NUA (Net Unrealized Appreciation)
A tax strategy for employer stock in a 401(k) that taxes its growth at lower capital-gains rates.
What does nua mean?
With NUA, you pay ordinary income tax only on the stock’s cost basis at distribution, and the appreciation is taxed at long-term capital-gains rates when sold — often far less than rolling everything into an IRA where it would all be ordinary income.
Related terms
NUA — frequently asked
What is the NUA tax strategy?
Net unrealized appreciation lets you move employer stock from a 401(k) into a taxable account, paying ordinary tax only on the original cost basis. The gains are then taxed at lower long-term capital-gains rates when you sell.
When does NUA make sense?
NUA can pay off when highly appreciated company stock sits in your 401(k) and the gap between your ordinary rate and the capital-gains rate is large. It is complex and irreversible, so it usually warrants professional advice.