In this video, Kevin Gormley, CFP®, CPA, PFS and Brenda Hill, B.S.B.A. discuss various types of equity compensation, including incentive stock options (ISOs), non-qualified stock options (NSOs), restricted stock units (RSUs), and employee stock purchase plans (ESPPs). ISOs and NSOs offer the potential for significant gains while also having the risk of becoming worthless. RSUs are actual compensation, taxed as ordinary income when vested, and can be sold or held for either long-term or short-term gains. ESPPs allow employees to buy company stock at a discount, with complex tax rules.
The key is to understand these different types of equity compensation in order to manage risk and tax implications, diversify your portfolio, and determine how it may fit into your financial plan.
Key Topics Covered:
- What ISOs, NSOs, RSUs, and ESPPs really are and how they work
- Tax risks and benefits of different types of equity compensation
- The importance of understanding vesting, exercising and selling timelines
Actionable Tips:
- Review equity compensation available to you and determine how it may fit into your financial plan
- Share your equity compensation options with your investment advisor to navigate complex equity compensation options
- Talk to a tax professional to understand how your equity compensation may impact your taxes
Whether you’re new to equity compensation or looking to optimize your approach, this video will help you make more informed decisions.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning and are subject to change at any time due to the changes in market or economic conditions.
