You've managed your own investments. The hard part now is everything around them.
When should you sell company stock, how much tax will you owe, and can you retire at 55?
Get written recommendations that connect your compensation, taxes, and retirement date.
Get a Second Opinion Without Moving Your InvestmentsCompany stock and RSUs
Am I too concentrated in my employer's stock?
When your income and savings depend on one employer, a setback hits both. Your plan measures that exposure, including unvested shares, and recommends a target.
How are RSUs taxed when they vest?
RSUs are ordinary income at vesting. That value becomes your shares' cost basis.
Is my employer withholding enough?
Employers commonly withhold 22% federally, or 37% on amounts over $1 million. Your plan estimates any shortfall against your tax bracket and recommends how to cover it.
What happens when I sell vested shares?
Only price changes after vesting create capital gains or losses; gains become long-term after more than a year. Check your reported cost basis: a mistaken zero can tax the vesting income twice.
How do I diversify without a huge tax bill?
Common approaches include selling new vests, selling high-basis shares first, spreading gains across tax years, and giving appreciated stock instead of cash. Your plan sets a diversification schedule with estimated taxes.
Stock options
How do stock options affect my planning?
Nonqualified option spreads are ordinary income at exercise; incentive stock option spreads can trigger alternative minimum tax. ISO gains may qualify for long-term rates after holding one year from exercise and two from grant.
Deferred compensation
How should I evaluate my deferred compensation election?
Deferring income may lower taxes, but consider these tradeoffs:
- The election is hard to undo. Elect before earning the income; later changes generally require a year's notice and a five-year payout delay.
- The payout schedule matters as much as the deferral. Spreading payouts may avoid a high-bracket lump sum.
- It's not protected like a 401(k). Payments depend on your employer's financial strength.
Your plan recommends how much to defer and which payout schedule fits your retirement date.
Retiring early
Can I retire at 55?
Possibly. It depends on whether your savings can cover your spending until other income starts, and whether you can reach your money without penalties. Your plan compares retirement ages side by side.
How do I get to my retirement money before 59½?
Possible sources include:
- The Rule of 55. Qualifying employer 401(k) withdrawals avoid the 10% penalty, not income tax.
- Taxable accounts. No age limits at all.
- Roth contributions. Contributions, not growth, can come out anytime.
- Deferred compensation payouts, on the schedule you elected.
- Substantially equal periodic payments from an IRA avoid penalties but lock in a multi-year schedule.
Does the Rule of 55 apply to my accounts?
It applies only to the departing employer's 401(k), when you leave in or after the year you turn 55. Rolling it into an IRA loses that access.
What happens to my unvested equity if I retire?
Your grant terms decide whether shares are forfeited or continue vesting. Check age and service requirements before setting your retirement date.
How will I pay for health insurance before Medicare?
Compare COBRA, a spouse's plan, and marketplace coverage until Medicare. Your withdrawal income can affect marketplace premium assistance.
Should I do Roth conversions?
Lower-income years after retirement may offer a conversion window. We weigh the tax savings against health coverage costs and later Medicare premiums.
What a plan looks like for a situation like this
An early-retirement plan might recommend these steps:
- Sell each new RSU vest when it vests, covering withholding gaps with estimated payments.
- Diversify existing company stock over several years, prioritizing high-basis shares and spreading gains.
- Give low-basis shares to a donor-advised fund instead of cash donations in a high-income year.
- Check your grant terms for retirement vesting provisions before choosing a date.
- Plan Roth conversions after deferred payouts end, accounting for health coverage costs.
Illustration only. Your recommendations depend on your own situation, and tax results aren't guaranteed.
A second opinion, not a handoff
Keep control of your portfolio, with recommendations on:
Your stock compensation decisions
- Diversification targets for vested and unvested company stock
- Equity tax estimates covering RSUs, options, and withholding gaps
- Deferred compensation choices matched to your retirement date
- Early retirement comparisons including account access and health coverage
Financial Planning: a one-time written plan for one flat fee. You keep your accounts where they are and carry out the plan yourself.
Ongoing Planning: we manage your investments at Fidelity and keep your plan current, for an annual fee based on the assets we manage. Accounts held elsewhere move to Fidelity, and we help with the transfer. It's separate and optional.
Questions people in your situation ask
The information on this page is general and isn't advice for your specific situation. Tax rules and employer plan terms vary and change, and your plan reflects the rules and documents in effect when it's written.
Who you'll work with
Kevin Jacobs, CFP®, leads every planning meeting and has prepared tax returns since 2005.
Get a Second Opinion Without Moving Your Investments30 minutes, by phone or video. No fee, no obligation, and nothing to prepare.