By AJ Tiarsmith
Publication Date: 2026-11-07 20:39:00
Inheriting a 401(k) stuffed with company stock sounds like a windfall until the standard rollover form arrives. One signature can decide whether nearly $2 million gets taxed at the highest rates, and most heirs only learn the alternative after it’s…
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If your parent left you a 401(k) full of company stock, the default paperwork could cost you a fortune. A little-known IRS rule called net unrealized appreciation (NUA) lets an heir take employer stock out of an inherited 401(k) and pay capital gains tax on most of it instead of ordinary income tax. Most heirs never hear about it until the money has already moved.
A Hypothetical $2 Million Inheritance Inside a 401(k)
This example is hypothetical. It exists to show how the rule works. A son, 52, is the named beneficiary of his late father’s 401(k). The father spent 33 years as a systems…
