Save time with our cheat sheets, fact sheets, checklists & books!

February 16, 2009

Net Unrealized Appreciation ( NUA)

Your Guide



The increase in value of employer securities while they are held in a qualified plan . For instance, if 100 shares of the security was purchased at a value of $10,000 in the employee’s account, and the current value of the 100 shares is now $15,000;  $10,000 is the basis and $5,000 is the NUA.

  • NUA is excluded from the income of the participant when the stocks are distributed as part of a lump-sum distribution.
  • An exception to the lump-sum rule applies to employer securities purchased in the plan with employee-contributions
  • The NUA is included in the participant’s income for the year the employer stocks are sold

Referring Cite

IRC §402(e), Treas. Reg. §1.402(a)-1(b), IRS Publication 575

Additional Helpful Information

  • The term “securities” means only shares of stock and bonds or debentures issued by a corporation with interest coupons or in registered form.
  • The term “securities of the employer corporation” includes securities of a parent or subsidiary corporation of the employer corporation.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


Keep Learning

Excess deferral

Definition Salary deferral contributions, contributions are limited to the lesser of the IRC § 402(g) limit or 100% of compensation. Salary deferral contributions in excess

Compensation Cap

Definition The compensation cap is the maximum amount of compensation that may be taken into consideration when determining contributions  to employer sponsored retirement plans,  such

Catch-up Contribution

Definition An additional contribution that can be made to a retirement plan by a participant who is at least age-50 by the end of the

Be among the first to know when

IRA Rules