The concentration problem
Holding a large share of your net worth in one stock, often your employer's, can build wealth fast and destroy it just as fast. A specialist can lay out a diversification schedule that balances risk, taxes and upside.
Equity compensation, decoded
- RSUs are taxed as ordinary income when they vest. Default withholding is often too low for high earners.
- ISOs can qualify for long-term capital gains treatment but may trigger the alternative minimum tax in the year you exercise.
- NSOs create ordinary income on the spread at exercise.
- ESPPs let you buy at a discount. How long you hold changes the tax treatment.
Tools pros use
Tax-loss harvesting, direct indexing, exchange funds, charitable gifting of appreciated shares, collars and staged sales can each help depending on your situation. Ask which they'd use and why.
Frequently asked questions
How are RSUs taxed?
RSUs are taxed as ordinary income at vesting, based on the share price that day. Later gains or losses are capital gains from that value.
What is direct indexing?
Instead of buying an index fund, you own the individual stocks. That allows customized exclusions and more frequent tax-loss harvesting.
How do I diversify a concentrated stock position?
Options include staged sales across tax years, gifting shares, exchange funds, hedging strategies and pairing sales with harvested losses. A specialist can model each.