NUA Calculator
Company Stock in Your 401(k): NUA vs IRA Rollover
Work out whether taking employer stock out of your 401(k) under the net unrealized appreciation rules beats rolling it to an IRA — and the cost basis at which it stops paying.
Read the full answer — method, rates and figures
Quick answer: Net unrealized appreciation (NUA) is the growth in your employer's stock while it sat in your 401(k). If you take the shares out in kind as part of a lump-sum distribution, you pay ordinary income tax now only on the plan's cost basis, and the NUA is taxed later as a long-term capital gain when you sell — instead of as ordinary income, which is how everything rolled into an IRA is taxed when it comes out.
For a married couple with $80,000 of other income holding $500,000 of company stock with a $100,000 basis, and realising it over 10 years, the NUA route costs about $16,700 in federal tax against $60,000 for rolling it all to an IRA — $43,300 less. It stops paying once the basis is above about 57% of the value.
It only works in a lump-sum distribution: your entire balance, in one tax year, after you separate from service, reach 59½, become disabled or die. Source: IRS Publication 575.
Should I use NUA or roll my company stock into an IRA?
It depends mostly on how low the cost basis is. $500,000 of stock with a $100,000 basis, sold over 10 years by a couple on $80,000: about $16,700 of tax with NUA against $60,000 through an IRA.
Tax, NUA route
$16,700
Tax, IRA route
$60,000
NUA saves
$43,300
Break-even basis
57%
NUA route, line by line
- Ordinary tax on the basis (now)$16,700
- Long-term gains tax on $400,000 of NUA$0
- Total$16,700
Leaving a job before 59½? The 401(k) withdrawal calculator prices cash withdrawals, the Rule of 55 calculator checks penalty-free access, and the 72(t) calculator sets up a fixed withdrawal plan.
Last reviewed 24 September 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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NUA route: the cost basis is added to your other income in the distribution year and taxed at ordinary rates (plus the 10% additional tax on that part if you are early). The NUA is then sold in equal parts over the years you choose, each part taxed as a long-term capital gain on top of your other income — so some of it can fall in the 0% bracket.
IRA route: the whole value is rolled into an IRA and withdrawn in equal parts over the same years, each taxed as ordinary income on top of your other income. Both routes use the 2026 federal brackets and standard deduction for every year.
Source: IRS Publication 575 (2025), “Distributions of employer securities” and “Net unrealized appreciation”; 2026 rates from Rev. Proc. 2025-32.
How the cost basis changes the answer
| Basis | NUA route | IRA route | Better |
|---|---|---|---|
| 10% ($50,000) | $6,000 | $60,000 | NUA |
| 25% ($125,000) | $22,200 | $60,000 | NUA |
| 50% ($250,000) | $51,428 | $60,000 | NUA |
| 75% ($375,000) | $82,968 | $60,000 | IRA |
The lower the basis relative to the value, the more of the balance escapes ordinary income tax, and the stronger the case for NUA. A high basis means paying ordinary income tax up front on the whole basis, with only a small gain left to benefit from capital-gains rates later.
How to use this calculator
- Enter the current value of the employer shares in your plan and the plan's cost basis (box 1 minus box 6 of Form 1099-R, or ask your plan).
- Enter your other taxable income in the year of distribution and after, and your filing status.
- Tick the early box if you are under 59½ and no exception applies.
- Choose over how many years you would sell the shares (or withdraw from an IRA).
- Compare the tax on each route, and see the basis level at which NUA stops paying.
❓ Frequently Asked Questions
What is net unrealized appreciation (NUA)?
The increase in value of your employer's stock while it was held in your retirement plan: the market value when distributed minus the plan's cost basis in the shares. It appears in box 6 of the Form 1099-R.
Under the NUA rules that increase is not taxed at distribution and is taxed as long-term capital gain when you later sell the shares.
How is NUA taxed?
In the year of the distribution you pay ordinary income tax on the cost basis only. When you sell, the gain up to the NUA is long-term capital gain whatever the holding period; any rise after distribution is long- or short-term depending on how long you then hold.
In the example, the $100,000 basis costs $16,700 of tax up front and the $400,000 of NUA, sold over 10 years, $0.
What qualifies as a lump-sum distribution for NUA?
Per IRS Publication 575: the distribution of the participant's entire balance, within a single tax year, from all of the employer's qualified plans of one kind, paid because of death, after reaching 59½, because an employee separates from service, or after a self-employed participant becomes disabled. The shares must come out in kind; the rest of the account can be rolled to an IRA in the same year.
Is there a 10% penalty on NUA?
Only on the taxable part — the cost basis — and only if you are under 59½ with no exception. The NUA itself is not income at distribution, so no additional tax applies to it.
Leaving the employer in or after the year you turn 55 is an exception for distributions from that employer's plan.
When is NUA not worth it?
When the basis is a large share of the value, when your ordinary income in retirement will be low anyway, or when you would sell the shares immediately and in one year at high income. In the example the break-even is a basis of about 57% of the value; above that, rolling to an IRA costs less.
Concentration risk matters too: holding one company's stock outside the plan is its own risk.
What does this calculator leave out?
State income tax, the 3.8% net investment income tax (its application to NUA gain was not confirmed from a primary source, so it is not applied), growth after distribution, and future tax-law changes. It uses the 2026 federal brackets for every year.
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Further Reading
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