{"type":"rich","version":"1.0","provider_name":"Transistor","provider_url":"https://transistor.fm","author_name":"Wealthyist","title":"Wealthyist E43 | Equity Compensation - What It Is, Tax Pitfalls, and Planning Tips","html":"<iframe width=\"100%\" height=\"180\" frameborder=\"no\" scrolling=\"no\" seamless src=\"https://share.transistor.fm/e/9f058448\"></iframe>","width":"100%","height":180,"duration":1152,"description":"In this episode of Wealthyist, host Dr. Brian Jacobsen speaks with Tom Berkholtz, Financial Planning Manager about Equity Compensation – what it is, why companies use it, the main types, tax pitfalls, and planning tips.Tom and Brian discuss why companies offer equity compensation, including its primary goal: to attract, retain, and motivate top talent (especially in tech/AI race – Google, Apple, Nvidia, etc.).Equity compensation can act as “golden handcuffs” via vesting schedules (e.g., 25% per year over 4 years or a 3-year cliff). The strategy can work for both public and private companies, but private-company equity is riskier (needs a liquidity event like IPO or buyout to have real value.Tom details the main types of Equity Compensation: Restricted Stock Units (RSUs) – where an employer gives you actual shares (not an option to buy).  IN that strategy, the RSU vests over 3–4 years → treated as ordinary income on vest date (shows up on W-2).  Tax trap: Employers often withhold only 22% federal tax; high earners (37% bracket) can owe big at tax time + possible underpayment penalty.  The conventional advice is to “Sell immediately after vesting” (because you already paid tax at the vest price). Tom says not always best — if you believe in the company and it’s not too concentrated, holding some can make sense.They then discuss Non-Qualified Stock Options (NSOs/NQSOs), which are the right (not obligation) to buy shares at a fixed “strike price” (usually within 10 years).  When you exercise and sell, a NSO, the bargain element (market price − strike price) is taxed as ordinary income.  Employer gets a tax deduction, which is sometimes why employers prefer NSOs over ISOs.Incentive Stock Options (ISOs) are less common now.  There's a potential for long-term capital gains treatment if holding-period rules are met.  Big catch: The bargain element is an AMT (Alternative Minimum Tax) preference item → can trigger AMT and create a huge surprise tax bill.  2025 may be a...","thumbnail_url":"https://img.transistorcdn.com/qGrVF3x5hFIhTcfRmZqwI5cWDYeStA3lwZ1z54k8q18/rs:fill:0:0:1/w:400/h:400/q:60/mb:500000/aHR0cHM6Ly9pbWct/dXBsb2FkLXByb2R1/Y3Rpb24udHJhbnNp/c3Rvci5mbS83MWRm/YWQ1NmRjOWIwNmNm/MjExZmE3MjViNTU0/Njk5NC5qcGc.webp","thumbnail_width":300,"thumbnail_height":300}