NUA Stock: Hold Until Death vs. Sell Now Calculator

You've completed an NUA distribution and the employer stock now sits in your taxable account. You have a choice: sell now and pay long-term capital gains tax on the NUA amount, or hold until death so your heirs receive a stepped-up basis on any additional appreciation. This calculator models both paths and finds your breakeven holding period.

Year-by-year comparison

Sell-now path: heirs receive reinvested proceeds at death, all stepped up (no CGT for heirs). Hold path: heirs receive stock value minus IRD on NUA amount; post-distribution appreciation is fully stepped up.

What the two paths look like at death

If you sell now

You pay LTCG tax on the NUA amount today. The after-tax proceeds are reinvested in a diversified taxable account. When you die, your heirs inherit those assets at a stepped-up basis — they owe no capital gains tax on growth from distribution date to death. The only tax was the LTCG you paid at sale.

If you hold until death

The stock stays concentrated and grows (or falls) at the employer's stock return. At your death:

• Post-distribution appreciation (from distribution date to death) gets a full step-up under IRC §1014. Heirs can sell immediately with no capital gains tax on this portion.
• NUA amount (FMV at distribution minus original cost basis) is IRD under IRC §691. Heirs owe ordinary income tax on this amount in the year they sell — typically at their own marginal rate.
• There is a §691(c) deduction if your estate also paid estate tax on this IRD income, but the $15M federal exemption (OBBBA, July 2025) means most estates won't trigger estate tax.

When holding until death makes sense

• Long time horizon — more appreciation accrues above the IRD layer and steps up tax-free
• Heirs in lower bracket than your LTCG rate — they'd pay less OI on IRD than you'd pay LTCG today
• High stock return expected — compounding inside a tax-free step-up is powerful
• Charitable intent — donating the stock instead of selling avoids IRD entirely (charity is exempt from income tax)
• Estate well below $15M — no estate tax eroding the benefit

When selling now makes sense

• You're in the 0% LTCG bracket — selling is tax-free for you; avoid the IRD exposure for heirs entirely
• Heirs are high earners — their OI rate on IRD exceeds your LTCG rate on the same amount
• Concentration risk — holding undiversified employer stock for 10–20 more years carries meaningful volatility risk
• Short life expectancy — breakeven period may exceed realistic holding period
• Reinvestment return matches stock return — removes the compounding advantage of holding; then heirs' OI on IRD makes hold worse

The 0% bracket opportunity

If your taxable income in early retirement stays below $49,450 (single) or $98,900 (MFJ), the federal LTCG rate on NUA stock sales is 0%.¹ In this scenario, selling now eliminates the IRD exposure for your heirs at zero current tax cost. Many retirees have a pre-Social Security, pre-RMD window where this bracket is accessible. Model it with fed LTCG = 0% above.

Sources

1. IRS Rev. Proc. 2025-32 — 2026 LTCG brackets (0% ≤ $49,450 single / $98,900 MFJ; 15% up to $545,501 / $613,701; 20% above): irs.gov/pub/irs-drop/rp-25-32.pdf
2. IRS Topic No. 559 — NIIT 3.8% applies to NII above $200K single / $250K MFJ (not indexed for inflation): irs.gov/taxtopics/tc559
3. IRC §691 — Income in Respect of a Decedent (IRD): law.cornell.edu/uscode/text/26/691
4. IRC §1014(b)(9) — exclusion of IRD assets from step-up in basis at death: law.cornell.edu/uscode/text/26/1014
5. OBBBA (One Big Beautiful Bill Act, July 2025) — $15M federal estate/gift exemption made permanent: congress.gov

2026 LTCG thresholds and NIIT amounts verified against IRS Rev. Proc. 2025-32 and IRS Topic 559, June 2026.