - Last updated Jul 19, 2019

Net Unrealized Appreciation Rules (NUA) — Retirement Strategies

If you own employer stock in your employer’s retirement plan, and if that stock has appreciated when you retire or leave your company, you should be aware of Net Unrealized Appreciation Rules (NUA).

NUA allows individuals to take a withdrawal from their stock holdings as a capital gain, as opposed to income.

For example, say you own employer stock for which you paid $50,000, and today it is worth $250,000.

If you use NUA, on the $50,000 you will pay income taxes, but on the $200,000 you will pay capital gains taxes, which are 15% to 20% below income tax rates for most people.

The $200,000 is your NUA.  It will fluctuate as the stock moves up and down.

NUA is an important option.  It can reduce taxes, but it may concentrate risk during retirement when diversification is needed.

These are the opinions of financial advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only, and should not be construed or acted upon as individualized investment advice.

Get Planning Advice

About Financial Advisor Tim Hayes

Independent Financial Advisor

Registered with Cambridge Investment Research, Inc., a broker-dealer with over 3,000 Registered Representatives nationwide. Investment Adviser Representative at Cambridge Investment Research Advisors, Inc., a $94B RIA based in Fairfield, IA. I've held an industry securities registration for 26 years and am subject to SEC and FINRA oversight.

Click to Call

Pin It on Pinterest

Share This
%d bloggers like this: