hard · Certified Financial Planner Estate Planning
Mrs. Bishop has $200,000 in employer stock within her 401(k) with a cost basis of only $30,000. She is retiring in 2026 at age 66.
If she utilizes the Net Unrealized Appreciation (NUA) strategy, how is the $170,000 of appreciation taxed upon the distribution to a brokerage account?
- No tax is due if she holds the stock until death due to the Section 1014 step-up
- Ordinary income tax at the time of the eventual sale
- Long-term capital gain (LTCG) tax at the time of the eventual sale
- Ordinary income tax at the time of distribution
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