Are you a US-based NRI looking to reduce taxes and maximize your retirement savings? If you hold company stock in your 401(k), Net Unrealized Appreciation (NUA) could be your golden ticket to significant tax savings. At Dinesh Aarjav & Associates, we specialize in helping NRIs like you navigate the complexities of cross-border tax planning, ensuring you make the most of your wealth.

What is Net Unrealized Appreciation (NUA), and How Can It Save You Money?

NUA is the difference between the cost basis (original price) of company stock in your 401(k) and its current market value. By utilizing the NUA strategy, you can pay lower long-term capital gains tax on the appreciation, rather than higher ordinary income tax rates.

This strategy is particularly advantageous for NRIs because:

• Tax Savings on Stock Distributions:
• Pay ordinary income tax only on the cost basis while the appreciation is taxed at favorable capital gains rates.

Cross-Border Tax Optimization:

• Use international tax treaties to further reduce tax burdens.

Retirement Income Flexibility:

• Minimize Required Minimum Distributions (RMDs) and lower your taxable income.

Why NUA is a Game-Changer for US-Based NRIs

As an NRI, you face unique financial challenges, including dual taxation and multi-jurisdictional tax compliance. The NUA strategy offers:

Significant Tax Reductions:

Long-term capital gains tax rates (max 20%) are much lower than ordinary income tax rates (up to 37%).

Tailored Cross-Border Solutions:

NRIs relocating to India or other countries can benefit from double taxation treaties like the DTAA India USA.

Wealth Preservation for Retirement:

Stretch your retirement savings further by reducing your overall tax liability.

Real-Life Success Stories of NUA for NRIs

Arjun Saves Big with NUA
Arjun, an NRI in New York, retired with $1 million in his 401(k), including $400,000 in company stock. With a cost basis of $100,000, he used the NUA strategy to pay ordinary income tax on $100,000 and long-term capital gains tax on $300,000, saving over $50,000 in taxes.

Meera’s Strategic Tax Move
Meera, a Texas-based NRI, planned to return to India post-retirement. Her $500,000 in company stock had a cost basis of $80,000. By leveraging NUA and the India-US tax treaty, she minimized taxes in both countries, securing a financially sound retirement.

How US-Based NRIs Can Leverage NUA

Assess Your Company Stock:
Evaluate your 401(k) holdings to identify eligible NUA stock.

Understand International Tax Treaties:
NRIs can use treaties like the India-US DTAA to avoid double taxation.

Work with Experts:
Tax laws for NRIs are intricate. At Dinesh Aarjav & Associates, we simplify the process, ensuring maximum savings.

Avoid Common Pitfalls in NUA Planning

Rolling Stock into an IRA:
This mistake results in losing NUA benefits, subjecting the stock to ordinary income tax upon withdrawal.

Ignoring Cost Basis Calculations:
Understanding your stock’s cost basis is critical to realizing NUA advantages.

Overlooking Cross-Border Taxation:
Failing to account for US and Indian tax laws can result in unexpected liabilities.

Why Choose Dinesh Aarjav & Associates for NUA Advisory?

At Dinesh Aarjav & Associates, we bring over 25 years of expertise in NRI tax planning and financial advisory. We help you:

Optimize Your Taxes:
Tailored NUA strategies for maximum tax savings.

Leverage Global Tax Treaties:
Minimize tax liabilities using the India-US DTAA and other agreements.

Simplify Complex Financial Decisions:
From estate planning to retirement savings, we ensure your wealth works for you across borders.

Take Charge of Your Retirement Savings Today!

Don’t let high taxes erode your hard-earned wealth. With the right NUA strategy, you can unlock significant tax savings and secure a financially independent future.

📞 Contact Dinesh Aarjav & Associates today for expert guidance on NUA and cross-border tax planning.