What is NUA and when should I consider it?
By Adam Kasick | Wealth Advisor | Updated September 2026
Net Unrealized Appreciation, or NUA, is a special tax treatment that may apply to employer stock held inside a qualified retirement plan. In the right situation it can allow the appreciation on employer shares to receive capital-gain treatment rather than having the entire value eventually taxed as ordinary income.
Here's how I'd think about it.
Concentration is not automatically a mistake. It becomes a planning problem when we cannot explain why the position is still the right size, what risk it creates or what would happen to your goals if the asset fell substantially.
Why this deserves planning
NUA has specific distribution and plan requirements, and using it can create an immediate tax bill on the stock’s cost basis. I want the NUA path compared with a rollover and other diversification choices before assets move.
What I would compare
Cost basis, current stock value, age, retirement status, concentration risk, cash available for taxes, charitable goals and the timing of distributions can all change the answer.
Here's what I'd want to know about you.
- What percentage of your financial life depends on this asset?
- What is your cost basis and where is the asset held?
- When will you need money from the portfolio?
- What would a major decline change for you?
- What taxes or other constraints would selling create?
I don't want a pie chart to make the decision. I want you to see the tradeoffs clearly enough to make the concentration intentional.
Start the Conversation →IRS Publication 575 explains that qualifying employer securities may receive special NUA treatment, with the NUA generally deferred until the securities are sold.