Silver Linings – NUA Tax Break in a Down Stock Market

by Prof. Robert Bloink and Prof. William H. Byrnes

The recent turbulence in the stock market has created stress across-the-board. In response, many investors have weighed selling—even at a loss—as stock prices wobble up and down in a veritable roller-coaster-like scenario. While market downturns rarely bring anything positive for ordinary investors, those who own employer stock in their retirement plans may have an opportunity to reduce their eventual tax liability with the net unrealized appreciation (NUA) strategy. Because a low tax basis in the employer stock actually increases the value of the NUA tax break, depressed prices offer a significant planning opportunity for clients who own company stock—if the strategy is executed in a tax-smart manner with a focus on long-term tax savings.

NUA Tax Strategy: Basic Mechanics