Is My Company Stock Appreciated? I Want to Utilize NUA

By Jeffrey Levine and Sarah Brenner
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This week’s Slott Report Mailbag follows up on Jeffrey Levine’s capital gains tax strategy using a free step-up in basis and answers a question on net unrealized appreciation (NUA) benefits. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. You can find one in your area here.

1.

I just read the idea posted by Jeff Levine about the possible tax-free capital gain suggestion. If a client were to sell a stock, then repurchase the same stock within 30 days, would that not trigger the 30-day wash sale rule?

Answer:
No, not if you’re selling a stock at a gain. The wash sale rule is a rule that deals with selling a stock at a loss and then buying it back within a 30-day window. The tax-free capital gain strategy is a strategy that involves selling a stock with a gain. No wash sale rule to deal with there.

2.

Thank you Mr. Slott for all of the retirement information you provide. I have purchased your tapes and a number of your books and publications. I will be retiring in the next few years and had one question on NUA benefits. I hold a portion of company stock in my 401(k). This may be a foolish question, as I have read several articles and the reference of ‘appreciated stock’ is always referred to. Would the company stock I have that shows the stock fund cost of $312,136 be considered as “appreciated stock”?

Sincerely,

Dom Bianco

Answer:
It’s impossible to say whether that’s “appreciated stock” or not because you haven’t told us what you bought it for. If the value of your stock is higher than the purchase price of that stock when you bought it in the plan, then it’s appreciated. Now, just because it’s appreciated doesn’t mean that NUA is the right move for you. That ultimate decision depends on a number of factors, including how great the appreciation is and your personal tax situation.