FAQ
What should I do first when planning a career transition with equity comp?
Start by inventorying every equity grant and rule set: RSUs, ISOs, NSOs, ESPP, deferred comp, and any post-termination exercise windows. Then model tax outcomes across multiple scenarios (stay, leave, negotiate, delay exercise, accelerate sales) so decisions are math-driven, not emotional.
How do I avoid a surprise tax bill from RSUs during a job change?
RSUs are typically taxed as ordinary income at vesting, regardless of whether you sell immediately. The key is to map vesting dates against your transition timing, bonus timing, and any sign-on comp, then plan withholding and sales strategy so liquidity matches the tax bill.
When does it make sense to exercise ISOs during a transition?
Some people consider exercising ISOs in lower-income years to potentially reduce AMT exposure and start the holding period clock earlier. Whether this helps depends on the spread, AMT exemption phase-outs, cash needed to exercise, and your ability to hold the shares through volatility and liquidity constraints.
Are NSOs treated differently than ISOs during a job change?
Yes. NSO exercises generally create ordinary income on the spread at exercise, which can be a major tax event. This is why timing, withholding, and liquidity planning matter. The âbestâ move depends on share price trajectory, cash flow, and whether you intend to hold or sell.
What is the biggest mistake people make with equity when they leave a company?
Missing deadlines. Post-termination exercise windows, expiration dates, and blackout periods can force bad decisions or eliminate options entirely. A transition plan should include a calendar of hard deadlines and a liquidity plan to execute before choices disappear.
Does moving to a no-tax state eliminate tax on equity compensation?
Not automatically. Many states tax equity based on where the compensation was earned (sourced), not where you live on the exercise or vest date. If you earned equity while working in a high-tax state, that state may still claim a portion of the income even after you move.
How do I establish domicile correctly before a liquidity event?
Domicile is proven through actions and documentation. Common steps include updating your driverâs license, voter registration, primary residence, and where you spend time, plus aligning banking, medical providers, and key records. The specifics depend on the states involved and the timing of the equity event.
How can consulting income help during a career transition?
Predictable income can reduce pressure to sell equity at the wrong time and can smooth your tax picture across years. It also helps you plan benefits, cash reserves, and timing for exercises or sales without relying solely on market conditions.
What should I track during a transition to stay audit-ready?
Keep a clean record of grant agreements, vesting schedules, exercise confirmations, brokerage statements, withholding, and where you lived and worked during each equity earning period. For state taxes, track dates and location details carefully because sourcing rules can be fact-dependent.
How does Tailored Wealth help with a career transition plan?
We build a rules-based transition model that coordinates equity timing, tax-year strategy, liquidity layers, and state-tax positioning. The goal is to reduce downside (missed deadlines, forced selling, avoidable taxes) and increase control so your next chapter is financially engineered, not improvised.