Mark Stevens, CFP®
mark@wealthcarenetwork.org
 
 




Net Unrealized Appreciation (NUA)

 

Advantages and Disadvantages of NUA Treatment

What are the advantages of NUA treatment?

  • Your distribution of NUA will be taxed at long-term capital gains rates, rather than ordinary income tax rates. Long-term capital gains rates are generally much more favorable, and currently are as low as 0% for some taxpayers.
  • Your distribution won't be subject to the required minimum distribution rules that would apply if you rolled the distribution over to an IRA. You need never sell the stock if you don't want to.
  • The NUA portion of your distribution will never be subject to the 10% early distribution penalty tax.

What are the disadvantages of NUA treatment?

  • Your cost basis in the stock is subject to tax at ordinary income tax rates when the stock is distributed to you. A 10% early distribution penalty tax may also apply if you're not age 55 or disabled when you receive your payment. (The 10% penalty tax generally doesn't apply if you're self-employed.)
  • You'll lose the benefit of tax-deferred growth offered by a rollover IRA.
  • NUA treatment applies only to employer stock and other securities. But holding a significant amount of employer stock may not be appropriate for everyone. In some cases, it may make sense to diversify your investments.



This communication is strictly intended for individuals residing in the state(s) of GA. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.