A tool designed to determine the increase in value of assets held in a defined contribution plan, such as an employer-sponsored retirement account, before those assets are sold or distributed. For example, if an individual’s initial investment of $10,000 grows to $15,000, the difference of $5,000 represents the growth in value. This calculation becomes particularly relevant when considering options like Net Unrealized Appreciation (NUA) strategies for tax-advantaged withdrawals.
Determining the growth in investment value offers valuable insights for financial planning, especially for retirement. Historically, the ability to isolate and treat this growth differently for tax purposes has provided individuals with opportunities to optimize their retirement distributions. This can potentially lead to significant tax savings, particularly when coupled with strategic rollovers and diversification of assets.
