By: Tim Hayes Financial Advisor - posted in: Financial and Retirement Planning - Last updated May 18, 2019

Net Unrealized Appreciation (NUA) — Retirement Strategies

If you own employer stock in your employer’s retirement plan, and if that stock has appreciated when you retire or leave your company, you should be aware of Net Unrealized Appreciation (NUA).

NUA allows individuals to take a withdrawal from their stock holdings as a capital gain, as opposed to income.

For example, say you own employer stock for which you paid $50,000, and today it is worth $250,000.

If you use NUA, on the $50,000 you will pay income taxes, but on the $200,000 you will pay capital gains taxes, which are 15% to 20% below income tax rates for most people.

The $200,000 is your NUA.  It will fluctuate as the stock moves up and down.

NUA is an important option.  It can reduce taxes, but it may concentrate risk during retirement when diversification is needed.

About Financial Advisor Tim Hayes

No cookie-cutter solutions

As an independent financial advisor, I have access to many financial products, including mutual funds, ETFs, stocks, bonds, annuities, and life insurance programs. I use these and other products to build custom solutions for people, according to their individual needs and goals

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