There's a little-known IRS provision called Net Unrealized Appreciation — NUA — that allows eligible Costco employees to distribute company stock from their 401(k) and pay long-term capital gains tax rates on the growth, rather than ordinary income tax rates. For someone with significant Costco stock appreciation, that difference in tax treatment can be substantial. But the strategy has strict eligibility rules, precise timing requirements, and must be executed correctly to work. Done wrong, the opportunity disappears — and so do the savings.

