Employer-sponsored retirement plans like 401(k)s offer a lot of savings, investment, and tax advantages, but you have to be paying attention to make the most of them. Some of the best tax strategies with retirement savings can be complex and require a good bit of planning, without which the strategy and benefits could be lost forever.
In some cases, poor planning not only results in lost strategies but could also create additional taxes or penalty fees. Since most people dislike being taxed the one time, we tend to get really annoyed when we’re taxed twice – especially when we don’t have to be.
One such strategy that offers a tremendous upside (but also has a lot of nuance) is called a Net Unrealized Appreciation tax strategy. Properly taking advantage of a NUA strategy could save you tens of thousands or more in taxes. Let’s dive into what NUA is really about and how to best take advantage of the strategy when it comes to your retirement savings.