Even though volatility has returned over the last year, markets have weathered the storm alright. Nonetheless, a more sustained downturn in the markets may occur at any moment. These declines combined with media headlines stating how the end is nigh can understandably cause the common investor to feel much angst and a sense of helplessness. However, the prudent investor with the proper guidance and plan could potentially use a poor market to their advantage by taking an opportunistic approach and considering certain planning strategies.
Employees at both startups and well-established public companies alike may receive opportunities to contribute towards, or engage in, company stock plans. These plans are generally referred to as equity compensation plans. Each plan has it’s own pros and cons, but perhaps none are as underutilized yet offer such certain benefits as the Employee Stock Purchase Plan (ESPP). We go through the basics of an ESPP, some of the tax considerations, some thoughts for how to get the most out of this type of equity compensation plan, and other things to keep in mind with this unique plan.
So you have restricted stock as part of your company’s equity compensation program. Do you understand the opportunities and risks associated with restricted stock? What about the tax implications? Does an 83(b) election make sense? What tradeoffs exist? We have you covered in our article discussing restricted stock and 83(b) elections.
Incentive Stock Options (ISOs) come with significant investment, tax, risk management and liquidity planning considerations. If you have ISO grants through work, make sure you are properly planning in advance to understand how to best navigate the complex rules while wisely using ISOs to your advantage to build wealth.