Why This Moment Matters
Nucor stock (ticker: NUE) recently hit an all-time closing high of $234.22, up more than 37% year to date. And up over 100% in the last full year. For senior Nucor employees and executives who have spent years accumulating company stock within RSU plans, Nucor ESOPs, 401(k)s, this is a rare convergence of high stock price and retirement proximity — a window of opportunity that deserves serious strategic attention.
Q1 2026 saw record shipments, strong earnings, and a robust backlog, with all segments outperforming and guidance raised for higher earnings in Q2. The tailwind is real — but so is the concentration risk. The question now is, “What should I do with my surging NUE with retirement on the horizon?” Keep reading. Unless you enjoy overpaying the IRS!
What Is Net Unrealized Appreciation (NUA)?
This strategy is one of the most powerful yet overlooked retirement planning tools. Many executives (and financial advisors) are unaware it exists.
In one sentence, NUA means to trade ordinary income taxation on retirement assets for long-term capital gains treatment.
How It Works
When you take a lump-sum distribution from your 401(k) or ESOP and elect NUA treatment, it allows you to change how the growth portion of your company stock will be taxed in the future. The cost basis (what you originally paid) of the employer stock is taxed as ordinary income at the time of distribution. However, the appreciation above that basis — the NUA — is taxed at long-term capital gains rates when the stock is eventually sold, regardless of how long you actually hold it after the distribution. For executives who will be in a higher tax bracket, 32%,35%, and 37% during retirement, this strategy allows for the company stock to be sold at a more favorable long term capital gains tax rate, 15% or 20%.
Why That Matters
Ordinary income rates can reach 37% federally. Long-term capital gains rates max out at 20% for high earners. Importantly, the 3.8% Net Investment Income Tax (NIIT) does not apply to the NUA portion. For executives with a low cost basis and large embedded gains, the difference can mean hundreds of thousands of dollars in tax savings.
Key Eligibility Rules
- Must be a qualifying triggering event: separation from service, age 59½*, death, or disability
- Must take a lump-sum distribution from the plan (cannot be a partial withdrawal)
- The stock must be employer securities distributed in-kind — not liquidated first.
*Nucor Corporation does not allow NUA at age 59½ if you plan to continue to be employed by Nucor past age 59½.
The Nucor-Specific Opportunity
Employees who have participated in Nucor’s profit sharing and 401(k) plan for 10 to 20+ years are likely to have a very low average cost basis on accumulated NUE shares, potentially well below today’s price. The stock’s recent run-up means the NUA (the spread between cost basis and current price (shown in the darker shade of blue below) is historically large right now.
Illustrative Example
If an executive’s cost basis on their NUE shares is $40 per share and the stock distributes at $234.22, they owe ordinary income tax only on $40 per share — but the $194.22 of appreciation per share is eligible for long-term capital gains treatment. On 10,000 shares, that is nearly $1.94 million potentially taxed at 20% rather than 37%.
$4M 401(k) Scenario — NUA Tax Treatment Summary
| Holdings within 401(k) | Amount | Tax Treatment | Tax Rate |
| Other funds / ETFs | $2,200,000 | Tax-free transfer to IRA | Up to 37% ordinary income upon withdrawing |
| NUE cost basis (taxed at distribution) | $400,000 | Ordinary income — one-time tax event | Up to 37% |
| NUA (appreciation taxed upon sale) | $1,400,000 | Long-term capital gains regardless of holding period | 0% / 15% / 20% depending on your income level |
| Potential federal tax savings vs. full IRA rollover | ~$238,000 | Differential: 37% ordinary vs. 20% LTCG on NUA portion | 17 cents / dollar |
* NIIT (3.8%) does not apply to the NUA portion. NIIT does apply to post-distribution appreciation above the value at the time of distribution. Potential savings estimate based on a 17-point rate differential (37% ordinary income vs. 20% LTCG) applied to the $1.4M NUA.
The Diversification Situation
This is arguably the most important section for long-term wealth protection. Having a large portion or even the majority of retirement wealth in a single stock — even a great company you know well — represents significant financial risk. Steel is a cyclical industry sensitive to tariffs, construction activity, and global demand.
The Double Exposure Problem
Nucor executives with large amounts of NUE should keep the following concurrent risks in mind:
- Human Capital Risk – their income depends on Nucor.
- Financial Capital Risk – their retirement savings also depend on Nucor.
Diversification is the natural hedge against both risks materializing at the same time. Imagine getting laid off close to retirement and having the company stock plummet at the same time. This happened last year with Intel, whose stock hit a 10 year low in early 2025 while they also laid off 22,000 employees. (Don’t worry, Intel, like Nucor, is recently hitting a record high stock price.)
The NUA Strategy as a Diversification Catalyst
Taking an NUA distribution does not mean holding the stock forever — it means getting a better tax rate on the appreciation when you do sell. You can execute the NUA, hold the shares in a taxable brokerage account, and then diversify at long-term capital gains rates on your own timeline. The non-NUE assets in the 401(k) roll to a traditional IRA tax-free, preserving tax deferral on everything else.
Who Should Consider This — and Who Shouldn’t
Strong Candidates for NUA
- Within 5 years of retirement or already at a triggering event
- Large amount of NUE shares with a low average cost basis
- Expect to be in a high ordinary income tax bracket in retirement
NUA May Not Make Sense If
- Your cost basis is high relative to current price (small NUA = limited benefit)
- You are far from retirement and would sacrifice years of tax-deferred compounding which is part of the beauty of retirement accounts
- The ordinary income tax hit on the basis portion creates a significant cash flow problem
- State income taxes significantly cut into the federal benefit
The Window Is Open Open — It May Not Stay Open
The stock is at record highs. Tariff tailwinds have been supportive. But steel is a cyclical industry, and nobody is going to let you know with their crystal bell when it hits the top. For executives nearing retirement, the combination of a historically high stock price and a favorable NUA tax structure creates a planning opportunity that may not repeat. The last time NUE dropped significantly from an all-time high it took 13 years to get back to that same stock price, 2008-2021.
The worst outcome is inaction — either missing the tax savings entirely or potentially riding the stock back down without a plan in place. Now is the time to run the numbers.
What Now?
Executives should work closely with a wealth advisor and a CPA to model the tax impact before triggering any distribution.
Call me or shoot me an email — no strings attached. I’ll help you weigh the decision of which tax/diversification strategy is in your best interest.
Marshall Nelson, CPWA®
Wealth Advisor | Crewe Advisors
Cell: 801-608-1894
marshall@crewe.com
Additional Planning Considerations
10% Early Withdrawal Penalty
The 10% early withdrawal penalty does not apply to NUE shares subject to NUA treatment if the triggering event is separation from service at age 55 or older. Confirm the specific rules with your plan administrator.
State Tax Treatment
State tax treatment of NUA varies. Some states do not conform to federal preferential capital gains rates, which may reduce but typically does not eliminate the benefit. A state-specific tax analysis is recommended.
Charitable Giving Angle
Executives with philanthropic intent could donate highly appreciated NUE shares to a Donor-Advised Fund (DAF) after the NUA distribution and potentially eliminate the capital gains entirely — combining tax efficiency with charitable impact.
Disclosures
This article is for informational purposes only and does not constitute tax, legal, or investment advice. NUA strategies involve complex tax rules and individual circumstances vary significantly. Consult a qualified CPA, tax attorney, and financial advisor before making any decisions regarding your 401(k) or employer stock. Investment advisory services are offered through Crewe Advisors, a SEC registered Investment Advisor. www.crewe.com.
