Your Company Stock Made You Money. Now What?

Oct 13, 2026 · Connor Low, CFP ®, EA 

It probably started small. A stock grant in your offer letter that you didn’t think much about. Then a few more grants, a promotion or two, and a share price that kept climbing. Somewhere along the way, “nice bonus” turned into “a big chunk of my net worth.”

That is a good problem to have. It opens doors: retiring earlier, buying a house, helping your kids, or just having the option to walk away from a job that is burning you out.

But it also raises a question most people avoid: how much of your financial future should keep riding on one company?

Selling some of your company stock is not a vote of no confidence in your employer. It is recognizing that the money you built now has a more important job than growing. Its job is funding the life you actually want.

First, What Do You Actually Own?

“Company stock” is not one thing. Most people have a mix of three or four types, each taxed differently, and the mix is where plans go sideways. Here is the version we walk every new client through.

RSUs, or restricted stock units, are shares your company hands you on a schedule as they vest. The value is taxed as regular income the moment they vest, whether you sell or not. Holding on afterward does not delay the tax. You already paid it. This is the one people get wrong most, and it is why so many of our clients walk in with a pile of RSUs they thought they were “saving tax” by keeping.

ISOs, or incentive stock options, give you the right to buy shares at a set price, with favorable tax treatment if you follow the rules. The tax usually comes at sale, but exercising a lot in one year can trigger the alternative minimum tax, or AMT. We run the AMT math before anyone exercises. Sometimes selling early on purpose, what the tax code calls a disqualifying disposition, actually beats holding for the special treatment and eating the AMT bill. The “wrong” move is the right one more often than people expect.

NSOs, or non-qualified stock options, are the same basic idea without the ISO perks. When you exercise, the spread between your purchase price and the market price is taxed as regular income right then. Simpler, but the tax hits immediately. If your company allows early exercise, an 83(b) election filed within 30 days can lock in a tiny basis and turn future growth into capital gain. Miss that window and it is gone for good.

An ESPP, or employee stock purchase plan, lets you buy shares through payroll, often at a 15% discount. That discount is real money. When you sell, part of the gain is income and part is capital gain, and the split depends on whether you hit both holding periods. We map those dates for every purchase so you are not guessing at tax time.

The trap is treating all of these the same. A plan that works for your RSUs can backfire on your ISOs. We sort every award by type before anyone decides anything.

One more split that matters: vested versus unvested. Unvested shares are future compensation, not money you can spend today. We track them separately and we never let them quietly prop up a plan.

The Risk Is Bigger Than Your Brokerage App Shows

Most people check their exposure by looking at one number: the company shares sitting in their account. That number is almost always too low.

Your paycheck comes from the same company. So do your bonus, your benefits, and your next round of grants. If the business hits a rough patch, your portfolio and your income can take the hit in the same quarter. FINRA flags this exact combo of investment risk plus employment risk as a problem for employees with big stock positions.

Then there is the sneaky overlap. Your 401(k), your brokerage account, and that index fund you set and forgot all look like separate buckets. But broad-market funds already own your employer’s stock. Tech and growth funds often own a lot of it, plus its competitors. The number of accounts you have tells you nothing. The actual holdings do.

So a real check asks two questions: how much company stock do you own today, and how much more is coming through future vesting?

Forget the “Right Percentage.” Ask What a Drop Would Change

There is no magic number. A 25% position might be fine for one household and a disaster for another. The useful question is not “what percent should I hold?” It is:

If this stock fell by half, what would change about my life?

Would retirement get pushed back? Would the house budget shrink? Would you have to stay in a job you were planning to leave? And would all of that get worse if your income dropped at the same time?

Here is a hypothetical. A household has $3 million invested, including $1.2 million in employer stock. That is a 40% position. Compare it to the same household holding 10%.

At 40%, a 50% drop in the stock wipes out $600,000, which is 20% of the entire portfolio. At 10%, the same drop costs $150,000, or 5% of the portfolio. The upside works the same way. If the stock rises 50%, the 40% position gains $600,000 and the 10% position gains $150,000.

This is a simplified illustration, not a forecast or a recommendation. It assumes the rest of the portfolio stays flat and ignores taxes and trading costs. In real life the other investments can fall too.

The bigger position wins more if the company keeps winning. It also puts far more of your life on the line if it doesn’t. The question is whether the extra upside is worth risking goals that are already within reach.

Taxes Matter. They Just Don’t Get the Final Vote

A big unrealized gain makes selling feel expensive. Fair. But “I don’t want to pay capital gains tax” is a feeling, not a strategy. We have an EA and a CPA in-house, so we run the actual numbers instead of guessing.

Start with what would really be taxed. For stock in a taxable account, the gain is the difference between what you sell for and your cost basis, not the whole value of the shares. Hold for more than a year and you generally get the lower long-term rate.

RSUs trip people up here. When your RSUs vest, the value is taxed as regular income right then, whether you sell or not. Keeping the shares does not delay that bill, and the shares your company withheld often do not fully cover it. If a share vests at $100 and you sell it later at $102, you owe capital gains on $2, not $102.

Here is the part that costs people real money: brokerages frequently report RSU basis as $0 on your 1099-B. If you file that as-is, you pay tax on the full $102, which means you are paying tax twice on the same $100. We catch this on nearly every new client’s prior return. It is one of the first things we fix.

So selling freshly vested RSUs is usually not a big tax event. Treating it like one is the most common reason people end up overconcentrated, and it is a mistake we rarely let clients make.

ISOs and ESPPs are different animals. ISOs come with AMT and a two-part holding-period test. ESPPs have their own qualifying-disposition rules. We model the disqualifying disposition on every ISO exercise because sometimes paying ordinary income tax now beats a surprise AMT bill later. Don’t copy your RSU strategy onto either one.

