Restricted Stock & RSUs: myStockOptions Newsletter No. 84 (June 2021)

Top 10 questions to ask about a grant of restricted stock/RSUs
When restricted stock/RSUs vest: what you must do and decide
Popular webinar on restricted stock/RSU planning now available on demand
Sell or hold RSU shares at vesting? New article explains 3 approaches to consider
Multimedia educational content on restricted stock, RSUs, and performance shares
Upcoming webinar: Stock Option Exercise Strategies: Advanced Bootcamp
myStockOptions Learning Center: Convenient CE credits online

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SPONSOR OF THIS ISSUE

• StockOpter: Professional Equity Compensation Analysis Software (see the ad below)

• AdvisorFind Directory from myStockOptions.com: Search this resource for financial, tax, and legal advisors with experience in stock compensation (see the ad below)

• myStockOptions Webinars: From stock comp basics to advanced financial and tax planning, our webinars have something for everyone (see the ad below)

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We launched myStockOptions.com on June 22, 2000, in a very different world to that of today. Thank you for all of your support. Over the past two decades we have become the leading independent educational resource on equity comp, with award-winning content and tools focused on stock options, restricted stock/RSUs, and ESPPs. We especially thank all of our site members, licensing clients, and advertisers. You have supported our growth through many stock market and economic cycles.

This issue of our quarterly newsletter showcases some of our award-winning content on restricted stock, restricted stock units (RSUs), and performance shares. Although our trusted brand name is myStockOptions, we could just as easily be myRestrictedStock, given our extensive and engaging articles, FAQs, videos, podcasts, and quizzes on restricted stock/RSUs and the related financial planning.

Separate from myStockOptions.com, we now have myStockOptions Webinars, a channel where you can register for our upcoming webinars and purchase past webinars on demand. Our most recent webinar, Restricted Stock & RSU Financial Planning: Advanced Bootcamp, featured an engaging panel of seasoned advisors with special expertise in financial and tax planning for restricted stock/RSUs. The recording is now available on demand with our other recent webinars.

Keep Up With Stock Comp Developments

The myStockOptions.com Blog is a great way to stay informed about new developments in equity compensation. You can also follow us on Twitter and Facebook. In addition, I have a blog at Forbes.com.

—Bruce Brumberg (Editor-in-Chief)

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What are the top 10 questions I should ask about my grant of restricted stock or RSUs?

You should know the answers to the questions in the checklist below. Understanding the topics involved and the key stock plan documents will help you make the most of your restricted stock/RSU grant and prevent costly mistakes.

1. Do I have a grant of restricted stock or a grant of restricted stock units? What are the key differences?

2. Is formal acceptance of the grant required? What happens if I don't accept the grant before vesting?

3. What is the vesting schedule?

4. Is vesting based on duration of employment or on performance goals?

5. What would happen to the vesting of my grant if I were to leave or lose my job, die, become disabled, retire, or become retirement-eligible?

6. When the shares vest, what account will they appear in?

7. Does the company offer a choice for the tax withholding, or does it hold back shares to pay the taxes?

8. With RSUs, can I defer the delivery of the shares at vesting?

9. If my company pays dividends to shareholders, will I get dividends on my restricted stock? If so, when? What if I have a grant of RSUs instead?

10. What would happen to my restricted stock in a corporate acquisition or merger?

In addition, you should understand the tax treatment, the reporting on your Form W-2 (whether for restricted stock or RSUs), and the related tax return reporting. This website's Tax Center covers all tax topics involving stock compensation. For key financial-planning points to know about your restricted stock or RSUs, see a related article.

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My restricted stock/RSUs will vest soon. What must I do and decide?

When vesting occurs and the restriction on the shares lapses, you have some choices but fewer than you would with stock options, which require decisions about exercise timing and method. Restricted stock and restricted stock units do not impose these decisions as vesting approaches. Earlier, you may have had to accept the restricted stock/RSU grant, though that is not as common as with options.

