Before you roll over the Textron Savings Plan: Ask should I use NUA for my Textron stock?
Somewhere in Wichita this year, a Textron employee is going to sit down with a rollover form and check the box that moves everything from their Textron Savings Plan into an IRA. This will feel like the obvious thing to do as it consolidates everything into one account with one statement. But if there's Textron stock in that plan (and there probably is), he may have just thrown away a tax benefit he can never get back, in about the time it takes to find a pen.
Roughly 1 out of every 6 dollars in the Textron Savings Plan is sitting in the Textron Stock Fund. The plan's annual report on Form 11-K puts the Textron Stock Fund at about $1.17 billion at the end of 2025, against $6.82 billion in total plan assets. Which means this isn't just a curiosity for the executives in C-suite. It's most of the shop.
Why do so many Textron employees own Textron stock they never chose to buy?
Textron deposits the employer match as company stock. The same Form 11-K describes the match as 50% of the first 10% you defer, so a maximum of 5% of eligible pay, and it goes in the Textron Stock Fund. You can sell those shares and move the money anywhere else in the plan any time you want, so nobody's trapped. But most people never do. And nobody sends you a letter explaining that a decision you never made is now a fifth of your retirement.
What is net unrealized appreciation?
Net unrealized appreciation splits your company stock into two parts that get taxed differently, in different years. The cost basis (think of this as your principal), gets taxed as ordinary income the year you take the distribution. Everything above that basis is the net unrealized appreciation, and it gets taxed as a long term capital gain when you sell. It shows up in Box 6 of your Form 1099-R. IRS Topic 412 is the rulebook.
That word “appreciation” is key. It means the part you've never paid a dime of tax on. NUA does not make it free. It changes when you pay and which rate applies to which chunk. That's it. That's the whole trick, and it can be worth a lot of money.
Why is signing the rollover form such a big deal?
NUA needs the actual shares, not just cash. However, the Textron Savings Plan pays out cash unless you specifically ask for stock. Most money decisions have a second chance. If you buy the wrong fund, you can sell it tomorrow. Set your contribution rate too low, fix it next month. Claim Social Security too early and you get 12 months to withdraw the application on Form SSA-521 and pretend it never happened.
NUA is not one of those. Once those shares leave the Textron Savings Plan as cash, or land inside an IRA, the NUA election is gone, and buying Textron stock back in your IRA the following week does absolutely nothing to bring it back.
What has to happen for NUA to actually work?
There are three things needed for NUA to work. First, you need a qualifying triggering event, which for a Textron employee means separation from service, reaching age 59 1/2, or death. Second, you need a lump sum distribution that empties the required plan balances inside 1 tax year (Jan to Dec). Third, you need the shares you've selected moved in kind into a taxable brokerage account, with everything else free to roll into an IRA.
But here's where this all goes wrong. Let's imagine you retire in October, pull $10,000 in December because the truck needs a transmission, but you never complete the qualifying lump sum rollover that year. That separation event may be spent. You could be sitting on your hands until 59 1/2 for another shot at it, which is a rough thing to learn in February from a tax preparer. Get written confirmation from Textron or Fidelity about exactly which accounts have to be emptied, because a phone rep's best recollection is not a plan document.
What does this look like for an actual Textron household?
Let’s look at an example. Imagine someone, age 63, retiring in December, $1.4 million in the Textron Savings Plan. Inside that, $300,000 is Textron stock with a $65,000 cost basis, which leaves $235,000 of net unrealized appreciation. He's married, starting Medicare within 2 years, needs about $75,000 to live on that first year, and would like a camper.
Furthermore, assume a tax rate of 24% on ordinary income and 15% on long term capital gains.
Scenario 1, roll all $300,000 of Textron stock into the IRA. No tax bill this year, everything keeps compounding, and he can sell out of Textron at any time and never think about aviation stock again. But every dollar comes as ordinary income. At 24%, that is $72,000 of federal tax on its way out.
Door 2, use NUA on all $300,000. He pays ordinary income tax on the $65,000 of basis in the distribution year, which comes to $15,600. The $235,000 of appreciation gets long term capital gain treatment when he sells, and at 15% that is $35,250. Add them together and he is at $50,850.
That is a $21,150 difference on one election, made one time. This is why NUA gets talked about the way it does, and why moving it all to an IRA without understanding the consequences can be so expensive.
Now the part the NUA fan club leaves out. The $72,000 in scenario 1 does not come due this year, or next. It gets spread across 20 or 30 years of withdrawals, at whatever bracket he lands in each year, with the full $300,000 compounding the entire time. Scenario 2 pays the IRS $15,600 in year one, and that $15,600 stacks on top of everything else he reports, at exactly the moment IRMAA is deciding what his Medicare premium looks like 2 years out. Kansas does not give capital gains a discount either, so the state layer of this comparison is close to a wash.
Scenario 3, use NUA on only the lowest basis shares, enough to fund the $75,000 he needs, and roll the rest. Most of the balance stays deferred, he pays ordinary income tax on a much smaller slice of basis, and he keeps the option to do more later if his brackets cooperate.
And this doesn’t account for the added flexibility he will enjoy by having some funds in taxable brokerage account and some in an IRA. This will allow him to keep is overall tax burden down over the next 20-30 years while he’s retired.
So when is NUA a bad deal?
Generally speaking, the lower your basis is compared to today's market value, the less ordinary income you eat up front and the more of the position can get capital gain treatment later.
So, the higher your basis is the worse NUA is since you will have so much more ordinary income in a given year.
What do you need in before you decide?
Ask Textron and Fidelity for the following...
• Current market value of your Textron stock
• Total plan cost basis, and the basis by individual lot
• The date and type of your most recent triggering event
• Any distributions you've already taken since that event
• Which accounts have to be emptied to complete a qualifying lump sum distribution
Other items to have…
• The cash you'll need in the first 1 to 3 retirement years
• A projected tax return with and without NUA, including projected Medicare premiums
• Textron stock as a percentage of your total household wealth
Net unrealized appreciation deserves an analysis. But that doesn’t mean it is automatically right for you.
If you're a Textron employee within 3 years of retirement with company stock in the Textron Savings Plan, remember this is the conversation to have before the rollover paperwork goes in.
Sources
Textron Savings Plan, annual report on Form 11-K for the plan year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission. Source for total plan net assets, the Textron Stock Fund balance, and the employer match formula.
IRS, Topic No. 412, Lump Sum Distributions. Source for net unrealized appreciation treatment, the qualifying lump sum requirement, and reporting in Box 6 of Form 1099-R. https://www.irs.gov/taxtopics/tc412
Social Security Administration, Form SSA-521, Request for Withdrawal of Application. Source for the 12 month window to withdraw a claim. https://www.ssa.gov/forms/ssa-521.pdf
Tax figures in the composite example use assumed rates of 24% on ordinary income and 15% on long term capital gains. They illustrate the mechanism and are not a projection of any reader's actual tax.
This article is for educational purposes. It is not personalized advice, a recommendation, or an offer. Decisions about Roth conversions, pensions, distributions, and taxes depend on your full plan and current law. Talk with a CFP or CPA before acting.
