What is a NUA strategy?
NUA relates to distributions of appreciated employer securities from an eligible employer-based retirement plan. When securities are sold, any NUA is taxed at the long-term capital gains rate. Any additional gain is taxed based on the holding period of the shares after they are distributed.
When should you not use Nua?
Be eligible to take a lump-sum distribution1 from their plan – usually due to separation from employment, disability, or attaining 59½ years of age. Receive the distribution of the company stock directly from their workplace plan. The NUA rule cannot be used if they roll the stock over to an IRA and then liquidate it.
When should I do a Nua?
“With NUA, when you have company stock in your qualified retirement plan, such as your 401(k), and take a lump-sum distribution from a qualified retirement plan, you can effectively pay lower capital gains rates on a portion of your tax-deferred assets instead of paying the typically higher ordinary income rates when …
How is Nua calculated?
Net unrealized appreciation (NUA) is the difference between the original cost basis and current market value of shares of employer stock. The IRS offers a provision that allows for a more favorable capital gains tax rate on the NUA of employer stock upon distribution, after certain qualifying events.
Do you have to be 59.5 to do Nua?
In order to be eligible for NUA treatment of an in-kind distribution of employer stock, the lump-sum distribution must be made after a triggering event. The triggering events are (a) Death, (b) Disability, (c) Separation from Service, or (d) Reaching age 59 ½.
What is net appreciation?
Net Appreciation means the amount by which cumulative capital gains exceed the sum of the capital losses.
Is Nua subject to NIIT?
Correct, the amount of NUA per share is not subject to the NIIT, nor does it receive a basis adjustment upon death. Subsequent gains after distribution are subject to NIIT, and do get a basis adjustment upon death.
Who is eligible for Nua?
Can you do partial Nua?
Consider Splitting up Stock The stock you acquired early, which has appreciated significantly, could be transferred to a brokerage account. Note, however, you can’t do partial NUA or partial rollovers.
Can I retire at 55 with my 401k?
The IRS Rule of 55 allows an employee who is laid off, fired, or who quits a job between the ages of 55 and 59 1/2 to take money from their 401(k) or 403(b) plan without the 10% penalty for early withdrawal.