Retiring with company stock? NUA strategy could be a money-saver

August 26, 2021

Question: T.R. from West Chester: I’m about to retire from P&G after 31 years. I have a lot of company stock and I’m happy to say I’ve made a lot of money on it. But now I’m worried I’m going to take a tax hit. Any advice?

A: We see this situation a lot, especially with our clients who worked for P&G and GE. Luckily for you, there’s a special strategy to consider called the ‘NUA strategy’ (Net Unrealized Appreciation). It’s essentially a tax break for those with a significant amount of company stock.

Anytime anyone with company stock decides to retire (or change employers), they have to decide what to do with that money. A common strategy is to roll the assets into an IRA then pay ordinary income tax on withdrawals. However, if the company stock within the account has appreciated a lot over the years, this could mean a large tax bill.