- Press Releases
- Charles Zimmerer helping clients with questions about Net Unrealized Appreciation NUA
Press Release provided by Charles J Zimmerer on December 11, 2017
LawyerCentral.com, December 11, 2017 — FLORIDA — Charles Zimmerer is helping clients who have questions about Net Unrealized Appreciation, or NUA. This typically includes company stock held in a 401(k) or ESOP. The benefit: clients can expect to cut their taxes in half, from ordinary rates to capital gains. It can result in substantial tax savings.
The premise is relatively simple. Rollover the 401(k) to an IRA and distribute company stock which has appreciated since it was purchased. This appreciation is called “Net Unrealized Appreciation” (NUA). If you chose to do so, the lump-sum distribution can cut your taxes in half from high ordinary income tax rates (39.6%+) to low capital gains rates (0%, 15%, 20%). The transaction also avoids the Net Investment Income Tax Rate (NIIT) (3.8%).
NUA is not widely known or understood because the IRS has published very little about it outside of its Treasury Regulations. It works for employees who hold appreciated company stock in their 401(k).
To qualify, the employee needs to take a lump-sum distribution. Additionally, the lump-sum distribution should be made within 1-year from the date in which the employee had a “triggering event.” A triggering event occurs on the date of retirement, disability, or separation. Thus, the NUA involves some planning.
The trustee of the 401(k) is instructed to distribute the NUA company stock into a separate taxable account. Federal income tax and early withdrawal penalties (as applicable) are owed on the stock’s acquisition price. The income tax on the NUA is deferred until the stock is sold. The employee can elect to include the NUA in income in the current year if he or she chooses. Otherwise, the employee can choose to hold the company stock.
Mr. Zimmerer is requesting that people considering NUA contact him for a complimentary consultation to determine if he or she is a candidate. Mr. Zimmerer can help determine the emplyee's eligibility for the transaction, suitability, and whether disqualifying factors are present. Furthermore, when retained, Mr. Zimmerer provides guidance to clients on whether the entire stock lot should be distributed or rolled over, with a detailed analysis of tax savings. Finally, Mr. Zimmerer works with the custodian and advisor to complete the transaction, and provides audit protections and guidance. Mr. Zimmerer can complete the transaction with the client's assistance, or if the client elects, entirely for the client, without any participation from the client.