Net Unrealized Appreciation (NUA)
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. Investopedia Says:
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:
401(k) Plan
Capital Appreciation
Capital Gain
Cost Basis
Individual Retirement Account - IRA
Market Value
Rollover
Tax Deferred |