Quick ReadNUA converts employer stock appreciation from ordinary income taxed up to 37% into long-term capital gains taxed at no more than 20%. Rolling employer shares into an IRA permanently destroys the NUA benefit, and the tax code offers no way to reverse that decision. Clark Howard warns company stock should never exceed 10% of a 401(k), since NUA only changes tax treatment without reducing concentration risk. Company stock held inside a 401(k) sits in an unusual corner of the tax code. Ordinary income tax is owed only on the cost basis in the year of the distribution.