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Does Turbo Tax handle a NUA (Net Unrealized Appreciation) from a 401k? I don't want to start with TurboTax if they cannot do what I will need this year.

 
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MarilynG1
Employee Tax Expert

Does Turbo Tax handle a NUA (Net Unrealized Appreciation) from a 401k? I don't want to start with TurboTax if they cannot do what I will need this year.

Here’s how the NUA rules generally work:

  • If you pull the company stock out of your former employer’s 401(k) plan in a lump-sum distribution, tax is deferred on the NUA until you sell the stock (you still must pay tax on your cost basis at your ordinary tax rate).
  • When you do sell the company stock, the NUA is taxed at the rates for long-term capital gain.
  • Any gain exceeding the NUA - the gain since taking the stock out of the former employer’s 401(k) plan - is taxed as long-term or short-term capital gain, depending on how long you held the stock after pulling it out of the 401(k) account (short-term gains are taxed at your ordinary tax rate).

Here's a detailed article on Net Unrealized Appreciation to help you. 

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