Incentive Stock Options and Alternative Minimum Tax

If you’ve worked in technology startup companies for even a short time, you’ve probably heard a story about or know someone who exercised stock options and got into trouble with alternative minimum tax (AMT). That story most likely involved incentive stock options (ISOs) and a drop in the company’s stock price after the person exercised their option.

While ISOs have potentially tax-saving features that non-qualified stock options don’t have, taxation of ISOs is more complicated and there are potential snags to be aware of. Read more

stocks

Non-Qualified Stock Options: Basic Features and Taxation

Two main types of stock options are offered to employees of technology companies: non-qualified stock options and incentive stock options. This article covers the basic features and tax treatment of non-qualified stock options.

Non-qualified stock options are often called “non-quals,” NSOs, or NQSOs. The term “non-qualified” is tax law jargon that means that this type of option does not qualify to receive special income tax treatment. In contrast, incentive stock options, or ISOs, are qualified to receive favorable income tax treatment. Read more

stocks

An Introduction to Restricted Stock and RSUs

Publicly traded technology companies increasingly use restricted stock and restricted stock units (RSUs) to give employees ownership in the company. Restricted stock and RSUs are two of the simplest forms of equity compensation, and their relative simplicity is part of the reason for their popularity with companies and employees. Read more

stocks

Why You Should Take Advantage of Your Company’s Employee Stock Purchase Plan

Saving and investing in your company’s Employee Stock Purchase Plan (ESPP) is on our list of permanent recommendations.  An ESPP allows you to buy your employer’s stock at a discount of up to 15% or more of its current market value. You can then sell your ESPP shares when you receive them to capture the built-in investment gain.

Publicly-traded companies offer ESPPs to give their employees an opportunity to earn more. ESPPs help companies by creating incentives for employees to contribute to the company’s success, through and aligning their interests with other shareholders. Read more

401k

401(k) Plan Basics—Part II: Contributions, Investment Options, and Recommendations

Last week we took a look at tax advantages and rules to remember for 401(k) plans. This week we will discuss the nuts and bolts of using a 401(k), including contributions, investment options, and beneficiaries.

Using your 401(k) plan requires that you select a contribution amount, investments, and often, a rebalancing frequency. You should also select beneficiaries for your account in the event of your death. Read more

401k

401(k) Plan Basics—Part I: Tax Advantages and Rules to Remember

In many households, 401(k) plans are the primary vehicle for tax-deferred saving and investing. In the competitive job market of Silicon Valley, employers find it essential to offer a 401(k) plan to attract top talent, and most companies offer this benefit to their employees. Here is a quick review of this plan’s features and benefits. Read more

401k

Four Options for Old 401(k) Plans

Receiving statements in the mail from “old 401(k)s” can be a nuisance. Even worse is losing track of those accounts. If either case applies to you, it may be a symptom that your personal finances are not in good order. Read more

family

Charitable Foundations: Flexibility and Control for High-Net-Worth Families

We occasionally receive questions about charitable foundations and when it makes sense to consider a foundation for giving. We will cover some of the key factors here. Read more

charity

Donor-Advised Funds: An Important Tool for Your Charitable Planning

Donor-advised funds are the fastest-growing charitable giving vehicle in the United States—and for good reason.[1] Donor-advised funds are a simple, flexible and tax-efficient way of supporting the charities you care about. With their ability to accept complex assets such as private company stock, real estate and venture capital fund partnership interests, donor-advised funds are an important charitable planning tool for Silicon Valley. Read more

Leaving a Legacy: You Can Pass On More Than Money

At some point, you will probably begin to think about your legacy—about what you will pass on to future generations. Often one or both of the following circumstances may motivate your reflection: Read more