Skip to main content
Services
Investment Strategy
Wealth Management
Tax Planning
Financial Planning x Tech
Learn
Insights
Videos
Case Studies
Benefits of combining CPA & CFP
Firm
Log in
Financial Plan Login
Investment Report Login
Schedule a call
Services
Services
Investment Strategy
Wealth Management
Tax Planning
Financial Planning x Tech
Learn
Learn
Insights
Videos
Case Studies
Benefits of combining CPA & CFP
FirmLog in
Log in
Financial Plan Login
Investment Report Login
Book a Call
© 2020 Brickley Wealth Management
Preparing your year-end finances? Brickley Wealth Management's latest blog is your guide to optimizing finances and navigating the new year with confidence.
Blog Post
by Nathan Brickley, CPA

A Year-End Guide for High Earners with Company Stock

Stock Options
Financial Planning
Tax Planning
Follow Us:
Notice: The content of this post is over two years old, information may not be up to date.

Updated for 2024

Year end planning is not just about ending the year strong, it’s about setting a solid foundation for the years to come. High earners with company stock, whether they are vested shares, RSUs, or stock options, have significant opportunities to optimize their finances prior to the close of the year. Let's explore a variety of strategies to maximize your year-end tax benefits and align your company stock with your broader financial goals.

General Year-End Strategies:

  • Defer Income: If you anticipate being in a lower tax bracket next year, it may be beneficial to defer income into the next year. This may allow you to use up lower tax brackets and potentially pay less in taxes. This might include selling shares with a large potential capital gain, or exercising and selling Non-Qualified Stock Options, next year as opposed to year end this year. 
  • Accelerate Deductions: If you are experiencing a higher-income year, you'll want to maximize deductions. For example, if you're planning a significant charitable contribution, making the donation in a year where your income is higher can yield a greater tax benefit.
  • Tax-Loss Harvesting: If you are in a high income bracket and generated capital gains this year (sale of stock, sale of real estate, etc.), look for opportunities to sell investments at a loss to offset any realized capital gains. This can help reduce your taxable income. 
  • Maximize Retirement Contributions: Contributing to retirement accounts like 401(k)s can significantly reduce your taxable income.
  • Integration with Personal Portfolio: Coordinate your company stock strategy, whether RSUs or options, with your personal investment portfolio to ensure a well-balanced approach.
  • Charitable Giving: If charitable giving is part of your plan, consider front-loading multi-year donations into this higher-income year to get a larger deduction when it counts most.

Strategies for RSUs:

  • Tax Rate Analysis: RSUs are taxed as ordinary income when they vest and your company will withhold at a predetermined tax rate. For many high earners, this withholding rate may not be enough which often results in the surprise of additional taxes being owed. If you've had significant RSUs vest this year, talk with your CPA about how to effectively prepare for this additional tax.
  • Blackout Period Planning: Factor in any company-imposed blackout periods to your selling strategy, which may limit when you can sell your shares.
  • Immediate Sale vs. Hold: If you have RSUs that will vest prior to year end, determine whether to sell vested RSUs immediately to reinvest in a diversified portfolio or hold them for potential future growth.

Strategies for Incentive Stock Options (ISOs):

  • Capital Gains Strategy for ISOs: If you want to sell shares before year end, and you have an open window, consider selling shares that will receive long term capital gain treatment. Long term capital gains are taxed at a lower rate than short term, but requires that you’ve held the shares for more than one year post-exercise and two years post-grant. 
  • AMT Assessment for ISOs: Exercising ISOs can trigger the Alternative Minimum Tax. Evaluate this year's tax situation with your CPA to decide if exercising makes sense. If so, how many shares can you exercise?
  • Further AMT Assessment: If you and your CPA determine that you exercised too many shares earlier in the year, and will owe substantial AMT, consider whether it is prudent to sell some of those exercised shares prior to year end. Selling exercised ISOs in the same year of exercise can remove some, or all, of the AMT tax element.

Strategies for Non-Qualified Stock Options (NSOs):

  • Timing NSO Exercises: When you exercise NSOs, the difference between your option grant price and the company’s share price is taxed as ordinary income. If you intend to exercise and hold NSOs, and the grant price and share price difference is small, consider taking advantage of this spread—especially if you’re in a low tax bracket.
  • Timing NSO Sales: If you intend to exercise and sell your NSOs, and turn them into cash, a lower tax year may be beneficial because you can take advantage of filling up lower tax brackets. The result may be less taxes paid.

Using these strategies can hopefully lead to a more favorable tax situation and a more robust financial standing as you move into the new year. Remember, the effectiveness can depend heavily on individual circumstances, so it's always a good idea to work with a financial advisor or tax professional to create a plan that's right for you.

