Net Unrealized Appreciation

The decision you make once, and cannot make again.

If you hold employer stock inside your 401(k), you have a tax election available at retirement that disappears the moment you roll the account to an IRA. There is no amended return that brings it back. Model both paths before you sign the rollover paperwork.

Your assumptions

Stock value in the plan$800,000

Market value of company shares only — not the whole balance.

Cost basis of those shares$120,000

Your plan administrator tracks this. Ask for it in writing.

Years until sale or withdrawal12 years

Assumed annual growth6.0%

Ordinary rate in the distribution year35%

Applied to the cost basis. Adding the basis to income can push you into a higher bracket than usual.

Ordinary rate when drawing from the IRA24%

Often lower in retirement — this is the number that most favors a rollover.

Long-term capital gains rate20%

Apply the 3.8% NIIT to appreciation that occurs after the distribution

Difference after tax

$26,893

Take the NUA election

Distribute the shares in kind, pay ordinary tax on the cost basis now, and let the built-in gain be taxed at long-term capital-gains rates.

$1,196,523

After-tax proceeds

Kept $1,196,523

Total tax $370,722

Roll everything to an IRA

Roll the entire balance into an IRA; nothing is taxed until you withdraw, and then every dollar comes out as ordinary income.

$1,223,415

After-tax proceeds

Kept $1,223,415

Total tax $386,342

See how each number was calculated

Stock value today	$800,000
Cost basis	$120,000
NUA locked at distribution value minus basis, fixed on the distribution date	$680,000
Value in 12 years	$1,609,757
NUA election
Less: LTCG tax on the NUA NUA × 20%, no NIIT	−$136,000
Less: tax on post-distribution appreciation appreciation × 23.8%	−$192,722
Less: ordinary tax on basis, paid now from other funds, and the growth it forgoes $42,000 grown at 6% for 12 years	−$84,512
After-tax proceeds — NUA election	$1,196,523
Roll everything to an IRA
Less: ordinary income tax on withdrawal full value × 24%	−$386,342
After-tax proceeds — IRA rollover	$1,223,415

What this model does not do

Assumes you qualify — separation from service, disability, death, or age 59½, plus a full lump-sum distribution of the entire plan balance within one calendar year.
Assumes the tax on basis is paid from other savings, and charges that money the same growth rate it would have earned.
Uses one flat rate per category. Real brackets are graduated, and a large basis can push you up a bracket in the distribution year.
Ignores state income tax, which can reverse the answer — particularly if you are moving between states in retirement.
Does not model dying while holding the shares. NUA is income in respect of a decedent and receives no step-up; appreciation after the distribution does.
Does not account for concentration risk. Holding one stock to defer tax is a portfolio decision, not just a tax decision.

Get the real number for your plan.

Send us your plan statement and we'll run the same analysis with your actual basis, your bracket, and your state — and tell you plainly if a straight rollover is the better move.

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Important: This tool is educational and hypothetical. It is not tax, legal, or investment advice, and it does not constitute a recommendation to take or forgo any distribution. Results are illustrations based on assumptions you selected; they are not projections, guarantees, or predictions of actual results, and actual outcomes will differ. Tax treatment depends on your specific facts and on current law, which is subject to change. Consult your CPA and attorney before acting. Skyview Financial Group is a registered investment advisor; registration does not imply a certain level of skill or training.