Retirement affects the vesting of your grants

Social Security and your stock compensation

Special articles on retirement planning

Pro Membership for financial and wealth advisors

Highlights of new content: best practices for Rule 10b5-1 trading plans; tax planning for restricted stock; ESPP strategies; taxation of mobile employee; India's new tax law for stock grants

Update on AMT reforms in Congress

BusinessWeek praises



Think Twice insider trading prevention videos: educate, entertain, and jolt your employees and executives (

Equity Focus: Get the Straight Talk on FAS 123R Compliance for Non-Public Companies; Free On-Demand Webinar from Two Step Software at

Net Worth Strategies: StockOpter Personalized Education (



Stock compensation from options, stock appreciation rights, restricted stock, and ESPPs can help you retire more comfortably—if you know all the issues and pitfalls to watch out for. We have greatly expanded our Life Events section, which has special subsections on retirement and retirement plans in the context of stock compensation, and a new subsection on college funding. Other life-events topics we cover in our award-winning content are divorce, death, and disability. Below you will find the text of FAQs about Social Security and about vesting at retirement, links to our articles about retirement planning, and other new content.

In addition to the many users of our site who have become Premium Members and Pro Members, companies, stock plan providers, and financial advisors are also contacting us about:

  • purchasing Premium Memberships in bulk at discounted subscription rates

  • licensing our easy-to-integrate Knowledge Center of content for HR and compensation portals and stock plan service providers' websites (particularly useful for employees at year-end and during the tax season)

  • creating custom websites that import grant data automatically, post stock plan documents, and match the look and feel of your company's site

For more information on these corporate services, please email inquiries to

Next week marks its 7th anniversary. Thank you for all your support. Have a great summer!

 ~ Bruce Brumberg, Editor-in-Chief


Below are two frequently asked questions (FAQs) on retirement planning. They are taken from the 700+ FAQs on All of these are available for your company to license or by Premium or Pro Membership. Please do not copy or excerpt this information without our permission.

Question 1:

When I retire, will my company let my stock options or restricted stock continue to vest, or will it accelerate the vesting?


Most likely, retirement will cause your company to do neither. While we have not come across any data on restricted stock, a survey by the National Association of Stock Plan Professionals ( discovered that only a small minority of companies either let the options continue to vest normally or accelerate the vesting in situations involving normal or early retirement:

Type of retirement

Options continue to vest

Vesting accelerates







At certain companies, these provisions are triggered by the number of years you worked at the company before retirement. For example, the provisions may apply after you have worked at the company for 20 years, or when you turn 55 after 10 years of service. When you near retirement, it is important to review these provisions in your stock plan and in your specific grants.

Alert: Find out how your stock plan or grant agreement defines retirement. This may not match the definition in other company benefit plans. If you take a full-time or part-time job, especially at a competitor, any continued vesting may stop, and you may not be allowed to exercise vested options.

See related FAQs on the beneficial post-termination exercise rules that may apply for normal (i.e., not early) retirement, and the differences for early retirement.

Insider Trading Prevention And Education:
Think Twice Video And Intranet Series
Request free previews at

With insider trading cases in the news, now is a good time for insider trading education and focusing on your compliance program. The dramatic Think Twice video series will teach, entertain, and jolt your employees and executives about insider trading and securities fraud. Used by over 1,000 companies and developed with input from the SEC Enforcement Division, these powerful videos with memorable story-lines will drive home key points on

  • what insider trading is
  • the penalties and consequences
  • how the SEC discovers illegal activity
  • what happens if illegal tipping or trading is suspected
  • how SEC investigations are conducted

For more information on the Think Twice video series, and a free white paper on insider trading prevention and education, see Both VHS and DVD formats are available. Qualified corporate buyers, including pre-IPO companies, can request free previews. Intranet licensing is available.

Question 2:

I have started receiving Social Security retirement payments. If I exercise stock options or my restricted stock vests, must I still pay Social Security tax on the income? Can this cause my Social Security payments to be taxed too?


