What is net unrealized appreciation | Financial advisors for engineers and executives

Welcome to today’s episode! At AdviceOne, we aim to demystify important financial concepts that can significantly impact your retirement planning. One concept that is especially important to understand is Net Unrealized Appreciation (NUA).

In this video, we’ll break it down for you:

Understanding NUA: Learn what NUA is and how it relates to company stock inside your 401(k) plan, accrued through your company match contributions. We’ll explain the importance of not selling your Employee Stock Ownership Plan (ESOP) without fully understanding its implications.

Tax Benefits: Discover how NUA allows you to benefit from tax advantages when handling company stock. We’ll illustrate this with an example where someone has $2 million in their 401(k), including $700,000 in company stock, and how the cost basis impacts your tax liability.

Common Mistakes: Avoid the pitfalls of prematurely selling your ESOP or rolling it over into an IRA. We’ll highlight the differences in tax treatment and the potential for significant tax savings if you maintain your ESOP until retirement.

Diversification Risks: Understand the balance between holding a substantial amount of stock in one company versus diversifying your portfolio. We’ll provide examples of how a couple’s overall net worth and investment strategies can influence their financial risk.

Join us as we discuss how to leverage NUA in your retirement planning and ensure you make informed decisions about your investment strategies!

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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.