Have some questions on how to mitigate capital gains on my RSUs (almost all are long-term).

- Will retiring help (wait and sell next yr with lower income)
- Am I just stuck paying 20% no matter what / don't matter
- is Trump going to change / help with capital gains tax (I've read he mentioned it)

If there are strategies available and any tax / Fin planning experts willing to help, I can pay for your time.

We waited until we retired. You can sell a lot and still pay minimum tax. We only sold half and play covered calls and puts.

We have savings to get to 70 and the IRAs will be a tax problem when we have to drain them. Options income is a tax problem. Tax problems are good problems, compared with the alternative. We did not figure out how to avoid taxes.

In most cases, you can save some money if you wait until you retire, assuming your income drops when you do.

Though I don't have any RSUs, my wife and I have mostly qualified dividends and capital gain income in retirement. Her retirement income and our taxable portion of social security are mostly offset by losses from an S corporation (due to depreciation) such that we owe from zero to a couple of thousand dollars of income tax since we retired. A couple of years we even took distributions from traditional IRAs without it creating any tax. You can have nearly $130,000 in income, reduced by $30,000 or so for the standard deduction, and owe no income tax, as long as that income is long-term capital gain and qualified dividends. A few thousand more if both over 65.

It will all come down to what your post-retirement income looks like. Some folks, particularly those with debt or that like to do a lot of expensive things in retirement, take large amounts from IRAs and 401k accounts so their tax on the RSUs would be higher than those who don't.

We've used stock to donate to charity of choice over time. Take the fmv as of the donation date / transfer and no capital gains tax. We were donating anyhow so works great in years the stock is up!

You should check your company policy. I receive RSUs yearly and once they have matured, they are taxed 22%. My understanding is this is a federal limit and corp can't go over that. That said, if you are a higher tax bracket you will owe the difference for that year.

If you sell within 1st year of maturity date, then you owe normal income tax rate for any gains and if hold for over a year any gains are taxed at 20%. Agains, assuming you fall in higher tax brackets here.

Also remember about wash tax rule if you think you are selling at a loss. If you are awarded RSUs monthly or it's drawn monthly from paycheck, even a sell at a loss could be defined under tax wash rule.

Just make sure the lots you're donating have been held long term

This. They are taxed as ordinary income as soon as they vest. Sell them as soon as they vest and invest in line with whatever your overall retirement/investment strategy is.

mosdefn14 said:

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RSUs are taxed at ordinary income rates upon vesting. Unless your company stock is something you really want to own (at all/compared to a competitor/diversified portfolio, or at high concentrations), just sell and buy what you want. Then there's no Capital gains considerations.

I pretty well sell day one every time some vest and then punch rebalance to target weightings.

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Thanks. Yeah. I hold my company's stock.

DannyDuberstein said:

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This. They are taxed as ordinary income as soon as they vest. Sell them as soon as they vest and invest in line with whatever your overall retirement/investment strategy is.

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I did that the first couple of years I got RSUs....what a horrible move on my part. I work for AVGO and started getting RSUs end of 2017

If you like your company's stock and want to hold it, I'd consider a hybrid approach. Pretend that you don't work there. Now how much do you like the stock? What % of your portfolio are you willing to hold in one stock that you don't have complete control over? For me, that number was 10%. So, I managed my RSU's accordingly, selling a portion here and there to maintain that level. I didn't always sell immediately if I felt it was under valued or if there was an upcoming dividend that was meaningful.

mosdefn14 said:

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RSUs are taxed at ordinary income rates upon vesting. Unless your company stock is something you really want to own (at all/compared to a competitor/diversified portfolio, or at high concentrations), just sell and buy what you want. Then there's no Capital gains considerations.

I pretty well sell day one every time some vest and then punch rebalance to target weightings.

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This. I sell day one almost every time. You've already paid tax on it, and you already have enough of your life invested in the company (compensation, other RSU exposures).

But I've always worked at banks with slightly anemic stocks. If I worked at Nvidia, Tesla or Facebook, I might have a different risk tolerance.

I dont understand the sell right away strategy u less you hate the company you work for.

GenericAggie said:

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I dont understand the sell right away strategy u less you hate the company you work for.

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You don't have to hate the company you work for to not want a large portion of your compensation sitting in their stock long term.

GenericAggie said:

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I dont understand the sell right away strategy u less you hate the company you work for.

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It's the basic concept of diversification and spreading risk. My salary, my bonus, and my unvested RSU's are concentrated in one company. For investments I can choose, I want to invest in the rest of the stock market. I did not work for Enron but I did have a front row seat when it went down - it was fast, furious, and most of the company was in the dark.

Sidenote, I work for a Fortune 50 blue-chip. Very stable growth but even it can get a little volatile at times. And you never know when that one scandal or one development in your company/company's market changes the game. I also want to be a bit more aggressive while also spreading my risk.

There are great companies that are terrible stocks. There are great stocks that are terrible companies.

You ever had a role where 40% of your income was paid in company stock? Your portfolio can get offsides real fast.

Would have hated to be a long time employee who never sold my AA or GM or MER stock in 2007.

My fortune 100 company requires you to hold a certain amount of stock once you get to the VP level. I need to see how much more stock I would need to meet the requirement as I get closer to that.