The lure for those fortunate enough to have highly appreciated company stock in their 401(k) is to pay lower taxes by utilizing what is called Net Unrealized Appreciation (NUA). To do so, it takes a triggering event: reaching age 59 ½, separating from service, becoming disabled, or death. NUA’s tax advantage stems from lower long-term capital gains rates on the stock’s appreciation. By contrast, if the company stock is sold within the 401(k), the withdrawal is taxed at a higher income tax rate. In the example below, the income tax rate is in the 33% tax bracket which appears relatively high.