Alert: If your company requires formal acceptance of the grant agreement, the delivery of the shares at vesting may be suspended until you accept it.

Open A Brokerage Account

Before the vesting date, when the restriction lapses and the shares are released, you will have to open an account with the brokerage firm or transfer agent that your company designates. At vesting or share delivery, the shares are then electronically deposited into your account from the transfer agent.

Alert: It is important that you open an account, as your company may have a policy of not delivering shares unless you have done so. You should also complete either IRS Form W-9 (for US tax residents) or IRS Form W-8BEN (for nonresident aliens) to certify your tax status.

The setup needed to activate this account may be all online, or you may have to send a paper document with your signature to the firm. With some brokers, your company may be able to establish an account for each plan participant, and then you merely need to accept yours.

Tax Decisions

You will owe taxes on the value of the shares at vesting, when the shares are delivered into your account. At least for federal tax purposes, most companies use the flat rate for supplemental wages (22%, but 37% for aggregate amounts above the level of $1 million during a calendar year). In addition, there will be Social Security tax up to the yearly maximum, along with Medicare (plus any state and/or local taxes on this type of income).

Alert: If this flat rate is insufficient to cover the tax imposed by your federal and state marginal tax rates, you may need to pay estimated taxes or consider putting funds aside to pay the future taxes that will be due.

You will need to decide how you will provide the taxes that must be withheld. The choices may include using cash, selling enough shares to cover the taxes (a sell-to-cover), or share withholding (i.e. some of the shares are held back for the taxes). Your company may have a mandatory withholding method, in which case you don't have to make a decision, or it may have a default that it will use if you do not elect your withholding method by the deadline.

Alert: When the grant vests, it could push you into a higher tax bracket. See a related FAQ that covers potential ways to reduce your income and taxes when your grant vests.

For more on this topic, see the full FAQ.

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Held on June 10, the myStockOptions webinar Restricted Stock & RSU Financial Planning: Advanced Bootcamp was a big hit among the many advisors and others who attended this lively online event. Moderated by myStockOptions editor-in-chief Bruce Brumberg, the webinar featured engaging insights from a panel of three leading financial advisors, including real-world case studies, to provide practical info, guidance, and expertise for restricted stock/RSUs in both public and private companies:

• Meg Bartelt (CFP®), Flow Financial Planning
• Chloe Moore (CFP®), Financial Staples
• Daniel Zajac (CFP®), Zajac Group

This popular webinar is now available on demand. To purchase streaming access, and for details of the webinar agenda and panelists, see the webinar homepage.

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When your restricted stock units (RSUs) vest, you have a lot of wealth tied up in one stock. How many of your RSU shares should you sell? How many should you hold? How do you decide on the right level of diversification? Is is always bad to have a lot of wealth concentrated in your company's stock, or are the circumstances in which it makes sense?

In a new article at myStockOptions, three approaches to these planning issues are explained in refreshingly plain English by Meg Bartelt (CFP®): Sell Or Hold RSU Shares At Vesting? 3 Approaches To Consider. It is a companion to her other article on myStockOptions, in which Meg tries to help you identify the best strategy that you feel comfortable following in a falling market: What To Do With Your Just-Vested Shares After Your Company's Stock Price Drops.

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Below we list articles, videos, podcasts, and interactive quizzes about restricted stock, RSUs, and performance share in the award-winning multimedia content of myStockOptions.com.

The extensive section on restricted stock and RSUs at myStockOptions.com is complemented by a self-study course and exam for CFP and CEP continuing-education credits.

All of the content and tools of myStockOptions are available by individual Premium Membership (bulk memberships at discounted rates available), by individual Pro Membership for financial advisors, or by corporate licensing.

ARTICLES

Ten Financial-Planning Rules You Should Know About Restricted Stock And RSUs by the myStockOptions Editorial Team
While grants of restricted stock and RSUs are conceptually simple, financial planning for them can be complex. This article presents the essential financial-planning points that you should consider before your restricted stock or RSU grant vests.

