NUA vs. IRA Rollover: Optimizing Taxes on Company Stock

If you hold highly appreciated company stock inside your employer’s 401(k) plan, you have a unique tax planning opportunity. Under the Net Unrealized Appreciation (NUA) rules, you can transfer the stock to a taxable brokerage account, paying ordinary income tax only on the original cost basis, while the appreciation is taxed at lower long-term capital gains rates.

Planning for your future in the Wasatch Front requires a strategy that accounts for local cost of living and specific lifestyle desires. Whether you enjoy skiing at Alta, hiking in the Cottonwood canyons, or raising a family in South Jordan, your financial roadmap should be built around your life—not just a generic set of numbers.

How This Calculator Works (Simply Explained)

To get the most out of this tool, it is helpful to understand the key inputs that drive the results:

Cost Basis of Stock: The original price paid for the company stock.
Market Value of Stock: The current value of the stock at distribution.
NUA Tax Savings: The difference between paying capital gains tax on the appreciation vs. paying ordinary income tax on a standard IRA withdrawal.

By adjusting these inputs, you can model different financial scenarios to see how subtle shifts in your savings rate or portfolio return can impact your long-term wealth.

Scenario: The Power of Planning in Action

Consider this hypothetical scenario: An employee retiring in Salt Lake City, UT, has a hypothetical $500,000 of company stock in his 401(k) with a cost basis of a hypothetical $100,000. Under an NUA strategy, he rolls the stock into a brokerage account, paying ordinary income tax on the $100,000 basis today. The remaining $400,000 of appreciation is taxed at capital gains rates (e.g., 15%) when sold. Compared to rolling it into an IRA (where withdrawals are taxed as ordinary income at 24%), the NUA strategy saves him a hypothetical $36,000 in taxes.

This scenario highlights how consistent actions and a clear timeline can remove the guesswork from your finances, transforming abstract goals into a concrete roadmap.

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FAQ – Frequently Asked Questions

What is Net Unrealized Appreciation (NUA)?

NUA is the increase in value of employer stock held in a qualified retirement plan from the time it was acquired to the time it is distributed.

What are the requirements for an NUA distribution?

You must distribute your entire 401(k) balance in a single tax year, transferring the company stock in-kind to a taxable brokerage account.

Is an NUA strategy always beneficial?

No, NUA is not always beneficial if the cost basis is very high relative to the market value, as you pay tax on the basis immediately.

Beyond the Numbers: Why Fiduciary Advice Matters

While this calculator provides a helpful baseline, it only tells part of the story. Static online tools cannot account for:

Tax Location Strategies: Maximizing the balance between Roth, Traditional, and taxable brokerage accounts.
Utah-Specific Tax Rules: How state income tax and retirement exclusions impact your bottom line.
Asset Allocation vs. Risk Tolerance: Aligning your investments with your actual comfort level.

At Salt Lake Financial Planning, we specialize in providing fee-based fiduciary financial planning and investment management that looks at your entire financial life. We help you move past basic calculator math to build a personalized, tax-efficient strategy.

We worked with Dallas for a comprehensive financial plan. He took the time to understand all aspects of our current finances and our goals and dreams. He helped us see where we were doing well and how we could improve. Knowing the full picture and how to proceed so that we can reach our goals gave us peace of mind and confidence. Thank you so much Dallas!

Travis G

Dallas has consistently been an incredible resource, from everything from car insurance to budgeting to retirement planning. He truly cares & has a great way of communicating options & suggestions. I refer him to people all the time.

Jenelle K

These statements are testimonials by clients of the financial professional as of 05/30/2026. The clients have not been paid or received any other compensation for making these statements. As a result the clients do not receive any material incentives or benefits for providing the testimonials. These views may not be representative of the views of other clients and are not indicative of future performance or success.

Ready to take control of your financial roadmap? Schedule an Initial Strategy Meeting with Dallas Price today to discuss your goals in Sandy, Draper, or South Jordan.

Compliance Disclosures

Any perceived advice is general and broad in nature and not meant to substitute direct consultation and advising. Please contact the applicable professional to go over your situation. Schedule an Initial Strategy Meeting if you’d like more 1-1 advice.

Calculations are for illustrative purposes only, do not represent actual performance of any investment, and do not reflect taxes or advisory fees, which would lower returns.