Question for board accountants / smart investors

[noleclone2]

I am leaving my employee owned company for a new opportunity and I have about 190k of non ESOP stock they will be paying me out. They have the option of paying equally over five years or all at once and I am not sure yet which path it will be because my amount is right around that spot they may decide to pay out over time.

Regardless if it is a 190k check or the first of five 38k checks, what is the best thing I can do to tax shelter this and reinvest? I do not believe I can get out of the capital gains tax coming my way.

My biggest concern is I do not want to blow this little pot of income and I have serious concern that after taxes and maxing out an IRA, I will spend the remainder on strippers and blow, especially if it is a 38k check five times a year.

I have another 100k in ESOP but that is much simpler since I can roll it over into my new company’s 401k with the rest of my old company 401k.

 

[Hawk_4shur]

Doesn't sound like you have any options to "shelter" the gain. If you are already maxing out your IRA/401k options I'm not sure what else you can do. So, pay the tax and invest the rest. The investment decision is really the same as it would be for any money you have to invest, i.e. conservative v aggressive v balanced.

Did you pay anything for the stock? Or was it just earned? Is it stock or incentive stock options?

 

[tarheelbybirth]

So, pay the tax and invest the rest.

In hookers and blow.

Problem solved.

You’re welcome.

 

[Hawk_4shur]

In hookers and blow.

Problem solved.

You’re welcome.

Hookers, blow and the Swarm

FIFY

 

[OrlandNole]

I suspect they may need to know your full situation (i.e. income) in order to answer. That said, it seems like the lump sum payout is better regardless. I have a structured buyout from a previous ownership situation and I get interest every year.

 

[SA_Hawk]

I am leaving my employee owned company for a new opportunity and I have about 190k of non ESOP stock they will be paying me out. They have the option of paying equally over five years or all at once and I am not sure yet which path it will be because my amount is right around that spot they may decide to pay out over time.

Regardless if it is a 190k check or the first of five 38k checks, what is the best thing I can do to tax shelter this and reinvest? I do not believe I can get out of the capital gains tax coming my way.

My biggest concern is I do not want to blow this little pot of income and I have serious concern that after taxes and maxing out an IRA, I will spend the remainder on strippers and blow, especially if it is a 38k check five times a year.

I have another 100k in ESOP but that is much simpler since I can roll it over into my new company’s 401k with the rest of my old company 401k.

Sounds like you aren’t willing to pay your fair share.

 

[noleclone2]

Doesn't sound like you have any options to "shelter" the gain. If you are already maxing out your IRA/401k options I'm not sure what else you can do. So, pay the tax and invest the rest. The investment decision is really the same as it would be for any money you have to invest, i.e. conservative v aggressive v balanced.

Did you pay anything for the stock? Or was it just earned? Is it stock or incentive stock options?

I paid straight up for some of it and some were stock options, each option though I did pay taxes on the gain from purchase price to actual price

 

[ping72]

Pokemon cards are freaking blowing up right now. If you’re willing to fist fight a bunch of other middle-aged men when they’re released to get your hands on some: it’s gold, Jerry, gold!!

 

[Hawk_4shur]

I paid straight up for some of it and some were stock options, each option though I did pay taxes on the gain from purchase price to actual price

So, you've got some tax basis that will reduce the gain.

 

[NDallasRuss]

**Not an expert.

I guess it's up to how they categorized the "non-ESOP stock"?

I think you can do a rollover IRA, which doesn't have the same limits. I had a similar situation and was able to set one up through Fidelity - which also has my 401k, HSA, and stock trading accounts. I was able to deposit the full amount without any kind of tax or penalty.

Rollover IRA | Simplify Your Retirement Savings | Fidelity Investments

Discover the wide range of investment options, support, and guidance needed in choosing which Fidelity Rollover IRA is right for you.

www.fidelity.com

 

[onlyTheObvious]

Hawk Tuah crypto comes to mind

 

[SeaPA]

**Not an expert.

I guess it's up to how they categorized the "non-ESOP stock"?

I think you can do a rollover IRA, which doesn't have the same limits. I had a similar situation and was able to set one up through Fidelity - which also has my 401k, HSA, and stock trading accounts. I was able to deposit the full amount without any kind of tax or penalty.

Rollover IRA | Simplify Your Retirement Savings | Fidelity Investments

Discover the wide range of investment options, support, and guidance needed in choosing which Fidelity Rollover IRA is right for you.

www.fidelity.com

Yeah, it does depend on the nature of the esop. In some situations it can be done as a rollover into an IRA - but even when it can, it's not always the best move.

 

[OutbackBowl2017]

 

[Titanhawk2]

I am leaving my employee owned company for a new opportunity and I have about 190k of non ESOP stock they will be paying me out. They have the option of paying equally over five years or all at once and I am not sure yet which path it will be because my amount is right around that spot they may decide to pay out over time.

Regardless if it is a 190k check or the first of five 38k checks, what is the best thing I can do to tax shelter this and reinvest? I do not believe I can get out of the capital gains tax coming my way.

My biggest concern is I do not want to blow this little pot of income and I have serious concern that after taxes and maxing out an IRA, I will spend the remainder on strippers and blow, especially if it is a 38k check five times a year.

I have another 100k in ESOP but that is much simpler since I can roll it over into my new company’s 401k with the rest of my old company 401k.

I think you should be able to transfer to another IRA, it's already given to you in that form I believe. They caveat would be the 5 year payout because they may revalue it each year and in the end you may end up with less than the $190K (from experience)

 

[luvmyhawks]

Lots of questions here and you likely need to speak to a financial professional of some sort. What kind if stock options are the 190k? Restricted stock? ISO? 1244? There are lots of different forms of stock for smaller companies and all are treated differently for tax purposes.

Also. Look into that 100k esop. It might be eligible for what is called net unrealized appreciation. You really need to look much further into both of your stock options.

And congrats on the new job.