Can You Use Restricted Stock Units To Qualify For A Mortgage?
Many tech companies like Amazon and Google pay employees partly through company stock. This type of compensation is referred to as paying employees through restricted stock units or RSUs. Typically when your employer grants you RSUs, you must wait for a certain period of time for the stocks to vest before they become yours. Once RSUs vest, they are considered income.
Do You Have Restricted Stock? Does an 83(b) Election Make Sense?
If you possess restricted stock you likely work either with a startup or some form of early stage company. Therefore, while there is certainly risk in holding restricted stock due to the uncertainty of an organization’s long-term viability, early stage stock may possess unique upside potential. To properly maximize and capture that upside potential while limiting downside risk is key to thoughtfully building and preserving wealth.
If You Have RSUs and Your Company Just Went Public, You Miiiight Want to Check Your Tax Situation.
A curious thing is happening when big tech companies, like Lyft and Uber, go IPO nowadays. I mean, aside from the fact that their stock immediately starts losing value…although that figures into my point, which is:
Your RSUs might be vesting on Day 1, not after lockup expiration. And that creates a tax hassle and possibly a big investment risk for you.
Do Your RSUs Make Your Annual Income Super High? Treat Yourself, Sure, and Also…
…don’t permanently increase your expenses.
Take that awesome vacation. Give your Mom the birthday present of a lifetime. Re-furnish your living room. Make an extra big donation to that presidential candidate you love so much. Sock it away in savings so that you can take a sabbatical in a year.
Are You Letting Your Vested RSUs Just Sit There, for Lack of a Better Idea?
Every month or every quarter, your Restricted Stock Units vest and now you own (more) company stock. Are you keeping the company stock…just because you don’t know what you’d do with the money from selling it? There is a solution!
For more on RSUs, check out Good Financial Reads: RSU Basics.
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