NUA Calculator 2026

If your 401(k) holds highly appreciated employer stock, the NUA strategy under IRC § 402(e)(4) lets you take that stock out as an in-kind distribution — paying ordinary income tax only on the original cost basis, while the appreciation (the NUA) is taxed later at long-term capital gains rates. This calculator compares NUA against rolling everything to an IRA, using your 2026 tax bracket, LTCG rate, and NIIT eligibility — all auto-calculated from your income inputs.

How NUA works

Under IRC § 402(e)(4), if you take a qualifying lump-sum distribution from your employer's plan and elect to receive the employer stock in-kind (not liquidated), the cost basis of those shares is taxed as ordinary income immediately. But the net unrealized appreciation — the difference between the stock's value and the basis at the time you received it — is only taxed when you eventually sell the stock, and it's taxed at long-term capital gains rates regardless of how long the shares were held inside the plan.

The critical comparison: paying ordinary income tax on a small cost basis now plus LTCG tax on the large NUA later vs deferring everything in an IRA and paying ordinary income rates on the full amount later. For highly appreciated employer stock, the difference can be hundreds of thousands of dollars.

When NUA is the stronger path

• High NUA percentage: When NUA exceeds 50–60% of the stock's FMV, the rate differential (ordinary vs LTCG) is applied to a large fraction of the total value.
• High ordinary income rate: In the 32–37% bracket, every dollar shifted from ordinary to LTCG saves 12–17 percentage points in federal tax alone.
• Sell soon after distribution: The full-rollover path benefits from tax deferral. The longer you would hold before taking IRA distributions, the less the NUA advantage — the deferral value of Path A grows.
• NIIT exposure: If your income already exceeds $200K/$250K, the NUA gain still incurs NIIT (3.8%), but the ordinary income in Path A would also carry state income tax — the relative impact depends on your state.

When full rollover wins

• Low NUA percentage: If most of the stock's value is cost basis (you're paying ordinary rates on almost the full amount now), the full rollover's deferral advantage is hard to overcome.
• Long deferral horizon: If you won't need IRA distributions for 10–15+ years, the present value of the deferred full-rollover tax shrinks substantially.
• Low ordinary rate: If your income will be much lower in retirement (moving from 32% to 22%), the NUA rate advantage narrows.
• State tax on LTCG: In California (13.3%), for example, LTCG is taxed as ordinary income at the state level — this can eliminate most of the federal LTCG benefit.

NUA requirements (IRC § 402(e)(4))

All four conditions must be met, or the tax break doesn't apply:

1. Qualifying triggering event: Separation from service, reaching age 59½, death, or disability.
2. Lump-sum distribution: You must distribute the entire balance from all accounts of the same type (all of the employer's qualified plans of the same kind) within a single tax year.
3. Employer stock distributed in-kind: The shares must be transferred as actual stock, not liquidated first. This requires your plan to hold the employer's own stock.
4. Employer stock specifically: The stock must be issued by the employer sponsoring the plan — mutual funds and ETFs in the same plan don't qualify.