Mark Stevens, CFP®

Net Unrealized Appreciation (NUA)


What Is a Lump-Sum Distribution?

In general, you're only allowed to use these favorable NUA tax rules if you receive the employer securities as part of a lump-sum distribution. To qualify as a lump-sum distribution, both of the following conditions must be satisfied:

  • It must be a distribution of your entire balance, within a single tax year, from all of your employer's qualified plans of the same type (that is, all pension plans, all profit-sharing plans, or all stock bonus plans)
  • The distribution must be paid after you reach age 59½, or as a result of your separation from service (if you're an employee), disability (if you're self-employed), or death

There is one exception: Even if your distribution doesn't qualify as a lump-sum distribution, any securities distributed from the plan that were purchased with your after-tax contributions will be eligible for NUA tax treatment. (After-tax contributions for this purpose do not include your Roth 401(k) contributions.)

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 2019.