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If you have spent years at Walmart, J.B. Hunt, Tyson, or a Northwest Arkansas vendor, some of your workplace retirement plan may sit in your employer’s stock. When you leave, retire, or reach 59½, a tax rule called net unrealized appreciation (NUA) may give you a different way to handle those shares than a standard rollover.

NUA has a reputation for being complicated. The Willow Team’s view is that it seems complicated, but it can be simple. Most NUA decisions come down to three paths and four considerations.

This article is for education only. It is not tax, legal, or investment advice. Eligibility depends on your plan document, your plan’s distribution options, and your own basis records. Talk with a CPA or tax professional before you act. Willow Financial is not affiliated with Walmart, J.B. Hunt, or Tyson.

What net unrealized appreciation is, in plain English

When employer stock leaves a qualified plan like a 401(k) as actual shares (called “in kind”), the tax code splits its value into pieces:

Three gates generally have to line up (IRS Publication 575):

  1. A triggering event: separation from service (for employees), reaching 59½, death, or disability (for the self-employed).
  2. A lump-sum distribution: your entire balance from all of the employer’s plans of the same kind, paid out within a single tax year. The non-stock money can be rolled to an IRA in that same year. It just cannot stay in the plan.
  3. Shares out in kind to a taxable account. Shares rolled into an IRA lose NUA treatment.

A hypothetical example

To see why people look at NUA at all, here is a simplified, hypothetical example. Pat’s 401(k) holds employer stock worth $200,000 with a plan cost basis of $40,000, so the NUA is $160,000. The example assumes a flat 24% ordinary income tax rate, a flat 15% long-term capital gains rate, and that the shares are sold right away.

That gap is why NUA gets attention, but it is not the whole picture. Money left in an IRA can keep growing tax-deferred. In a separate hypothetical from Schwab with different assumptions (a $100,000 stock position with a $40,000 basis, the same flat rates, 6% annual growth, and NUA at age 62), it took about nine years for the after-tax value of the stock diversified in an IRA to overtake the NUA approach. Schwab notes that results will vary and that the break even shifts with the cost basis and tax rates. Your time horizon can matter as much as the rate difference.

Hypothetical example for illustration only. It uses flat tax rates and ignores tax brackets, state tax, the 3.8% net investment income tax, any 10% additional tax that may apply, and the value of continued tax deferral. It is not a projection, does not represent any actual client or investment, and your results will differ.

The first thing we look at: cost basis

When someone tells us, “I have company stock in my 401(k),” the first thing the we review is the cost basis in that stock position.

Basis is the amount taxed up front when you use NUA. A low basis limits that upfront taxable amount. If the basis is $20,000, you are looking at a taxable distribution of $20,000, which is a lot easier to absorb than a basis of $200,000.

Age matters here too. If you are under 59½, the 10% additional tax on early distributions may apply. Because only the portion included in income is subject to it, practitioner sources such as Schwab and The CPA Journal apply that 10% to the cost basis, not to the NUA. The “rule of 55” exception can remove it for someone who separates from service in or after the calendar year they turn 55. That exception applies to qualified plans, not IRAs.

The lump-sum rule and timing

The lump-sum requirement is where people tend to trip. Schwab, Kitces, and Fidelity note that after a triggering event, the first year you take a distribution generally becomes the NUA year. A small withdrawal after you leave can close the window until the next triggering event. Check how any withdrawal affects NUA eligibility before you take it.

Timing also shapes the tax picture. If someone retires midyear, one approach is to delay the distribution and rollover to the next tax year, so the basis income is not stacked on top of that year’s salary. In a year when a required minimum distribution is due, that amount generally has to come out first and cannot be rolled over. Two more timing checks: ask the plan whether any employer contribution (such as a profit-sharing deposit) is still to come, since a later deposit can complicate the lump sum, and remember that a distribution is generally irreversible once it is done.

Three NUA paths

If you are weighing NUA, these are the three paths. Depending on your plan, you may also be able to leave your balance in the plan for now, move it to a new employer’s plan, or cash it out. Each has its own trade-offs, and leaving company stock in the plan may keep NUA available at a later triggering event, such as reaching 59½.

