Restricted Stock
What is your vesting schedule? What method should you use to pay withholding taxes?
This section covers the basics and complexities of restricted stock and restricted stock units. (Unless otherwise stated, all content in this section applies to both.) On this overview page are selected articles and FAQs from the subtopics in this section. For the full content of a subtopic, click on a link in the upper left.
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Articles (Jump to FAQs)
Alan B. Ungar
In a growing trend, your company may let you choose between stock options and restricted stock. Which is better for you? Learn techniques to analyze your financial situation and goals so that you can make the right choice.
Richard Friedman
Your company is no longer granting you stock options, or at least fewer than before. Instead, you're receiving restricted stock or restricted stock units. While these grants don't carry the same upside as stock options, they have benefits you will surely appreciate once you understand the special features of these grants.
Alan B. Ungar
As noted in Part 1, many companies are developing employee-choice programs that allow you to choose between stock options and restricted stock. Part 2 provides a method of analysis to help your decision-making.
Richard Friedman
UPDATED! Understand financial planning for restricted stock and RSUs. Part 1 discusses the growing popularity of these grants, and tax planning.
The myStockOptions.com Tax Team
UPDATED! Learn how to report your sales of company stock on Schedule D of IRS Form 1040. Our comprehensive guide to Schedule D reporting covers sales of stock from nonqualified stock options, incentive stock options, restricted stock, restricted stock units, employee stock purchase plans, and stock appreciation rights.
Richard Friedman
Careful planning can help you maximize the value of restricted stock and RSUs. Part 2 covers financial, estate, and retirement planning.
Tom Davison
Thanks to the IRS, with restricted stock you have to make decisions immediately at grant. Learn the rules that accompany this increasingly popular type of equity compensation.
Bruce Brumberg and Kate Victory
Along with stock options, your company has awarded you restricted stock. Restricted stock grants carry their own requirements and tax rules, which can significantly differ from those of stock options.
Tom Davison
Vesting is another crucial time for making decisions about your restricted stock. Decisions include what tax-withholding method to use, whether you should hold or sell the stock, and what account to keep the shares or cash in after vesting.
Tom Davison
Now that you understand the risks of choosing to be taxed at grant with a Section 83(b) election, should you do it? Part 3 takes you through the analysis.
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FAQs (Jump to articles)
Restricted stock shares are issued up front at grant, but you do not own them outright and cannot sell or transfer the shares until the restrictions lapse. With standard restricted stock units the situation is similar, except that...
Generally, yes, with two exceptions. First, with RSUs you cannot...
Surveys show that rank-and-file employees and executives are likely to receive fewer stock options, or that grants will be made only at higher levels. In addition, the types of equity grants at companies have changed. A summary of data in surveys from 10 major consulting and research firms shows that...
Restricted stock refers to outright grants of company stock to employees or other service providers...
The tax treatment is different than that of stock options. You pay tax at the time the restrictions on the stock lapse. The tax is based on the value of the shares at...
It is easy to make mistakes that lead to paying more tax than you need to, or that may even prompt a review by the IRS. When the restricted stock vests, the full value of the shares at vesting is reported on your...
The traits of restricted stock include the following...
The outcome depends on how well your company's stock price does in the years after the grant date and on the ratio of stock options to restricted shares, among other factors. To calculate whether the appreciation of stock option gains equals or exceeds restricted stock gains, you need to...
You make this election only for stock options that you can exercise before vesting, and for restricted stock at grant when you want to be taxed on its value at that time. A Section 83(b) election must be filed with the IRS within...
Some companies let the standard time-based vesting schedule accelerate if...
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