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Financial Planning: Strategies

What are the top 10 questions related to retirement planning that I should ask about my stock options, restricted stock/RSUs, or ESPP participation?

Retirement savings can be significantly boosted by equity compensation. When factoring stock options, restricted stock/RSUs, or ESPPs into your retirement planning, you should know the answers to the following questions that apply to you.

1. After I retire, what will happen to the vesting of my stock options or restricted stock/RSUs? Is early retirement treated any differently?

2. How can stock compensation help me to plan for a financially secure retirement? What are some retirement-planning basics?

3. Can stock compensation affect contributions to my 401(k) plan? Can ESPP participation affect contributions?

4. Can stock options or restricted stock/RSUs help me establish a Roth IRA or make a Roth IRA conversion? What are some planning ideas around this?

5. If I am eligible for vesting acceleration at retirement but have not actually retired, will my restricted stock or RSUs be taxed?

6. When I retire, will I get an extended period to exercise my vested options? If my post-retirement exercise period is longer than the remaining term of my stock options, which term applies after I retire?

7. What are some planning ideas with stock compensation for the year in which I retire?

8. What are some planning ideas with stock compensation that I may need to consider during my retirement, after I have left my company?

9. Do stock option exercises or restricted stock/RSU vesting events affect the annual earnings limit of Social Security and reduce my benefits? Will I still have to pay Social Security tax on that income?

10. If I move from one state to another after retirement, what happens with the taxes on my equity awards if I live in different states during the period between grant and option/SAR exercise or between grant and restricted stock/RSU vesting?

Alert: In addition, before you retire, be sure that you will have continued access to your company's stock plan website to see your outstanding equity awards and your stock holdings. Confirm that you will be able to follow the same procedures for option exercises (or learn the new ones), and be sure that you will receive the same company notices that you did as an employee.

For additional reading about the role of stock compensation in retirement planning, see this website's sections on retirement and retirement plans.

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