Path 1: Take the NUA distribution on all company shares

All employer shares come out in kind to a taxable brokerage account, and everything else in the plan is rolled to an IRA in the same tax year. You pay ordinary income tax on the cost basis now. The NUA is taxed at long-term capital gains rates later, when you sell.

Path 2: Use NUA on part of the shares

Some company shares are distributed in kind to a taxable brokerage account, and the rest (remaining shares plus other investments) are rolled to an IRA. This still has to be part of the same lump-sum distribution, all within one tax year (Pub 575). Whether you can choose specific lower-basis shares depends on how your plan tracks basis, so ask the plan before assuming.

Path 3: Roll everything to an IRA and do not use NUA

The full balance goes to an IRA. Nothing is taxed at the rollover, and future withdrawals are generally taxed as ordinary income. For some households, continued tax deferral may matter more than the capital gains treatment.

Plans and IRAs can differ in investment choices, fees, services, and protection from creditors. Shares moved to a taxable brokerage account generally lose the creditor protection they had inside the plan. Compare these before you move anything.

Four considerations that drive the choice

  1. Cost basis and current market value of the stock. The bigger the gap between basis and today’s value, the more NUA there is to work with. A high basis means more ordinary income up front and less benefit from NUA.
  2. Age. Your age at separation affects whether the 10% additional tax may apply to the basis, and how long you may be relying on the money.
  3. Short-term tax picture. Salary, severance, or a bonus in the distribution year can push the basis income into a higher bracket. This is where timing the distribution can help.
  4. Portfolio diversification impact. Using NUA can mean holding a large position in one company outside the plan.

Tax diversification and concentration

When people hear “diversification,” they usually think about companies, indexes, or stocks versus bonds. Tax diversification matters too, and the Willow Team considers it heavily in retirement planning.

That has to be weighed alongside portfolio diversification. Schwab notes that over concentration becomes a concern when a single stock is more than 10% of a portfolio. If using NUA leaves a concentrated position in your employer’s stock, it may make sense to plan how to reduce that position over time, based on your risk tolerance. This is part of broader wealth management, not a one-time tax move.

What happens at death: the step-up question

Many families assume heirs get a full step-up in basis. With NUA, that is not the case. Shares held in a brokerage account after an NUA distribution do not receive a step-up in basis on the NUA portion at death. Under Rev. Rule. 75-125, the NUA is treated as income in respect of a decedent, so the heir’s basis is generally the date-of-death value minus the NUA. Appreciation after the distribution can receive a step-up. This is worth weighing from the start.

Check your own plan first

Plan rules decide what is actually possible. Based on public filings:

State tax treatment of the basis and the NUA is a question for your CPA.

Practical takeaway

Net unrealized appreciation seems complicated, but it can be simple: look at your cost basis, pick from three NUA paths, and weigh four considerations. The best time to do that is before a retirement date or separation, not after the first withdrawal.

This article does not recommend any option; the right choice depends on your situation.

If a retirement date or separation is on your calendar, the Willow Team would be glad to help you map it out ahead of time. Reach out here to start the conversation.

Sources for further reading

Educational information from Willow Financial. Not individualized tax, legal, or investment advice. Willow Financial is not affiliated with or endorsed by Walmart, J.B. Hunt, or Tyson. Tax rules and plan provisions change, and eligibility depends on your plan document and records. Review current plan materials and consult a CPA or tax professional before you act.Willow Financial · Northwest Arkansas · willowfinancialnwa.com

4–6 minutes

Before the calendar flips, 2026 401(k) contribution limits give you a practical reason to open your workplace plan and make an educated decision, not a guilt-driven one and not an automatic max.

The IRS raised the ceilings again. Your paycheck election, standard versus catch-up settings, and Roth versus traditional choice (where your plan allows it) still only change when you change them. Year-end is when that review pays off: you can still adjust withholding, confirm both contribution settings, and weigh cash flow against the rest of your benefits.

The most important objective is not to hit every dollar the IRS allows. It is to decide, with clear eyes, what fits your household for the rest of this year and into 2026.