When there are big gains to realize, we spread them across tax years against your projected income, bracket thresholds, and any capital losses you can harvest. A sale that costs 23.8% in one year can sometimes cost 15% if it is split across two. That is not clever. It is just planning ahead.

The goal is to compare the real tax cost of selling against the real risk of holding. Not to avoid every dollar of tax at any price.

You Don’t Have to Sell It All

This is not keep everything or dump everything. Most good plans land somewhere in the middle, and they split the problem in two.

New shares. Set a rule for what happens every time a grant vests. Maybe you keep 30% and sell 70%. Maybe you sell all of it and redirect the cash to a goal. The point is that each vesting event becomes a decision instead of an autopilot addition to the pile.

Shares you already own. These usually carry the big gains, so a staggered approach often makes sense. Sell in planned chunks across tax years. Direct new savings somewhere else so the position shrinks as a percentage over time. Neither trick removes the risk on the shares you keep, and a slower schedule means living with that risk longer.

Before selling anything, look at your individual tax lots, holding periods, expected income this year, and any capital losses you can use to offset gains. If you harvest losses, mind the wash-sale rule: no buying the same or substantially identical stock within 30 days before or after the sale.

And decide where the money goes before it lands. Cash for next year’s tax bill or a down payment has a different job than money that needs to last 30 years of retirement.

This is where our CFA earns his keep. Swapping your employer’s stock for a hot sector fund that owns your employer and all of its competitors is not diversification. It is the same bet with a different name. When we rebuild the exposure, we look through to what the replacement actually holds, how correlated it is to your company and your industry, and whether your paycheck already covers that risk. If you work in tech, your portfolio probably should not be overweight tech too. The goal is a mix that does not fall apart on the same bad news that would hurt your career.

A solid plan answers four questions. How much company exposure are we okay keeping? What happens to every future grant when it vests? Which existing shares do we sell, and on what schedule? And what is the money for once it is sold?

Sometimes Slow Is Right. Sometimes Selling Isn’t Even an Option Yet

Not everyone needs to move fast. If your essential goals are already covered by other assets, holding a larger position for extra upside can be a reasonable choice. If your retirement or a home purchase leans heavily on this stock, you probably need to move sooner. Same account balance, very different situation.

Then there is the question of whether you are even allowed to sell.

If you are an insider or regularly see material nonpublic information, trading windows and blackout periods apply, and the legal exposure goes beyond the company calendar. A Rule 10b5-1 plan can let you schedule future sales in advance, but it has real conditions: you adopt it before you know anything material, and there is a cooling-off period before trades begin. It is not a loophole. Set it up with your company’s legal or compliance team.

Private company? Different problem. The shares may be hard or impossible to sell, and a buyer may not exist when you want one. A 409A valuation or a headline from the last funding round is not cash. Plan around what you can access today, and treat a future liquidity event as a scenario, not a guarantee the plan depends on.

The Cash Test

Here is a gut check before you decide to hold a big position:

If that same amount were sitting in cash today, would you put all of it into your employer’s stock?

It is not a perfect comparison. Selling has tax consequences, and trading restrictions can limit your options. But it separates an actual investment decision from just continuing to own what you already have.

You don’t need to believe the company is in trouble to decide your exposure is too high. And diversification is not a promise of better returns. A diversified portfolio can trail a single hot stock for years, and it can still lose money when markets fall. Its job is to make sure no single company can derail your plan.

The goal is a decision you can stand behind no matter what the stock does next.

Turn Company Success Into Flexibility

At Iarann Wealth, we treat employer stock as one piece of your whole plan, not a standalone trade. Our team includes a CFP, an EA, a CPA, and a CFA, which means the tax modeling, the portfolio work, and the actual financial plan all happen in the same room. You are not getting a plan that says “talk to your accountant.” We are the accountant.

It starts with four things: what you own, what is still coming, what you are allowed to sell, and what a serious drop would change. From there we build a coordinated approach to taxes, concentration, and where the proceeds go, down to which lots to sell in which year.

The answer might be keeping a meaningful stake. It might be gradual sales or a quicker reduction. What matters is that the decision comes from the plan, not from inertia, a price target you picked years ago, or a fear of paying any tax at all.

Your company stock helped build your wealth. Good planning helps decide how much of it should stay with the company, and how much should go to work on the rest of your life.

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About Iarann Wealth

At Iarann Wealth, we believe managing wealth isn’t just about numbers—it’s about purpose, clarity, and confidence for the road ahead. Whether you’re building a business, growing your investments, preparing for retirement, or navigating major life decisions, our mission is to help you make smarter financial choices that align with your values and goals.

We serve high-income earners, business owners, tech professionals, and families with comprehensive, relationship-focused financial planning. From tax strategy and cash flow management to retirement, estate, and exit planning—we deliver actionable strategies designed to support your long-term success.

Our Services Include:

• Cash Flow & Investment Planning
• Tax Strategy & Risk Management
• Retirement & Estate Planning
• Education & Insurance Planning
• Business Exit & Asset Protection Strategies
• Real Estate & Major Life Decision Support

We offer transparent pricing through either an Assets Under Management (AUM) model or flat-fee financial planning, providing flexibility to meet your unique financial needs.

This material is for educational purposes and is not individualized investment, tax, or legal advice. The hypothetical illustration is not an actual client experience or a projection of investment performance. Investing involves risk, including loss of principal. Diversification does not guarantee a profit or protect against loss. Consult your advisory, tax, and legal professionals before implementing a strategy.