You pay Social Security and Medicare taxes on all wage and self-employment earnings, regardless of your age. If these are stock grants from a prior employer, the company will probably withhold these taxes from your stock option exercise or restricted stock vesting. However, these taxes do not apply to ISO exercises (as is the case before retirement). The good news is that if your extra earnings are substantial, they may increase your monthly benefit payment.

See the full FAQ for details on the taxation of your payments. Other FAQs on discuss when to start taking Social Security benefits when you have stock compensation, and on how income from stock grants can impact the annual earnings limit for Social Security when you retire early.

Straight Talk on FAS 123R Compliance for Non-Public Companies;
Free On-Demand Webinar

Are you concerned about your equity compensation expense numbers under FAS 123R?
Experts from FAS123 Solutions, iComp LLC, and Two Step Software recently shared their recommendations with hundreds of CFOs, financial executives, and controllers of venture-backed and other non-public companies who attended Two Step Software's webinarStraight Talk on FAS 123R Compliance: Five Things Your Auditors Will Want to Know.

It's the first webinar focused on how the new rules apply to non-public companies. And it's available on-demand.

On-Demand Webinar: Click here to download the recorded version and the related slides and white papers.

On-Demand and Live Demos: Would you like to find out how to reduce the time you spend on stock option administration and FAS 123R compliance? See how you can get rid of all those spreadsheets, easily calculate grant date valuations and amortize compensation expense, and have all the supporting documentation at your fingertips so you can avoid raising red flags with your auditors. Sign Up Now to take a look at Equity Focus, Two Step's hosted system for stock option administration and FAS 123R compliance.

Free white papers, demonstrations, and 14-day trial available at

Contact: (800) 223-8900 or, and please mention your referral by

SPECIAL ARTICLES ON RETIREMENT PLANNING has special articles on retirement planning in the section Life Events: Retirement. They were written by Carol Cantrell, a CPA, lawyer, and financial planner with the accounting firm of Briggs & Veselka in Houston, Texas.

Retirement Planning With Your Stock Options And Other Stock Compensation (Part 1: Pre-Retirement Planning)
Your stock options and restricted stock are important for your retirement planning. Understand the related issues and explore strategies, whether you are planning for retirement now, are nearing retirement, or have retired already. Click here to read the article.

Retirement Planning With Your Stock Options And Other Stock Compensation (Part 2: Retirement Year) This is premium content
Once you reach your retirement year, the decision landscape and timeframe change. To avoid unpleasant surprises, understand what will happen to your stock grants and other company benefits so that you can develop appropriate strategies. Click here to read the article.

Retirement Planning With Your Stock Options And Other Stock Compensation (Part 3: Post-Retirement Planning) This is premium content
Tax planning for retirees can be more challenging that it was during their working years. You need to constantly monitor any stock options and company stock holdings as part of your overall portfolio. Part 3 looks at special issues that can arise after you retire, including Social Security; coordinating with required minimum distributions for IRAs and your 401(k); moving to another state; and the gifting of stock. Click here to read the article.

Content with the This is premium content symbol requires Premium Membership.

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We are receiving high praise for the new membership level we call (MSO) Pro, specially designed for financial advisors, wealth managers, CPAs, and anyone who tracks and models equity grants for others. Introduced late last year, MSO Pro gives you the power to track and model grants for multiple clients with our award-winning record-keeper and tools, plus special features for proactive client communications and relationship-building. You can choose a membership level to track and model for 5, 10, 25, or more clients.

MSO Pro gives you access to all the features of Premium Membership, plus:

  • Grant tracking and modeling for multiple clients
  • Grants you have already entered in transfer seamlessly to MSO Pro
  • Client portal where your clients have special access to a confidential, highly secure site to see their grants online
  • Co-branding of your firm's identity in the client-accessible site
  • Grant alerts reminding you of important dates and target values for each of your clients, plus the flexibility to send alerts to selected clients
  • Create and save scenarios for you and your clients from any of the calculations you run in our tools
  • All our exclusive articles by leading experts in financial planning, tax and securities law, and stock-based pay
  • 700+ FAQs on all aspects of equity compensation
  • PDF versions of articles, FAQs, and all tool results that you can send your clients, all co-branded with your name and firm
  • Reports on your clients' investable stock compensation gains, individually and in aggregate

Track and communicate with multiple clients

Send grant alerts to yourself and to your clients

Create and save tool results as "scenarios" you can call again with one click

For more information on MSO Pro and to become a Pro Member, contact or click on myClients after signing into the site.