Restricted Stock Units Made Simple (Part 1): Understanding The Core Concepts by the myStockOptions Editorial Team
Restricted stock units (RSUs) have become the most popular alternative to stock options. While RSUs share many of the same issues as restricted stock, there are differences, and it is important to understand the basics of RSUs in their own right.

Restricted Stock Units Made Simple (Part 2): Taxation by the myStockOptions Editorial Team
The taxation of RSUs generally resembles that of restricted stock but carries some important differences, as this article explains.

Restricted Stock 101: Five Essentials Of Restricted Stock & RSUs by the myStockOptions Editorial Team
While restricted stock and RSUs are relatively straightforward, they have technical aspects you must understand to make the most of them. Learn the essential facts of restricted stock and RSUs, including basic concepts, vesting schedules, and tax treatment.

NEW! Restricted Stock, Restricted Stock Units, Restricted Securities: How To Tell Them Apart And Avoid Confusion by the myStockOptions Editorial Team
Restricted stock, restricted stock units (RSUs), and restricted securities are often confused by employees, companies, and financial advisors alike. That can be problematic. Those three things are not the same—and understanding which you have matters, as a lawsuit by current and former Uber employees demonstrates. This article explains the differences..

The Great Benefits Of Restricted Stock And RSUs by Richard Friedman
Podcast included! Your company may no longer be using stock options. Instead, it may be granting restricted stock, restricted stock units, or performance shares. While these grants don't carry the same upside as stock options, they have benefits you will surely appreciate once you understand their special features.

Sell Or Hold RSU Shares At Vesting? 3 Approaches To Consider by Meg Bartelt, CFP®
When your restricted stock units (RSUs) vest, you have a lot of wealth tied up in one stock. How many of your RSU shares should you sell? How many should you hold? This article presents ways to approach your best answer to those key financial-planning questions.

Financial Planning With Restricted Stock Units: 3 Key Questions by Daniel Zajac, CFP®
If you own restricted stock units (RSUs), you need to plan for what you will do when the shares vest. Whether you hold or sell, being prepared will help you be proactive instead of reactive and make the most of the opportunity RSU grants provide.

What To Do With Your Just-Vested Shares After Your Company's Stock Price Drops by Meg Bartelt, CFP®
When markets are on a wild ride, stock volatility can rattle anyone's financial plan for equity comp and company shares. What should you do with shares acquired from equity awards now? Should you change your strategy or ride it out? This article provides a financial planner's insights.

Restricted Stock: Tax, Financial, Estate, And Retirement Planning (Parts 1 and 2) by Richard Friedman
Podcast included! Understand financial planning for restricted stock and RSUs. Part 1 discusses the growing popularity of these grants, their special features, and the related tax planning. Part 2 covers complex issues in financial, estate, and retirement planning.

Stockbrokers' Secrets: Restricted Stock And Performance Shares by John Barringer
For many employees, receiving restricted stock, restricted stock units, or performance shares adds a new layer of complexity to their equity compensation. This article presents six common questions the author hears from his clients.

Performance Shares (Parts 1, 2, and 3) by Bruce Brumberg
Part 1 explains the basics of performance share grants. Part 2 explores their structure in depth, along with the concept of expiration and the impact of job termination. Part 3 explains the taxation of performance share grants and then goes on to discuss the special tax considerations that arise in corporate mergers and acquisitions.

Decisions At Grant With Restricted Stock (Parts 1, 2, and 3) by Tom Davison
Part 1 presents what you need to know at grant and the decisions you can make. Part 2 discusses the risks of the Section 83(b) election. Part 3 explains ways to analyze your alternatives.

Decisions At Vesting With Restricted Stock (Parts 1 and 2) by Tom Davison
Vesting is another crucial time for making decisions about your restricted stock. Part 1 explores 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. Part 2 looks at key vesting decisions.

