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Funding a Freelance Lifestyle with an Old 401K
Manage episode 357924888 series 3437793
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Did you know an old 401K might hold the key to funding your new business or, at the very least, could save you thousands in taxes? For big tech employees or those with employer stocks that have performed tremendously well, it’s worth researching how net unrealized appreciation, or NUA, might impact your financial plans.
In this episode, Alex reveals what Net Unrealized Appreciation is, its unique advantages, and who might benefit from this little-known tax strategy the most.
In this episode, you’ll also hear:
2 advantages of using the Net Unrealized Appreciation tax treatment
3 major components of Net Unrealized Appreciation
Option for potential tax savings or funds for entrepreneurial ventures
Must-listen moments:
[00:02:14] If you have a million dollars in your 401K and a large gain in your employer stock, this strategy could potentially save you a hundred thousand dollars in tax.
[00:04:47] NUA [net unrealized appreciation] is all about separating out the growth component from the original purchase price.
[00:07:54] You are by no means forced to sell the stock once it's been transferred to a taxable brokerage account. Once it's inside of that taxable brokerage account, you could sell some of it, none of it, all of it, part of it, it's yours. You can do whatever you want with it.
For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com
You’re also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/
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