Which choice may create less tax: using NUA or rolling everything to an IRA?
Should you move company stock from your retirement plan to a taxable account or roll it into an IRA? This NUA calculator compares the estimated taxes under both paths using your stock value, plan cost basis, sale timing, and tax rates. Start with the numbers, then confirm that the distribution qualifies before moving any shares.
Before you act on the number
See what the result means—and what could change it.
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How to read it
A positive difference means lower nominal tax under the NUA assumptions entered. It is not a recommendation: the cost of paying tax earlier and the risk of holding company stock are not priced into that difference.
Check sensitivity to cost basis, future ordinary-income rates, sale timing, and stock performance. A smaller rate spread or a large current tax bill can change the practical choice.
Before execution, review the qualifying event, all employer plans of the same kind, prior withdrawals, stock lots, and distribution destinations with the plan administrator and your tax professional.
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What could change the answer
An eligibility determination, plan-specific restrictions, prior-distribution history, or taxable/after-tax contribution adjustments
Early-distribution penalties, withholding, estimated-tax payments, or tax-bracket and NIIT income thresholds
Present value of taxes, different ordinary rates now and later, different portfolio returns, dividends, or required minimum distributions
Short-term tax on post-distribution appreciation sold within one year; that appreciation is modeled at the entered long-term rate
Capital-loss deductions when sale proceeds fall below basis, estate planning, charitable transfers, or a diversification plan
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What to take forward
Use the result to identify which assumption needs verification, then bring that question to the professional helping you make the decision.
Transparent method
How the estimate works
See how the estimate is calculated
Net unrealized appreciation is the company stock’s distribution value minus its plan cost basis. In this simplified model, an eligible in-kind distribution creates ordinary income on the basis now; the original NUA receives long-term capital-gain treatment when sold.
Project stock and other rolled-over plan assets using the entered growth rate and years. Original NUA is excluded from net investment income tax (NIIT); the entered NIIT rate applies only to positive post-distribution stock appreciation. If the stock falls, taxable NUA is limited to the gain realized above basis.
Compare current basis tax plus future stock-sale and IRA-withdrawal tax with ordinary income tax on the entire future rollover value. The same ordinary rate is used now and later. This is a nominal tax comparison, not a present-value or after-tax wealth forecast.
Common questions
Frequently asked questions
How do you calculate net unrealized appreciation?
Subtract the plan’s cost basis in the employer shares from their market value when distributed. In the example, $400,000 less $60,000 equals $340,000 of NUA. Confirm the plan’s actual basis records; the amount you remember contributing is not necessarily the stock’s tax basis.
How is NUA taxed compared with an IRA rollover?
For a qualifying distribution, the taxable plan basis generally creates ordinary income at distribution, while original NUA is taxed as long-term capital gain when sold. An IRA rollover generally postpones tax, but subsequent taxable IRA distributions are ordinary income. Other contributions or special circumstances can alter the calculation.
Is the 3.8% net investment income tax applied to NUA?
Original NUA from a qualifying employer-stock distribution is excluded from net investment income. Appreciation after distribution can be subject to NIIT. This calculator applies the NIIT rate you enter only to that later appreciation and does not calculate whether your income crosses the NIIT threshold.
What are the lump-sum distribution requirements?
Generally, the full balance from the employer’s plans of the same kind must be distributed within one tax year after a qualifying event. IRS guidance identifies death, reaching age 59½, an employee’s separation from service, and qualifying disability for a self-employed participant. Prior withdrawals and plan facts can affect eligibility; confirm the entire sequence before starting.
Can I use NUA after rolling the company stock into an IRA?
Generally, the special employer-stock NUA treatment is lost for shares rolled into an IRA. Review the destination of the stock before initiating a rollover. Other eligible plan assets may follow a different path as part of a coordinated qualifying distribution.
Must I hold the distributed shares for a year?
Original NUA receives long-term capital-gain treatment when sold regardless of how long the shares are held after distribution. The holding period does matter for appreciation after distribution, which can be short- or long-term. This calculator assumes the later appreciation is taxed at the entered long-term rate.
Is NUA always the better choice with a low cost basis?
No. Eligibility, current tax and possible penalties, the timing of future withdrawals, diversification, charitable intentions, and future tax rates all matter. A tax difference alone does not decide whether keeping or distributing employer stock fits your plan.
Method referenceIRS Topic 412: lump-sum distributionsPublic source used to define this calculator's method and limitsOpen source Method referenceIRS Publication 575: employer securities and NUAPublic source used to define this calculator's method and limitsOpen source Method referenceIRS Form 8960 instructions: NUA and net investment incomePublic source used to define this calculator's method and limitsOpen source