Net Unrealized Appreciation - NUA

What is the 'Net Unrealized Appreciation - NUA'

The net unrealized appreciation (NUA) is the difference in value between the average cost basis of shares and the current market value of the shares held in a tax-deferred account.

BREAKING DOWN 'Net Unrealized Appreciation - NUA'

The NUA is important if you are distributing highly appreciated company stock from your tax-deferred employee-sponsored retirement plan, such as a 401(k). Upon the distribution the NUA is not subject to ordinary income tax. For this reason it may be better to transfer the company stock to a regular brokerage account instead of rolling the stock over to a tax-deferred IRA: that is, if rolled over to an IRA, the company stock's NUA would eventually be taxed at your ordinary income tax rate (when you take distribute the stocks).

RELATED TERMS
  1. Tax-Deferred Savings Plan

    A savings plan or account that is registered with the government ...
  2. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  3. Non-Qualifying Investment

    An investment that does not qualify for any level of tax-deferred ...
  4. Unrealized Gain

    A profit that exists on paper, resulting from any type of investment. ...
  5. Distribution In Kind

    A payment made in the form of securities or other property, rather ...
  6. Qualifying Investment

    An investment purchased with pretax income. Money invested in ...
Related Articles
  1. Professionals

    Taxation of Distributions

    Taxation of Distributions
  2. Retirement

    401(k) Rollovers: Which Option Makes You the Most?

    Know the choices that net you the most on a 401(k) rollover – including big tax benefits (capital gains, not income tax) when company stock is involved.
  3. Retirement

    401(k) Rollover: Roth IRA or Traditional IRA?

    Here are the pros and cons of choosing to roll over your 401(k) into a Roth IRA and a traditional IRA.
  4. Retirement

    The Complete Guide To Retirement Planning For 50-Somethings: Retirement Nest Egg

    Ideally, distributions from your retirement savings account would be deferred until you reach retirement age. However, extenuating circumstances may necessitate making withdrawals before then. ...
  5. Take Stock of Where You Are

    With retirement looming, your first step towards final preparation is to take a look at your savings portfolio to see where you stand.
  6. Retirement

    Best Ways to Roll Over Your 401(k)

    When you leave a job, you have some decisions to make about what to do with your 401(k). Here are some choices.
  7. Retirement

    Not All Retirement Accounts Should Be Tax-Deferred

    It may be better to leave your assets exposed to the tax man when you're saving to retire.
  8. Financial Advisors

    Top Tips for Retirement Account Withdrawals

    Top things you need to know when it comes to managing the complex task of retirement account withdrawals.
  9. Retirement

    Top 4 Reasons To Save For Retirement Now

    No more excuses. Make sure you are financially secure and independent for your golden years.
  10. Financial Advisors

    Multiple Accounts? Here's How to Calculate RMDs

    Ever wondered about how to calculate required minimum distributions on multiple accounts? Here's a quick primer.
RELATED FAQS
  1. What are unrealized gains and losses?

    An unrealized loss occurs when a stock decreases after an investor buys it, but he or she has yet to sell it. If a large ... Read Answer >>
  2. What are the most common deferred tax assets used by individuals?

    Use these deferred tax assets to reduce your tax liability and grow your assets simultaneously. Discover the most common ... Read Answer >>
  3. What's the difference between a savings account and a Roth IRA?

    A savings account is an all-inclusive term , which includes IRAs and regular ( non-retirement) savings. A Roth IRA is a savings ... Read Answer >>
  4. Should I use a deferred tax asset for all of my retirement funds?

    Look outside tax-deferred accounts for retirement savings that are worthwhile now and later. Invest a portion in after-tax ... Read Answer >>
  5. Can I roll a Traditional IRA into a 529 college account for my grandchild?

    The short answer: Not without paying taxes. But as with much of the tax code, there are various nuisances and exemptions ... Read Answer >>
  6. Are Simple IRA taxes the same as traditional IRA taxes?

    Discover the tax difference between a SIMPLE IRA and a traditional IRA before you determine which retirement plan is the ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center