–––

Brickley Wealth Management is a Registered Investment Adviser*. Advisory services are only offered to clients or prospective clients where Brickley Wealth Management and its representatives are properly licensed or exempt from licensure. The information throughout this website is solely for informational purposes. The content is developed from sources believed to provide accurate information, and we conduct reasonable due diligence review however, the information contained throughout this website is subject to change without notice and is not free from error. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Readers should conduct their own review and exercise judgment prior to investing and should carefully consider their own investment objectives and not rely on any post, chart, graph or marketing piece to make a decision. No investment or tax advice may be rendered by Brickley Wealth Management or Brickley & Company unless a client service agreement is in place. We are not providing any personalized investment advice through this website. Please consult your investment, tax, or legal advisor for assistance regarding your individual situation. Brickley Wealth Management does not provide legal advice, and nothing in this website shall be construed as legal advice. For more information on our firm and our advisers, please see the latest Form ADV and Part 2 Brochures and our Client Relationship Summary https://adviserinfo.sec.gov/firm/summary/287487. For a copy of our Privacy Notice, please go here.

*Please note that the term "registered investment adviser" and description of our firm and/or our associates as "registered" does not imply a certain level of skill or training.

Three Brickley team members smile at the camera in their headshots, the headshots overlap in a decorative style.

Need help understanding your financial situation?

Our team is ready to help you plan for your financial future. If you’re ready to make a plan, we make it easy.
Book a call

Key Financial Terms 
Related to this Post:

This is some text inside of a div block.

Alternative Minimum Tax (AMT)

Alternative Minimum Tax, a parallel tax system ensuring high-income individuals pay a minimum amount of tax.
This is some text inside of a div block.

Non-qualified Stock Option (NSO)

An employee stock option that does not qualify for special tax treatment and is taxed when exercised.
This is some text inside of a div block.

Restricted Stock Unit (RSU)

Restricted Stock Unit, a form of employee compensation involving company stock that vests over time.
This is some text inside of a div block.

Stock Option

A contract giving the right to buy or sell a stock at a set price within a specific time frame.
This is some text inside of a div block.

Tax Loss Harvest

A strategy that involves selling an underperforming investment to offset capital gains and reduce taxes.

Brickley Insights

Subscribe to practical insights on important wealth management topics.

Your submission has been received!
Oops! Something went wrong while submitting the form.
We respect your privacy.
Three Brickley team members smile at the camera in their headshots, the headshots overlap in a decorative style.

Ready to make a plan?
We make it easy.

Book a Call
contact@brickleywealth.com
(650) 638-0111
Follow Brickley Wealth on LinkedIn.Follow Brickley Wealth on Twitter.

Services

Wealth Management
Tax Planning
Investment Strategy
Financial Planning x Tech

Learn

Case studies
About Us
BLOG
Benefits of combining
CPA & CFP
Finance Definitions

Connect

Contact
Financial Plan Login
Investment Report Login
Charles Schwab

Brickley Insights

Subscribe to practical insights on important wealth management topics.

Your submission has been received!
Oops! Something went wrong while submitting the form.
We respect your privacy.
161 W 25th Ave, Suite #204, San Mateo, CA 94403
Contact@brickleywealth.com
(650) 638-0111

Brickley Wealth Management is a Registered Investment Adviser*. Advisory services are only offered to clients or prospective clients where Brickley Wealth Management and its representatives are properly licensed or exempt from licensure. The information throughout this website is solely for informational purposes. The content is developed from sources believed to provide accurate information, and we conduct reasonable due diligence review however, the information contained throughout this website is subject to change without notice and is not free from error. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Readers should conduct their own review and exercise judgment prior to investing and should carefully consider their own investment objectives and not rely on any post, chart, graph or marketing piece to make a decision. No investment or tax advice may be rendered by Brickley Wealth Management or Brickley & Company unless a client service agreement is in place. We are not providing any personalized investment advice through this website. Please consult your investment, tax, or legal advisor for assistance regarding your individual situation. Brickley Wealth Management does not provide legal advice, and nothing in this website shall be construed as legal advice. For more information on our firm and our advisers, please see the latest Form ADV and Part 2 Brochures and our Client Relationship Summary https://adviserinfo.sec.gov/firm/summary/287487. For a copy of our Privacy Notice, please go here.

*Please note that the term "registered investment adviser" and description of our firm and/or our associates as "registered" does not imply a certain level of skill or training.

2020 Brickley Wealth Management. All rights reserved.
Privacy Policy

Your Privacy is important to us

Customize your cookie preferences or click “Accept All” to agree to the storing of cookies on your device. View our Privacy Policy for more information.

Preferences
Accept
Deny
Privacy Preference Center

Below we list the different types of cookies that we use on the Site.  The specific cookies that we use, and the categories to which they belong, are available in the consent manager. To the extent any personal information is collected through cookies, our Privacy Policy applies and complements this Policy.

Always Allow Cookies
Close
Manage Consent Preferences
Required cookies enable you to navigate the Site and to use its services and features. Without these absolutely necessary cookies, we may not be able to provide the Site or certain services or features, and the Site will not perform as smoothly for you as we would like it to.

These cookies are used to deliver advertising that is more relevant to you and your interests. They may also be used to limit the number of times you see an advertisement and measure the effectiveness of advertising campaigns. Advertising networks usually place them with the website operator’s permission.

These cookies allow us to analyze your use of the Site to evaluate and improve our performance, for example, by providing us information about how our site is used.

Reject AllConfirm My Choices
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.