• If you don’t own stock in your employer, inquire about ways to do so.

• If you already own company stock, total up the dollar value of how much you own across the various ways/accounts to own it that apply to you.

• Divide this number by your total investment portfolio value

• Also divide your total stock value by your net worth to determine if you are maybe exposing yourself to too much company-specific risk through your employer.

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Employer Stock Shares in a Taxable Account

• You can always elect to buy shares of your company’s stock by investing in a taxable brokerage account or inside a Roth IRA or Traditional IRA.

• Investing in individual stock is good inside a taxable account where you could claim losses should the investment not go well long term or opportunistically as part of loss harvesting or selling at the lower long term capital gains rate.

• You can setup weekly, monthly, etc. purchases to be made and funds directly withdrawn from your checking account to simulate a payroll deduction-like contribution.

Employer Stock Fund Within Your 401k

• You can purchase shares of individual stock within your 401k or sometimes your plan will offer a fund which holds basically shares of stock plus cash instead.

• Advantages are the dollar cost averaging of more regular purchases vs. ESPP plan which may only allow for quarterly purchases and longer hold periods.

• There may not be a discount available, it depends on the plan.

Employer Stock Purchase Plan

• This program allows you to buy your company’s stock at a discount, usually up to 15% or so, through payroll deductions.

• Holding period requirements and tax consequences are key considerations when time to sell.

Restricted Stock Units Plan

• This is stock based employee compensation.

• Shares are promised at a future date when company goals or milestones are met.

• After vesting, the shares are delivered to a brokerage account on behalf of the employee. Some shares are often withheld to pay taxes due.

• An important consideration is if the withholding is adequate so you don’t owe significant taxes next year.

• Another is if you want to hold those shares or sell them as the arrive.

Non-Qualified Stock Option Plan

• Offers the ability to purchase company stock at a predetermined price but must be exercised by the expiration date.

• More common in startups where future prospects are less certain but also well rewarded if it succeeds.

• Income tax is due on the value of the grant price minus the price of the exercised option.

Incentive Stock Option Plan

• Common compensation for corporate management

• Rather than shares, this is granting rights to company stock at a discounted price at a future date.

• Can be a form of “golden handcuffs” for executives and leaders, linking the tenure of a leader to reaching performance milestones.

• A common vesting period is least two years and then a holding period of more than one year can be required before selling.

• This does allow for preferred tax treatment over ESPP plans often.

Employer Stock Ownership Plan

• There are many versions of these plans but essentially a company is offering ownership of shares usually contingent upon meeting a vesting requirement.

• These can offer attractive opportunities to own privately held company stock and sometimes have tax advantages.