Equity Pay and a Growing Family

Tim and Mary are in their mid-30s with a young child and a second on the way. Tim gets RSUs from a public company and has kept every share as it vested, so a big piece of their net worth now sits in one stock. Mary's private company pays her partly in ISOs.

She hasn't exercised any yet. As the company grows, she's started to wonder whether she should. Both of them earn good salaries and fund their 401(k)s. Past that, money seemed to leave each paycheck without a trace, and saving more each month kept slipping.

What they were looking for: Ongoing help with their equity pay and their investments, including a steady way to reduce how much they hold in their employers' stock. Their time goes to their kids and careers, and they wanted someone else watching the finances.

What We Did

Tim now sells his RSUs as they vest, and we set a schedule to sell down the shares he'd held from earlier vests. Mary began exercising some of her ISOs in amounts their cash and their AMT exposure could support. That way she'll own shares she can sell if her company runs a tender offer or goes public.

Part of every paycheck now goes straight into a brokerage account before they see it. When we decide whether to sell or hold a position, we look at the capital gains treatment and their income that year, aiming to keep taxes as low as their situation allows.

Illustrative example based on typical client situations. Names and details have been changed. Individual results vary.

Live in a high-tax state?

If you live in a state like New York, California, New Jersey, or Connecticut, taxes can grow into one of your largest lifetime expenses. The timing of your Roth conversions and stock sales makes a big difference in that bill, and we plan it with you year by year.

New York Tax Planning