Net Unrealized Appreciation (NUA) vs. IRA Rollover Calculator

Consideration of NUA strategy is important if you are distributing highly appreciated employer securities from your prior employer’s qualified plan, such as a 401(k). Cost basis, the value of the employer contributions on your behalf, is subject to ordinary income tax upon distribution. In addition, the 10% early distribution penalty* may apply unless you have an exception (i.e., attained age 55 or older and separated from service). Taking in-kind distributions allows the appreciation (NUA) above the cost basis to be taxed at the more favorable capital gains tax rate. For this reason, upon separation from service, it may be more tax advantageous to transfer the employer securities to a regular taxable account instead of rolling the assets into an IRA where future distributions will be taxed as ordinary income.

* Please refer to www.irs.gov for further information on exceptions to the early distribution penalty.

Assets
Current 401(k) company stock balance ($) 
Total stock purchases (cost basis) ($) 
Anticipated investment return (%) 
Holding period after 401(k) (years) 
Holding period after 401(k) (months) 
Assumptions
Marginal income tax rate (%)help
Capital gains tax rate (%) 
Separated from service PRIOR to age 55? 
Current distribution PRIOR to age 59 1/2? 
Final distribution PRIOR to age 59 1/2? 
   
No bank guarantee • Not a deposit • Not FDIC/NCUA insured
May lose value • Not insured by any federal government agency

This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state, or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life, its affiliates, their distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor or attorney.

The results and explanations generated by this calculator may vary due to user input and assumptions. Pacific Funds does not guarantee the accuracy of the calculations, results, explanations, nor applicability to your specific situation. We recommend that you use this calculator as a guideline only and ultimately seek the guidance of an experienced professional. CalcXML, the provider of this information and interactive calculator, is an independent third-party and is not affiliated with Pacific Funds.

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