The American Taxpayer Relief Act and the Affordable Care Act introduced tax-rate increases you must consider in deciding when to exercise stock options, when to sell company shares, and how to plan around income from restricted stock/RSU vesting. Although tax reform is on the horizon, these tax laws will remain in place until new laws are adopted.
Notable shifts in tax rates occurred in 2013 for people with high incomes. Part 1 surveys these important tax changes and considers their impact on planning. Unless or until tax reforms become effective, the rates and income thresholds covered in this article still apply.
Part 2 of this article series looks at planning strategies involving capital gains rates, the AMT, and ISOs, and considers general ideas related to income-shifting.
One of the most vexing investment decisions you will ever make involves when to exercise your stock options and when to sell the shares. This article series will give you the tools for determining that time.
Your tax return can help you develop your stock option strategy. With your return in hand, make projections for your income, taxes, AMT risk, and use of capital-loss carry-forwards. Next, review the details of your stock plan documents to develop an exercise program.
Your option grant terms and the behavior of your company's stock price are only part of your financial-planning story in volatile markets. Equally important is the price movement of what you will buy with the proceeds from an option exercise and stock sale. As this article explains, relative changes in price, not absolute changes, are what matter.
Weighing a Roth IRA conversion is complicated enough, but the complexity can explode when you add in stock option exercises or the vesting of restricted stock. Let's take a look at how this can work in real life through a case study.
When stock markets rise, question the urge to exercise your options for quick profits as soon as possible. Exercising too early can be a big mistake.
Even when stock prices are volatile, there are still opportunities to achieve gains from stock compensation. This article presents a range of ideas to considerr: buying stock now to swap later, exercising and holding ISOs, or making a Section 83(b) election for restricted stock.
With tax increases in mind, now may be a good time to re-evaluate your current financial-planning strategy for equity compensation and company stock holdings to determine whether action is required. Part 2 looks at restricted stock and restricted stock units.
With tax increases in mind, now may be a good time to re-evaluate your current financial-planning strategy for equity compensation and company stock holdings to determine whether action is required. Part 1 looks at nonqualified stock options.
With tax increases in mind, now may be a good time to re-evaluate your current financial-planning strategy. Should you take action with stock options now? Part 3 looks at incentive stock options.
Part 2 of this series considers reasons and strategies for diversifying away from a concentrated position in your company's stock.
Deciding which stock options to exercise and when can pose a dilemma. Part 2 of this series focuses on reducing risk when you exercise. Quantifying a risk/return number can determine the point when holding your options is no longer desirable.
If the majority of your net worth lies in unexercised stock options or company stock, it may make sense to sell a portion to reduce the concentration risk while holding on to a portion to participate in future appreciation. However, if most financial goals can be reached without these proceeds and your position is not heavily concentrated, other strategies are worth exploring. One that is gaining popularity is writing call options on vested ESOs to generate some income.
When should you exercise nonqualified stock options? You need a decision-making process that removes guesswork and emotions. Otherwise, you're likely to exercise too soon or too late.
This PowerPoint presentation provides financial and wealth advisors with an overview of trends in equity compensation grants that can affect their clients and their practice.