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Capital Gains From Retirement Accounts

Capital Gains From Retirement Accounts

Best options for a client receiving distributions that include employer stock with net unrealized appreciation

Usually, a distribution from a qualified retirement plan is taxed as ordinary annuity income.1 However, a special rule applies when appreciated employer securities are received in a lump sum distribution from an employer retirement plan, such as from an Internal Revenue Code Section 401(k) plan or an employee stock ownership plan. The net unrealized appreciation (NUA), which is the growth in the value of the employer stock while it was held by the qualified retirement plan, is

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