Qualified Small Business Stock: A Powerful Tax Planning Opportunity
Things have been…interesting…at Meta since the news about layoffs first emerged in November of 2022. The 11,000 staffers last year combined with an additional 10,000 as of March 2023, represent approximately 25% of tech giant’s headcount. If you are one of the remaining employees still working with Meta, the past two quarters have likely been destabilizing. Assuming you’ve been with the company since before the layoff announcements, you’ve witnessed a substantial number of your colleagues, teammates, and even friends losing their jobs. It’s safe to assume you’ve lost sleep wondering whether you’re next…and more to the point, if you are, what happens then?
Our Five-Step Framework
At Cerity Partners, experience has taught us that a financial plan can provide a framework for managing diverse situations, whether you’re strategizing how to make it through a temporary rough patch or planning for a life-changing windfall. Here are the steps we recommend to balance competing priorities and make informed decisions now and going forward.
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1
Take stock
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- How much did you receive? How will it be paid? RSUs, NSOs, ISOs, and restricted stock may have different tax implications.
- Are you saving enough, based on conservative assumptions about company stock performance? As the saying goes, “if the stock does well” isn’t a financial plan.
- What is the estimated tax liability? What can you do to minimize it prudently?
- Where will you put the money until you have a plan?
- What are your short- and long-term financial needs and goals?
- Do you have a trusted team of advisors who can help you manage your finances?
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2
Make an investment plan
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- How much should you set aside for living expenses, taxes, and other shorter-term goals?
- What type of investment return do you need to accomplish your longer-term goals?
- What level of volatility are you comfortable with when investing?
- How can you restructure your portfolio (asset allocation and location) to maximize after-tax returns?
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3
Write an risk management checklist
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- How much should you set aside for living expenses, taxes, and other shorter-term goals?
- What type of investment return do you need to accomplish your longer-term goals?
- What level of risk are you comfortable with when investing? As a tech worker, are you courting unnecessary risk by over allocating to technology stocks due to the familiarity bias?
- Whether by equity compensation, acquisition, or IPO, do you have a concentrated position or windfall that needs to be actively hedged, managed, or monitored?
- How can you restructure your portfolio (asset allocation and location) to maximize after-tax returns?
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4
Consider your estate-planning priorities
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- Are there any new or unique assets that need to be addressed from an estate-planning perspective?
- Do your estate planning documents accurately reflect your wishes?
- Should you consider setting up a trust?
- Who will manage your finances and make health care decisions if you’re unable to do so?
- What, if any, strategies should be used to minimize future estate taxes?
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5
Think about philanthropic planning
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- Do you want to pay for a loved one’s education? If so, how (and how much) will you pay?
- How will you handle requests from loved ones to borrow money?
- How much of your new wealth do you want to allocate to charitable gifting?
- What strategies make the most sense for your charitable gifts?
We’ll Get Through This Together
The uncertainty and stress of the recent Meta experience have left many employees grappling with difficult questions about their future employment and financial stability.
By taking proactive steps to plan for new opportunities and navigate the shifting landscape of the tech industry, you can position yourself for success and emerge stronger from this experience. So, what’s your plan? The experts at Cerity Partners are here to help you consider your options and take the necessary steps to achieve your goals. Don’t let uncertainty hold you back – take action today and start building a brighter future for yourself.
Meet Myles VanderWeele
Myles is a Partner based in the San Francisco office. He provides investment and financial planning advice to help clients achieve their short- and...Read more
Meet Myles
Meet Dustin Ribergaard
Dustin is a Principal based in the San Francisco office. As a Client Experience Director, he is a liaison between prospective clients and the...Read more
Meet Dustin
Cerity Partners is not contracted with, endorsed by or affiliated with Meta.
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