FAQ

What is the difference between shares purchased in a pre-IPO versus post-IPO exercise?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

If you exercise your ISOs post-IPO, you can trade your purchased shares on a public exchange among a global forum of buyers and sellers. If you exercise and purchase shares...

Should you exercise your ISOs pre- or post-IPO?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

There is no universally correct answer for whether to exercise your ISOs pre- or post-IPO. Either approach has advantages and disadvantages, with outcomes that depend on a future nobody can...

How are NQSOs taxed?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

As a general rule, you will be subject to ordinary income tax on the bargain element when you exercise non-qualified options. This amount is often included in your w-2 at...

When are NQSOs taxed?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

NQSOs are not taxed when they are granted. An NQSO grant means your company gives you the right (or option) to buy a set number of stock shares at a...

What is the 83(b) Election for Non-Qualified Stock Options?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

Some companies will offer an early exercise provision on their NQSOs. This allows you to exercise your NQSO prior to the shares vesting. If allowed an early exercise, the 83(b)...

How are incentive stock options taxed?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

If your employer has granted you incentive stock options (ISOs), you’ve probably read about the alternative minimum tax (AMT) and qualifying and disqualifying dispositions. Perhaps the complication has left you...

What are the advantages of Incentive Stock Options (ISOs)?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

Incentive stock options are a powerful compensation tool that can help you grow your wealth. Companies award them to employees as a retention vehicle, to reward specific successes or as...

How are performance shares taxed?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

There is no taxable event when performance shares are granted. A taxable event occurs once you meet a performance metric and shares are delivered. This often occurs after the board...

What might a Performance Award/Grant look like?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

A performance award is generally issued with a target number of shares, an achievement timeline, its metric(s), and a minimum and maximum award. Minimum/maximum awards are typically based on how...

Why Do Companies Use Performance Awards?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

Performance Stock Awards (PSAs or PSUs), are meant to reward executives based on their contributions to a company’s objectives and overall progress measurably and harmoniously. The more deliberately a company...

What are the advantages of a qualified employee stock purchase plan?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

An ESPP is a convenient way to buy shares of your company stock, as contributions are often deducted pre-tax directly from payroll. In addition, ESPPs may allow you to buy...

What factors should you consider before you participate in an employee stock purchase plan?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

Your plan document can tell you how your employee stock purchase plan works, but there are still details to dig into before you can understand if using your ESPP is...

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