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Dianne Williams Wildt, MBA
Certified Retirement Counselor®
Since 1983 in the financial services and investment industry
Retirement Pathways, Inc.
4500 Bowling Blvd., Suite 100
Louisville, KY 40207
Phone: 502-797-1258
Email: dianne@retirementpathways.com
Website: www.retirementpathways.com
July/August 2025
Net Unrealized Appreciation and Your 401(k)
If your 401(k) plan account contains employer stock, the tax law's net unrealized appreciation (NUA) provision may allow you to take advantage of potentially lower tax rates on the growth or unrealized appreciation of the stock.
How It Works
Normally, distributions from a traditional 401(k) are taxed as ordinary income. Under the NUA provision, you can separate the appreciation of your employer stock from other assets in your 401(k) at retirement. When you eventually sell your stock, the NUA will be taxed at the generally lower long-term capital gains rate. You typically need to separate from your employer through retirement or other means and take a qualified lump-sum distribution of your entire plan balance to take advantage.Here's an Example
Twenty years ago, Taylor received a $50,000 company stock 401(k) contribution. Today, upon her retirement, the stock is worth $200,000. Instead of rolling everything into an IRA, Taylor is taking a separate stock distribution. Ordinary income tax will be due only on the $50,000, while the $150,000 appreciation would be subject to capital gains tax when sold.*Your trusted professional can help determine whether this fits your broader retirement and investment strategy.
*This is a hypothetical example and is not representative of any investment strategies. Actual results my vary.
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Investment advisory services offered through American Capital Management, Inc., a State Registered Investment Advisor. Retirement Pathways, Inc. is independent of American Capital Management, Inc.
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