2026 401(k) contribution limits: the numbers to know

Per the IRS (IR-2025-111):

Those figures are ceilings. Your employer's plan, payroll, and plan portal still control what actually comes out of your paycheck.

Before year-end: open the workplace plan and check the election

A higher limit does not rewrite last year's election. Before year-end, it is worth asking:

  1. Does my current percentage or dollar deferral still match what I intend under the new ceilings?
  2. If I want more of the new room, can my cash flow support a higher paycheck election for the remaining pay periods?
  3. If I was already near the old ceiling, do I want to increase toward 2026's room, or adjust so my dollar contributions stay roughly where they were?

Raising a 401(k) deferral toward the limit can be a useful planning choice for some households. It can also tighten take-home pay in a year when other goals need cash. Year-end is a good time to test that trade-off against the next few paychecks, not against a vague sense that you "should" be maxing.

Standard vs catch-up: confirm both settings in your portal

Many people believe they are "maxing" because one contribution field looks full. At many plan sites (including some Merrill or Schwab access portals), catch-up is controlled separately from the elective deferral. In plain terms: two settings (sometimes two slider bars), one for the regular limit and one for catch-up.

Before year-end, confirm both in your own portal. Do not assume every screen looks the same. If only the core setting is raised, you may leave catch-up room unused even though you intended to use it. If you are ages 60-63 and want the higher $11,250 catch-up, both settings matter, not just the headline deferral percentage.

Roth vs traditional: tax structure, plus the 2026 catch-up wage rule

"Should I use Roth or traditional?" is a fair year-end question. It is rarely the only question.

Focus on overall tax structure: how Roth versus traditional contributions interact with your expected tax picture, other savings, and when you might need flexibility. Prior-year returns can inform the conversation. Scenario work usually matters more than product labels on a statement.

Beginning in 2026, if your plan offers Roth catch-up and your prior-year wages with that employer exceeded $150,000, catch-up contributions generally must be Roth. Confirm how your plan and payroll apply that rule before you change elections. That check belongs in the same year-end review as your core and catch-up settings.

Late in the year, the practical question often narrows to: are you going to push toward the limit, or not? That still belongs in the context of taxes and cash flow, not as a December reflex.

Walmart associates: RSUs and ASPP as cash-flow levers before year-end

If you work at Walmart, two benefits often sit next to the 401(k) decision:

Treat them as cash-flow levers, not as a tour of every Walmart benefit. Vesting, share sales, and ASPP purchases can change when cash is available and how much room you have to raise (or protect) a 401(k) deferral before year-end. Modeling the paycheck election without those levers can make a contribution feel either more affordable or more painful than it really is.

The objective: an educated decision, not guilt or fear

You do not have to increase your contribution because the limit rose. You also do not have to freeze because take-home pay feels sacred.

Before year-end, the useful path is to weigh the trade-offs with an advisor: remaining paychecks and cash flow, Walmart equity and ASPP timing if those apply, Roth versus traditional in your tax structure (including the 2026 Roth catch-up wage rule if it applies to you), and whether both portal settings (core and catch-up) match the plan you think you elected.

Higher 2026 401(k) contribution limits create options. Options still deserve a clear-eyed, educated decision.

Practical takeaways (before year-end)

  1. Confirm the 2026 ceilings that apply to you ($24,500 standard; $8,000 age 50+ catch-up, generally up to $32,500; $11,250 ages 60-63 catch-up, generally up to $35,750) against your plan documents and payroll.
  2. Revisit your paycheck election now: increase toward the new room, hold, or adjust so dollar contributions stay where you intend for the rest of the year.
  3. In your plan portal, confirm both elective deferral and catch-up settings (many sites separate them; Merrill or Schwab access portals are examples only; verify your own screen).
  4. If your plan offers Roth catch-up and your prior-year wages with that employer exceeded $150,000, catch-up contributions generally must be Roth beginning in 2026. Confirm how your plan and payroll apply that rule before you change elections.
  5. If you are a Walmart associate, model RSUs and ASPP as cash-flow levers alongside the 401(k) election.
  6. Do not elect from guilt, auto-max habit, or fear. Make an educated decision with an advisor.

