Raytheon Stock in Your 401(k): What You Need to Know About NUA
If you've worked at Raytheon or Raytheon Technologies (RTX) for years, there's a good chance you own company stock in your 401(k) — either because you chose to buy it, or because it was the default years ago. And if you're nearing retirement, you may have heard of something called NUA — Net Unrealized Appreciation — a little-known tax rule that can save you tens of thousands in taxes.
This article explains how company stock works inside your 401(k), what NUA is, who it helps, and when it makes sense to use it.
How Raytheon Stock Got Into the Plan
“Before the RTX merger in 2020, Raytheon employees could invest in Raytheon Company stock through the Raytheon Savings and Investment Plan (SIP), which was administered by Fidelity at the time.”
After the merger with United Technologies, the stock transitioned to Raytheon Technologies (RTX) stock in the new consolidated plan.
You might hold company stock if:
You directed 401(k) contributions to Raytheon or RTX stock in the past.
Company match contributions were made in stock (in some plan versions).
You never changed the default investment early in your career.
If you’ve been with the company for decades, your RTX stock may represent a large portion of your 401(k) — which could open the door to NUA planning.
What Is Net Unrealized Appreciation (NUA)?
NUA is a special tax treatment available when you take company stock out of your 401(k) as part of a full distribution.
Here’s the idea:
The cost basis (what the company paid for the stock) is taxed as ordinary income.
The appreciation (growth in stock value) is taxed as long-term capital gains — often at a lower rate.
This can lead to huge tax savings compared to just rolling over the 401(k) and paying ordinary income tax on everything later. Want to learn more? Check out this flowchart diagram for a clear overview.
Example: NUA in Action
Let’s say your 401(k) contains $250,000 worth of RTX stock, and it was purchased over the years for $75,000.
If you roll the entire account to an IRA, you’ll eventually pay ordinary income tax on all $250,000 as you withdraw it.
But if you use NUA:
You pay ordinary income tax only on the $75,000 cost basis.
The remaining $175,000 in appreciation is taxed later at capital gains rates (typically 15–20%).
That’s a tax savings of 10–20% on the appreciation, depending on your income bracket.
Rules for Using NUA
You must meet all of these criteria to qualify for NUA treatment:
Distribute the entire 401(k account in a single tax year (not just the stock).
Take a "lump sum distribution" after a triggering event:
Separation from service (i.e., retirement or termination)
Turning age 59½
Disability or death (for heirs)
Move the stock to a taxable brokerage account, not an IRA.
Track your cost basis and NUA precisely.
Once the stock is rolled to an IRA, NUA treatment is no longer available. Timing is critical.
This strategy can be powerful — but it's also complex and must be executed carefully to avoid unintended taxes.
Is Holding RTX Stock a Good Idea Long-Term?
Many employees hold a significant amount of RTX stock in their 401(k) — sometimes 30% or more. That’s risky.
Why?
Your income, bonus, and benefits already depend on the company.
Holding too much company stock adds concentration risk — if the stock drops, your retirement drops with it.
Even good companies face volatility, market changes, or regulatory shocks.
General rule: Limit company stock to no more than 10–15% of your portfolio unless you have a specific strategy (like NUA) and a solid exit plan.
Strategic Uses for RTX Stock in Retirement Planning
If you hold RTX stock in your 401(k), consider these options:
Sell and Diversify
Move out of company stock gradually into a diversified portfolio within the plan.
Use NUA at Retirement
If your stock has grown significantly and the cost basis is low, NUA could save you thousands.
Donate Highly Appreciated Stock
If you take RTX stock into a brokerage account via NUA, you can later gift or donate shares for additional tax benefits.
Final Thoughts
Raytheon and RTX employees who’ve accumulated company stock in their 401(k)s often overlook one of the most powerful tax strategies available: Net Unrealized Appreciation.
But NUA only works when applied correctly, and only makes sense for the right kind of portfolio. If you’re unsure whether to hold, sell, or use NUA, now’s the time to get clear.
How We Help
We work with RTX employees to:
Evaluate whether NUA makes sense in your situation
Coordinate stock distributions with taxes and retirement income
Create a smart exit plan for concentrated stock positions
If you're within 5–10 years of retirement and have questions about your plan—or simply want a second opinion—we're here to help. Let's have a no-pressure conversation.
Curious about our process? Please click here.
This material was written in collaboration with artificial intelligence (ChatGPT) and derived from sources believed to be correct.
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