Employer Stock Options
These instructions refer to employer stock options that are exercised upon vesting.
The spread on ISOs isn’t subject to payroll taxes and ISOs are taxed when you exercise them and/or when you sell them.
For this reason, we recommend creating an after tax account with the Capital Gains tax treatment, creating a lump sum pension for the value of the ISOs coming into your plan, and directing the lump sum pension to the after-tax account as follows:
STEP 1: Navigate to to My Plan > Accounts and Assets and add an after-tax account with the Capital Gains tax treatment
Add a savings account
Navigate to My Plan > Accounts and Assets
Press Add an account ➕
Select Investment/Savings/Checking account
Select manual entry
Give the account a descriptive name, "ACE Employee ISO," for example
Enter $0 for the balance
Select Capital Gains as your tax treatment
Enter the $0 for the Cost Basis
Enter 0 for the turnover rate
Select your optimistic and pessimistic rates of return
STEP 2: Navigate to to My Plan > Income > Pensions
Press add a pension ➕
Select lump sum
Give the pension a descriptive name, “ACE Employee ISO,” for example
Enter the value of the ISOs coming into your plan
Enter the date of the grant
Direct the lump sum pension to the new after-tax account
Select No for the tax treatment