VIDEOS

Restricted Stock & RSUs (Part 1): Key Aspects To Know
Editor-in-Chief Bruce Brumberg presents the fundamentals of restricted stock and RSUs to help stock plan participants make the most of these grants. The coverage includes key concepts, such as vesting schedules and understanding a grant's value. Running time: 4:37.

Restricted Stock & RSUs (Part 2): Taxes And Related Key Decisions
An engaging primer on the basic tax treatment of restricted stock and RSUs, including the tax rates, the timing of taxation, and withholding. Running time: 3:57

PODCASTS

Basics Of Restricted Stock And Restricted Stock Units
Running time: 8:05. In this audio interview, the editor-in-chief of myStockOptions.com explains how restricted stock and RSUs work, including grant, vesting, sale, and taxation.

Why Restricted Stock And RSUs Are A Good Deal
Running time: 11:37. Compensation expert Richard Friedman explains what makes restricted stock and restricted stock units valuable equity awards. This interview is a companion to Mr. Friedman's article on this topic in the Restricted Stock section of myStockOptions.com, where he also has articles on financial and tax planning for restricted stock and RSUs.

Restricted Stock Units After An Acquisition: Know What Could Happen
Running time: 13:36. When a company is merging or being acquired, its employees wonder what will happen to their unvested RSUs. In this interview, wealth advisor Kristin McFarland explains the potential outcomes for holders of unvested RSUs and current equity holders in an M&A deal. This interview is a companion to her article on this topic.

INTERACTIVE COURSES/EXAMS/QUIZZES

Learning Center: Course on Restricted Stock, RSUs, and Performance Shares for CE Credit
This course and exam, offering continuing education credits for CFPs, CEPs, CWPAs, CIMAs and other professional designations, weaves all of our key articles, FAQs, podcasts, and videos on restricted stock, RSUs, and performance shares into a dynamic, interactive learning tool.

You can also test your smarts with our free interactive quizzes on restricted stock and restricted stock units. In addition to being fun, the quiz is also a course of study. The answer key links to content on the topic for followup reading.

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Stock Option Exercise Strategies: Advanced Bootcamp

• June 24, 2pm–3:40pm ET, 11am–12:40pm PT
• 2.0 CE credits for CFP, CIMA, CPWA, and CEP

Employees with stock option grants, whether NQSOs or ISOs, face important wealth-building and tax-minimizing decisions about when to exercise their stock options. Our upcoming webinar Stock Option Exercise Strategies: Advanced Bootcamp will clearly explain the variety of stock option exercise strategies to both build wealth and prevent expensive mistakes. This webinar is part of our advanced series building on our flagship webinar Stock Compensation Bootcamp For Financial Advisors.

Registration is now open for this lively educational event. In 100 minutes, it will feature insights from a panel of three leading financial advisors, including real-world case studies, to provide practical info, guidance, and expertise for stock options in both public and private companies.

For a detailed agenda of topics covered, see the webinar registration page.

Time conflict? No problem. All registered attendees get unlimited streaming access to the webinar recording for their personal viewing, along with the presentation slide deck. Therefore, even if you have a time conflict, please still register, as you will receive a link to the recording and presentation.

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myStockOptions Learning Center offers convenient continuing education (CE) credits

Including our popular course on restricted stock, RSUs, and performance shares, the myStockOptions.com Learning Center has self-study courses and exams that offer continuing professional education:

• 35 CE credits for Certified Equity Professionals (over 100% of the total requirement)

• 21 CE credits for Certified Financial Planners (70% of the total requirement)

• 21 CE credits for CPWAs and CIMAs (52.5% of the total requirement)

• Potential self-reportable CPE for Certified Public Accountants (CPAs) and CE for CFA Charterholders (see the Learning Center for information)

Each course of study features podcasts, articles, and FAQs from myStockOptions.com. They are woven into a dynamic, interactive learning tool that teaches the topics in a memorable way. The answer key for each exam also links to relevant content on the site for further reading and learning.

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