About the Net Unrealized Appreciation Calculator
This net unrealized appreciation (NUA) calculator compares two ways to handle company stock inside a 401(k) when you leave your job or retire. With NUA treatment you take the shares out in kind as part of a lump-sum distribution, pay ordinary income tax only on the stock’s cost basis now, and pay long-term capital gains rates on the appreciation when you sell. With a rollover you move everything into an IRA, defer all tax, and pay ordinary income tax on every dollar you eventually withdraw.
It is built for employees holding highly appreciated employer shares, and for advisers testing whether NUA is worth the up-front tax bill. Enter the cost basis your plan reports (Form 1099-R box 6 shows the NUA), the current value, your tax rates and how long until you sell, and the calculator shows the after-tax value of each route and the difference.
NUA requires a lump-sum distribution of your entire balance from all of the employer’s plans of the same type within one tax year, after a triggering event such as separation from service, reaching 59½, disability or death. The up-front tax is treated as money that would otherwise have grown at the same rate, so both routes are compared fairly. The 3.8% net investment income tax and state taxes are not included.
With the default inputs, the nua advantage over ira rollover is $22,500.00. Change any value above to recalculate instantly.
How to use the net unrealized appreciation calculator
- 1Find the cost basis and market value of your company stock on your plan statement.
- 2Enter your ordinary tax rate for the distribution year and expected rate on future IRA withdrawals.
- 3Enter your long-term capital gains rate and how many years until you would sell.
- 4Turn on the early-distribution toggle if you are under 59½ and did not separate in or after the year you turned 55.
- 5Compare the after-tax values and check the chart to see how the answer changes with holding time.
Formula and method
With NUA treatment the cost basis (B) is ordinary income in the year the shares are distributed, plus a 10% additional tax if you are under 59½ and no exception applies. The net unrealized appreciation (V − B) is taxed as a long-term capital gain whenever you sell, regardless of how long you held the shares inside the plan, and any further growth after distribution is long-term gain once you have held the shares for more than a year after distribution. This calculator sells in whole years, so later growth is treated as long-term.
With a rollover, nothing is taxed now; the full value (grown at the same rate) is taxed as ordinary income when withdrawn. To compare fairly, the up-front NUA tax is grown at the same rate as the stock — that is the growth you give up by paying the tax early. The result is the after-tax amount you would have under each route at the chosen horizon.
- V
- Current market value of the employer stock
- B
- Cost basis (taxable portion of the distribution)
- g, t
- Annual growth rate and years until sale/withdrawal
- t_ord, t_later
- Ordinary tax rate now and at withdrawal
- p
- 10% additional tax if it applies
- LTCG
- Long-term capital gains rate
Worked examples
$300,000 of stock with a $50,000 basis, sold right away
With NUA you pay 24% on the $50,000 basis ($12,000) and 15% on the $250,000 of appreciation ($37,500), keeping $250,500. Rolling into an IRA and withdrawing it all at 24% leaves $228,000, so NUA is worth $22,500 more.
Same shares held 10 years at 6% growth
The stock grows to about $537,254. Under NUA, capital gains tax on $487,254 is about $73,088, and the $12,000 paid up front would have grown to about $21,490, leaving roughly $442,676. The rollover leaves $537,254 × 76% ≈ $408,313, so NUA is still about $34,363 ahead.
High basis — rollover wins
When the basis is 80% of the value, NUA means paying 32% on $200,000 now ($64,000) to save tax on only $50,000 of appreciation. The rollover, taxed later at 24%, leaves $11,500 more.
Frequently asked questions
What is net unrealized appreciation?+
NUA is the increase in value of employer securities while they were held inside your retirement plan — the market value at distribution minus the plan’s cost basis. If you take the shares out in a qualifying lump-sum distribution, the NUA is taxed as long-term capital gain when you sell instead of as ordinary income.
What qualifies for NUA tax treatment?+
You must take a lump-sum distribution — your entire balance from all of the employer’s plans of the same type within one tax year — after separation from service, reaching age 59½, disability (self-employed) or death, and receive the employer stock in kind rather than as cash.
When is NUA not worth it?+
NUA tends to lose when the cost basis is a large share of the value, when your ordinary rate now is much higher than your expected rate in retirement, or when you would hold the shares for decades so the deferral on the rollover side compounds.
Is the 10% early withdrawal penalty applied to NUA?+
The 10% additional tax, if it applies, is charged only on the taxable cost basis, not on the NUA. If you separated from service in or after the year you turned 55, the separation-from-service exception usually removes it.
Do I pay tax on NUA if I never sell?+
No. The NUA is not taxed until you sell the shares. NUA does not get a step-up in basis at death, so heirs pay long-term capital gains on the NUA when they sell, though growth after distribution can get a step-up.
Where do I find my NUA amount?+
After the distribution, the plan reports it on Form 1099-R: box 2a shows the taxable amount (generally the basis) and box 6 shows the net unrealized appreciation in employer securities.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.