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Maximizing Company Stock Benefits with NUA

By Alaina Lotito
Financial Advisor at Investment Consulting Group
Published May 8, 2026

Maximizing Company Stock Benefits with NUA

If you work in the automotive industry, you may have company stock inside your retirement plan like a 401(k). Over time, that stock can grow a lot in value.
One strategy that can sometimes help reduce taxes on that stock is called Net Unrealized Appreciation (NUA).
It is a tax rule that can help you pay less tax on company stock when you move it out of your retirement plan.
This guide explains NUA in simple terms and why it might matter for people with employer stock.

What Is NUA?

NUA stands for Net Unrealized Appreciation.

That sounds complicated, but here is the simple idea:

  • You bought company stock inside your retirement account for a certain price
  • The stock went up in value over time
  • NUA lets you pay lower taxes on the growth if you follow specific rules

Normally, money you take out of a retirement account is taxed like regular income. That can mean higher taxes.

With NUA, part of the money may be taxed at a lower rate later, like long-term capital gains.

Why Taxes Matter

The type of tax you pay can make a big difference.

Here is a simple breakdown:

  • Ordinary income tax rates can go up to 37% depending on your income
  • Short-term capital gains (assets held under 1 year) are taxed at ordinary income rates
  • Long-term capital gains (assets held over 1 year) are typically taxed at 0%, 15%, or 20% depending on your income

With an NUA strategy:

  • The growth on your company stock inside your 401(k) may qualify for long-term capital gains treatment later
  • This is true regardless of how long you personally hold the stock after distribution

This is especially important if you are in a higher income tax bracket, where paying ordinary income tax on everything could be significantly more expensive.

How NUA Works (Simple Steps)

Here is a basic way to understand it:

  1. You leave your job or retire: NUA usually only works when you leave your employer or retire.
  2. You take all your retirement money out at once: This is called a lump-sum distribution.
  3. You move company stock into a regular brokerage account: Instead of selling it inside your 401(k), you transfer the shares.
  4. You pay taxes in two parts:

a. You pay ordinary income tax on the original cost of the stock
b. You may pay long-term capital gains tax on the growth later when you sell it

Simple Example

Let’s say:

  • You bought company stock for $50,000
  • It is now worth $200,000
  • The gain is $150,000

Without NUA:

  • You might pay ordinary income tax on the full $200,000

With NUA:

  • You pay ordinary income tax only on $50,000
  • You may pay long-term capital gains tax (0-20%) on the $150,000 growth

This difference in tax treatment can sometimes lead to meaningful tax savings.

When NUA Can Help

NUA may make sense if:

  • You have a lot of company stock in your 401(k)
  • The stock has gone up a lot in value
  • You are retiring or leaving your job soon
  • You are in a high tax bracket

When NUA May Not Help

NUA may not be useful if:

  • Your company stock has not gone up much
  • You want to move everything into an IRA instead
  • You are not ready to pay taxes now
  • You need more simple retirement planning

Important Things to Know

NUA is not automatic, and it has rules:

  • You must take a lump-sum distribution in one tax year
  • Timing is very important
  • Once you do it, you cannot undo it
  • It is not right for everyone

Also, future gains work differently:

  • Growth inside the retirement plan may qualify for long-term capital gains under NUA rules
  • But once the stock is in a brokerage account:
    • If you sell within 1 year → short-term capital gains
    • If you hold over 1 year → long-term capital gains

So, planning ahead matters.

Why People Miss This Strategy

Many automotive professionals miss NUA because:

  • It is not explained clearly in retirement plans
  • Most people only hear about rolling money into an IRA
  • The rules are confusing
  • It is usually not discussed until retirement is close

How We Can Help

At Investment Consulting Group, we help automotive professionals understand strategies like NUA in a simple way.

We focus on helping clients with:

  • Company stock and 401(k) planning
  • Retirement tax strategies
  • Reducing taxes on large retirement accounts
  • Planning when to retire or leave a job
  • Making sense of complex financial rules

Our goal is to help you understand your options clearly so you can make better decisions with your money.

Other Resources You Should Check Out

If you are learning about NUA, you may also want to look into: Managing RSUs, Company Stock, And Pension Income

If you would like to talk to us further: Book a Call with Us

 Securities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth.