NUA options for beneficiaries | Ed Slott and Company, LLC

NUA options for beneficiaries

Can the beneficiary of a 401k still take advantage of Net Unrealized Appreciation of company stock upon inheritance?

Yes. The beneficiary inherits the NUA in the plan, and the participant's death becomes a new triggering event to qualify for NUA even if the participant had taken distributions. The beneficiary should determine the cost basis % of the total share value before making the decision to request a taxable distribution (cost basis now and cap gain when shares sold) by having the NUA shares transferred to a taxable brokerage account. The remainder of the inherited 401k would be transferred as a direct rollover to an inherited IRA, and the entire plan balance must be distributed as a lump sum distribution qualifying for NUA treatment. A non spouse beneficiary should be sure that NUA will be beneficial since they cannot change their mind and do a 60 day rollover of the NUA shares to an IRA like the participant could have done.


Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.

I agree to the terms and services:

You may review the terms and conditions here.