Looking to rollover your stock into your IRA then NUA? Watch this short video as Tyson Mavar from The Retirement Group discusses different strategies you could use to rollover your stock to your IRA and NUA.
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Disclaimer: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Fees are incurred when assets are under the management of advisors affiliated with The Retirement Group. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice. Securities offered through FSC Securities Corporation, member FINRA/SIPC. Investment Advisor Representative of & Advisory Services offered through The Retirement Group, LLC. The Retirement Group is not affiliated with ExxonMobil. The Retirement Group 5414 Oberlin Drive San Diego, CA 92121 (800) 900-5867…(read more)

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Q&A for ExxonMobil Employees: Can You Roll Over Stock in Your IRA then use NUA?

If you are an ExxonMobil employee who has company stock in your IRA (Individual retirement account), you may be wondering about the possibility of rolling it over and using the Net Unrealized Appreciation (NUA) strategy. NUA is a tax advantage that allows you to potentially pay less tax on the appreciated value of your company stock if you distribute it rather than rolling it over into an IRA. In this article, we will answer some common questions regarding this topic.

Q: Can I roll over stock in my IRA?

A: Yes, in general, you can roll over stock held in your IRA. However, the type of stock and the specific circumstances surrounding your account may determine the feasibility of a rollover. It is important to consult a tax advisor or financial professional who can assist you in understanding the implications of such a decision.

Q: What is Net Unrealized Appreciation (NUA)?

A: Net Unrealized Appreciation (NUA) is a tax strategy that can be used when you have company stock in your employer-sponsored retirement plan, such as a 401(k) or ESOP (Employee Stock Ownership Plan). It allows you to take advantage of lower capital gains tax rates on the appreciated value of the stock, potentially resulting in significant tax savings.

Q: How does NUA work?

A: NUA works by separating the company stock from the rest of your retirement account assets when you take a distribution. The cost basis (the value of the stock when it was acquired) is taxed as ordinary income, while the appreciation is subject to capital gains tax rates when you eventually sell the stock. By using NUA, you may be able to pay lower taxes on the appreciated value at the time of distribution.

Q: Can I use NUA with stock held in my IRA?

A: No, NUA is not applicable to stock held in an IRA. The NUA strategy is reserved for employer-sponsored retirement plans, such as 401(k) or ESOP accounts. However, you can consider rolling over your IRA into a company-sponsored retirement account, if available, to potentially take advantage of NUA in the future.

Q: What are the potential benefits of using NUA?

A: The main benefit of utilizing the NUA strategy is the potential to pay less tax on the appreciated value of your company stock. By paying capital gains tax rates instead of ordinary income tax rates, you can effectively reduce your tax liability, especially if the stock has significantly appreciated. However, it is important to evaluate your overall financial situation and consult with a professional to determine if NUA is the right strategy for you.

Q: Are there any potential drawbacks to using NUA?

A: While NUA can offer tax advantages, it is essential to consider other factors such as diversification and investment risk. Opting for the NUA strategy means choosing to hold a significant portion of your retirement assets in a single stock. This lack of diversification can expose you to a higher level of risk. It is important to weigh the potential tax savings against the risks associated with concentrated stock holdings.

In conclusion, although rolling over stock in your IRA to utilize the NUA strategy is not feasible, ExxonMobil employees can explore other options, such as rolling over their IRA into an employer-sponsored retirement plan, to potentially take advantage of NUA in the future. It is crucial to seek guidance from tax advisors or financial professionals who can help evaluate your specific circumstances and determine the most suitable course of action for your retirement planning needs.