Strategies
The checklist below summarizes what you need for comprehensive year-end planning with stock compensation.
Review:
- exercises, vestings, and ESPP purchases in current year
- holdings of NQSOs, ISOs, restricted stock/RSUs, and company shares
- scheduled vestings in the year ahead, including the end of the cycle for a performance share grant and when payout occurs
- salary contributions allocated for ESPP purchases
- any estimated adjustments needed for the year ahead in the Form W-4 used for salary withholding (the IRS revised Form W-4 for 2020), as your W-4 rate is sometimes applied to stock compensation withholding too
Know:
- deadlines for option or SAR exercises and the expiration dates of option grants
- expected new grants in year ahead and ESPP enrollment/change dates
- trading windows and blackouts, company ownership guidelines, and any post-vest holding-period requirements
- your ability to spread the recognition of income from certain sources over this year and next year
- your marginal tax rate after tax reform, and whether the flat rate for federal supplemental withholding that applies to stock compensation will cover it
- whether sales of stock trigger short-term or long-term capital gains
Consider:
- your situation, including short-term cash needs that may prompt you to sell company stock and/or exercise options
- whether your decisions should be entirely tax-driven
- your outlook for both your company's stock price and your job
- how comfortable you are with your concentration in company stock and whether you should diversify
- multi-year projections for your income and taxes
- donations in company shares instead of in cash
Collect:
- Company and brokerage firm statements, whether online or in print. You will need them for tax-return reporting.
For year-end financial-planning points to consider with stock compensation, see a related FAQ.
