Are you someone who has company stock in your 401K? If you are, you may be able to take advantage of the Net Unrealized Appreciation (NUA) strategy.
Normally, assets in your employer-sponsored plan, including company stock, have the potential to accumulate on a tax-deferred basis. However, once you begin taking distributions from the plan, you generally must pay ordinary income tax on the current market value of the assets distributed.
However, using the NUA strategy you can possibly defer paying tax or to pay at the capital gains tax rate rather than the ordinary income rate on portions of your lump-sum distribution.
For most taxpayers, the federal long-term capital gains rate is currently 15%. Many times this is much lower than most ordinary income tax rates, thereby using the NUA strategy can significantly reduce the amount of tax you pay on your distribution.
The Holbert Wealth Management group has worked with a number of clients from a variety of companies to assist them in enacting the NUA strategy at their retirement. Contact us today to determine if the NUA strategy makes sense today. Click here to get your Net Unrealized Appreciation Report.
Some of the companies we have worked with include: Publix, Fed Express, UPS, NextEra, AT&T, United Technologies, and more.
Changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of Raymond James & Associates we are not qualified to render advice on tax or legal matters