Do you have ... Employer
have an emergency fund ? Know
If you do not have sufficient liquidity to cover the equivalent of at least 3-6 months of expenses necessary , this should be your priority. If something were to happen to your business, you might be out of work , while their employer shares and options would be worthless . Stock If you acquired shares option , consider exercising. If you have the same pattern that you can sell , consider doing so. Use the money to build your emergency fund . Employer
have a high interest debt ? Know
If the interest on its debt that is likely to win your share of the employer (5-7 % is a reasonable estimate ) , you may want to sell the stock and put the debt to . Stock
Correspond to the maximum of your 401 ( k ) ? Know
It is unlikely that the purchase of reducing the employer share is as valuable as his party and contribute at least enough to your retirement plan to maximize this game before buying shares of the company .
Having too many actions? Stock
In general , no stock should be more than 10-15 % of its portfolio.This is especially true of the shares of your employer because your job is already associated with this company . You also need to include it in the context of the allocation of shares of its total portfolio. In both cases, to sell at least enough shares or exercise enough options to make your exposure to a reasonable level and to reinvest the money into something more diverse. Stock
Access a share purchase plan ?
As long as you have set the last four points , you can enjoy discounts on the purchase of shares. You can always sell the stock and reinvest the proceeds later or use it to fund IRA contributions .
Shares that are passed by value ? Stock
Sale of shares , you may be eligible to use the losses to offset gains and other income , including up to $ 3k of revenue . Net (loss of more than $ 3k can be carried forward indefinitely) .
Shares had appreciated less than a year ?
If so , you may want to hold on to them until the one year mark before selling. This is because you can take advantage of a tax rate lower capital gains income. Otherwise, you end up having to pay taxes on the higher ordinary income rate . Stock
Want to pay taxes on the product now or later?
Prior to the exercise of options or sale of shares , it is important to understand how are taxed . For example , when you exercise Appreciation Rights ( SAR ), which is basically receiving a cash payment based on the amount of the share price rising over a period of time, and like other cash payments from your employer, you must pay ordinary income tax on profits. Stock Also, when you exercise stock options not - qualified , which give the right to buy shares at a time " exercise price " given , you have to pay ordinary income tax on the difference between the fair market value of the shares and the exercise price of the option. If you put it into a higher tax bracket , you may want to exercise for more than a year. If you expect your tax bracket is lower next year , you can wait and exercise. Stock
Although the exercise of stock options ( ISO ) does not create an immediate tax liability , the difference between the fair market value of the shares and the exercise price of the option could include income from the Alternative Minimum Tax (AMT ) . (You can learn more about how ISOs are taxed here) If you could be subject to the ATM or increase AMT liability , you may want to wait another year for the exercise . Stock
Appreciated stock from your employer pension ?
When you leave the company, you can initiate the actions of its pension plan and paying a tax rate lower capital gains of the gain (assuming you have held the shares for at least 12 months). However, you will lose this benefit if you sell shares in the retirement account or roll into an IRA . This could be a reason to delay the sale of shares , if you get out of the business. Stock
As with most financial planning , the first step in the use of their stock purchase plans is to start with your goals and how they can help you achieve them . So if you decide to exercise their options and sell shares or buy more shares through a stock purchase employer plan , you should know how they fit into your investment portfolio and how they can be managed to minimize taxes . After all , knowledge is half the battle. Stock
Liz Davidson is CEO of , the leading provider of impartial advice to employers on national financial education , issued by Financial Finesse staff - Certified Financial Planner ™ professional . For additional financial tips and insights , follow Financial Finesse on Twitter and become a fan on Facebook .
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