I recently changed employment and have securities in my former employer's 401(k) plan.
The cash component of the 401(k) I am rolling over into an SEP-IRA.
What I need advice on is whether I should also rollover the securities in the 401(k) plan.
The issue is that taking money (eventually) out of the 401(k) plan will be taxed as income (at a marginal rate of 28%). However, cashing out now will incur capital gains tax (15%) as well as an early withdrawal penalty (10%).
This difference (28% vs 25% with the numbers above) is the problem. This issue is often referred to as the Net Unrealized Appreciation or NUA.
What other aspects of the issue should I take into account, assuming that the cash-out option shows the better monetary return?