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Below are selections from's newest award-winning educational content. All of these are available to our Premium and Pro Members and our licensees.

With option exercises, you can control the timing of the income and therefore the year of your tax hit. With restricted stock and RSUs, can you do anything to shift the income and taxes to some later time, or are your stuck with this at vesting? Read about this situation in Ask The Experts (free to all registered users of

SEC Rule 10b5-1 does not have many details on setting up and operating these prearranged stock-trading plans. Best practices have evolved, as explained in a new FAQ in SEC Law: Rule 10b5-1 plans.

Leading financial and wealth advisors provide their thinking on when or whether it is smart to participate in your company's ESPP. Read "Financial Planning with ESPPs (Part 2)" in ESPPs: Rules.

Companies increasingly send or relocate employees abroad. However, the international taxation for what are called "mobile employees" is always complex, particularly with equity compensation, as explained in a new article in NQSOs: Taxes Advanced.

In India, the fringe benefit tax, rather than regular income tax, is now applied at the exercise of stock options and the vesting of restricted stock units. Though your company pays this tax, it may pass it on to you, as explained in our Global Tax Guide.

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We understand that Congress may seriously consider legislation about the alternative minimum tax (AMT) this summer. It will probably either enact another patch to increase the AMT income exemption amount (explained in an FAQ on how to calculate the AMT), or permanently reform the AMT. Under the "pay-as-you-go" budget requirement adopted in early 2007, any fix depends on finding tax revenues to replace what the government gets from current AMT rules.

Various sources expect that during the early summer Charles Rangel (D–New York), the Chairman of the House Ways and Means Committee, will propose legislation to reform the AMT. The Washington Post, in an article of early June, reported that House Democrats want to repeal the AMT for couples with incomes of less than $250,000 and for individuals earning less than $125,000, and to index the tax for inflation. To fund this repeal, families with income over $500,000 would pay a 4.3% surtax. has learned from contacts at the Ways and Means Committee that revising the AMT income calculation to remove the ISO spread at exercise/hold is not, apparently, under consideration.

Elimination of the AMT is opposed by Steny Hoyer (D–Maryland), the House Majority Leader. While some key senators want to end the AMT altogether, they think that for practical reasons a complete elimination is unlikely. For more on AMT reform, see the relevant FAQ on

Equity Compensation Forfeit Value®
A Crucial Metric for Employers, Employees, and Advisors

Forfeit Value® is the value employees leave behind upon terminating their employment. It is the essential and sole metric that determines the ability of an equity compensation plan to retain key employees. Yet employees and even compensation professionals dramatically underestimate Forfeit Value®.

Research conducted by business school professors at the University of Illinois and Michigan State University presents compelling evidence that:

  • Employees on average underestimate their Forfeit Value® by 60%.
  • This underestimation can be substantially eliminated with a personalized education program that explains the concepts and provides them with their specific Forfeit Value®.

The data used in this study came from questionnaires administered before and after StockOpter® Personalized Education sessions from Net Worth Strategies, Inc.

For the employer, StockOpter® Personalized Education is cost effective insurance against unnecessary loss of key personnel. For employees and their advisors, understanding Forfeit Value can prevent massive erosion of this critical asset.

For more information on Forfeit Value® as well as other metrics essential to retention, motivation and timely decision making regarding equity compensation visit or contact Bill Dillhoefer at


We are often contacted by journalists for insights and commentary on various topics in stock compensation. After an interview, BusinessWeek quoted one of our experts in a financial-planning article about stock options ("Options: Have An Exit Plan" by Lewis Braham, June 18, 2007). BusinessWeek recommends as a "handy resource," and goes on to say:

"The site offers calculators that allow you to see what the aftertax gain of your options sale will be and compare it with other investments. You can also monitor your portfolio and sign up for alerts that notify you if your company's stock has hit your price target or if your options are close to expiration. You don't want your valuable options to end up among the 10% that expire worthless."

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