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


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


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


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


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


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


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

Evaluating Startup Job Opportunities: Think Like an Investor

You’ve been approached by a hot new startup company that urgently needs your talents and asks you to come in to interview. The product and technology sound great, and you can’t stop thinking about how much money you’ll make when the company goes public or gets acquired. There are some risks involved, though. This may be a great opportunity—or it may not be. And that leaves you wondering: Just how should you evaluate a job opportunity at a startup company? Read more