Net Unrealized Appreciation Calculator

§ 402(e)(4) · reviewed September 6, 2026

Compares the tax on taking company stock out of a 401(k) with a special election against rolling it into an IRA. About

In plain words. If your 401(k) holds your employer's stock, there is a special way to take it out. Instead of rolling the shares into an IRA, you can move them into a regular brokerage account. You pay ordinary income tax now on what the plan paid for the shares, and the growth since then is taxed as a long-term capital gain only when you sell, at the lower gains rate. This tool takes the shares' value, what they cost, and your tax rates, and compares the two routes.

Why it matters. For a long-tenured employee whose company stock has grown many times over, the difference can be tens of thousands of dollars. The choice is made once, when the plan is emptied, and cannot be undone.

An example. Company stock worth $500,000 that the plan bought for $100,000, at a 32 percent ordinary rate and 15 percent on gains: the election costs about $92,000 in tax in all, against about $160,000 if the shares are rolled over and withdrawn. The election saves about $68,000.

Where it stops. The whole plan must come out in one year, after leaving the job, 59½, disability, or death. If you leave before the year you turn 55 and are under 59½, a 10 percent penalty applies to the cost part. And the rollover route defers its tax, sometimes for decades, which this comparison does not credit. Everything it leaves out.

Today's value of the employer stock in your plan

What the shares are worth now, from your latest plan statement.

Cost basis of those shares

What the plan paid for the shares over the years. The plan administrator has the figure.

Your ordinary income tax rate

The federal rate on your wages, pension, and IRA withdrawals.

Your long-term capital gains rate

0, 15, or 20 percent, depending on your income in the year you sell.

When you left the employer

Left in or after the year I turned 55, or I am 59½Left before the year I turned 55, and under 59½

Decides whether the 10% early-withdrawal tax applies to the cost basis.

Would the 3.8% investment income surtax apply to the gain?

NoYes, my income is over the surtax threshold

Tax saved by the NUA election

$68,000

With the election, you pay $32,000 of ordinary income tax now on the $100,000 cost basis, and $60,000 later on the $400,000 of growth when the shares are sold, for a total of $92,000. Rolling the shares into an IRA and withdrawing them later at 32% costs $160,000 in all.

Growth in the shares (the net unrealized appreciation): $400,000; Taxed as a long-term capital gain when you sell, whenever that is
Tax due the year you take the shares out: $32,000; On the cost basis
Tax rate on the growth: 15.0%; Instead of 32% as ordinary income

The election trades tax now on the cost basis for a lower rate later on the growth. It pays off when the basis is a small share of the value and your ordinary rate is well above the capital gains rate. It has a cost the comparison does not show. A rollover puts off all tax, sometimes for decades, and shares held outside the plan carry the risk of one company's stock.

This follows the federal rule for net unrealized appreciation on employer stock, the early-withdrawal tax, and the investment income surtax, at the rates you set, and assumes the whole plan is paid out in one year. It leaves out growth after the shares come out, the value of the rollover's delay, state tax, and what happens at death, when this growth gets no step-up in basis. Educational, not advice.

This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.

Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.