I would like to know whether it’s possible to convert my vested stocks into stocks/ETFs/Bonds without incurring the capital gains tax. I don’t mind the subsequent capital gains tax. Just if I can skip it when converting from RSUs to other instruments. Currently, the only option I see is to have them vest directly into a RothIRA/401K but the issue with that is they will forever be stuck in there until I get to retirement age. Also, I’m not sure if this is even possible. Does anyone know if it’s possible to vest RSUs directly into a Roth IRA/401K? If so, is it company agnostic? Please elaborate on how any of the above are possible. TC: 390K Edit: For folks interested in knowing about Exchange Funds - Exchange Fund Requirements Exchanged funds may require potential participants to have a minimum liquidity of $5 million cash to join and contribute. Exchange funds will also typically have a seven-year lock-up period to satisfy the tax deferral requirements, which could pose a problem for some investors. Still unclear on what qualifies you as a “concentrated shareholder”. Source: https://www.investopedia.com/terms/e/exchange-fund.asp
Now, if you have 2m+ in a single company stock you can look into swap funds to diversify (but iirc there's a 5 year no sell clause) w/o paying cap gains
That’s great to know! I’ll look into this. Thanks!
Just looked into this. It’s crazy how the government provides so many ways for rich to defer as many taxes as they can meanwhile someone who actually can benefit a lot from tax rebate gets none of these opportunities. It’s like the entire system is geared towards benefiting the rich since they control it. SMH.
There’s no capital gains tax if you sell right when they vest, just ordinary income. And then use income to max Roth/401k as desired
Right, you always have to pay income taxes on your RSUs. If you sell immediately, there's no capital gains on the RSUs because they haven't increased since you got them. You can then do anything you want with the proceeds from the sale
I guess, that’s one strategy. But don’t most companies vest at previous month average? I would still have to pay some if the stock is doing good. Right? Also if I believe in the company’s growth and want to convert later after reaping the benefits, I’m guessing, there’s no way out of that. Unless, I sell right away, contribute to Roth and then immediately buy again there. But that’s less than ideal.