Educational information from Willow Financial. Not individualized financial, tax, or legal advice. Contribution limits are set by the IRS and may interact with plan-specific rules. Willow is not affiliated with or endorsed by Walmart, Merrill, or Schwab. Plan rules and custodian interfaces change. Review current plan documents and consult appropriate professionals before you change elections.

There has been no shortage of conversation surrounding Trump Accounts since they were signed into law. Now that these new accounts are officially available as of July 4, 2026, families have a new option to consider when saving for a child's future. While much of the speculation has ended, many executives are still asking the same questions: How do Trump Accounts work? Who is eligible? And how might they fit into an overall financial plan?

For Walmart Home Office executives, there is another reason to pay attention. The legislation allows employers to offer payroll deduction options and employer contributions to eligible Trump Accounts through their benefits programs. While participation is voluntary for employers, executives should watch for future communications from Walmart's HR department regarding whether these features will be available and how they may be administered.

Before deciding whether a Trump Account belongs in your family's financial strategy, it's important to understand how these new accounts work.

What Is a Trump Account?

A Trump Account is a custodial-style traditional IRA created specifically for children under age 18. Although a parent or guardian manages the account while the child is a minor, the child is the legal owner of the assets. Once the child reaches adulthood, the account transitions to follow traditional IRA rules, with additional guidance depending on the account custodian.

One of the most talked-about features is the federal government's planned $1,000 seed contribution for eligible U.S. citizens born between January 1, 2025, and December 31, 2028. Families whose children do not qualify for the seed contribution may still open and fund a Trump Account if they meet the eligibility requirements.

The goal is straightforward: encourage long-term investing early in a child's life through a simple, low-cost investment vehicle.

How Do Trump Accounts Work?

Unlike many retirement accounts, Trump Accounts do not require the child to have earned income before contributions can be made. Instead, funding may come from several different sources, including:

Individual, employer, and employee payroll contributions generally count toward the annual contribution limit, while certain government and qualified charitable contributions do not. Since different contribution sources receive different tax treatment, maintaining accurate records is important.

Investment Options Are Designed to Be Simple

Trump Accounts intentionally limit investment choices.

Rather than allowing investments across the full market, these accounts are restricted to low-cost index mutual funds or exchange-traded funds (ETFs) that primarily track broad U.S. equity indexes. Investment expenses are capped at 0.10%, and leveraged investments are prohibited.

The objective is to provide diversified, low-cost exposure to the stock market while reducing complexity for families.

How Do Trump Accounts Compare to Other Savings Options?

Many executives already save for their children through 529 education savings plans, custodial brokerage accounts, or Roth IRAs for children with earned income. Trump Accounts don't necessarily replace those options they simply add another tool to consider.

For example:

Which account is most appropriate depends on your family's goals, tax situation, and long-term planning objectives.

What Walmart Home Office Executives Should Watch For

One feature that makes Trump Accounts unique is the ability for employers to facilitate contributions through payroll deductions and employer-funded contributions.

However, these features are optional for employers not automatic.

As implementation continues, Walmart Home Office executives should watch for announcements from Walmart's HR department regarding whether payroll deduction options or employer contributions will become part of the company's benefits offering. Understanding these details may help determine whether participating through payroll makes sense as part of your family's broader savings strategy.

Before You Decide

As with any financial account, the decision isn't simply whether to open one it's how it fits alongside everything else you're already doing.

Questions worth considering include:

These are planning questions, and the answers will vary from family to family.

We're Here to Help

Trump Accounts represent a new opportunity for families, but understanding the rules is only the first step. Determining how they fit into your broader financial strategy is where thoughtful planning can make a difference.

If you'd like to learn more about how Trump Accounts work, understand the contribution rules, discuss future withdrawal considerations, or evaluate how they may fit alongside your retirement savings, education planning, and other investment goals, Willow Financial is here to help.

Our goal is to provide Walmart Home Office executives with the education and guidance needed to make informed financial decisions that align with their family's long-term objectives.