Non Qualified Stock Options (NQSOs)
With NQSOs, your employer grants you stock options on a specific date and you will not be able to exercise (purchase) the stock until the end of the "vesting period." Once your options are vested, you have the right to exercise the stock at a fixed price (the "strike price") set when you were granted the options. You're subject to ordinary income and FICA taxes on the difference between the market price and the “strike price when you exercise.
Current Shares
Navigate to to My Plan > Accounts and Assets
Add an Investment account.
Make sure to create a specific label such as "Ace Employee NQSO" so you can distinguish it from your 401(k).
Select the Capital Gains tax treatment (when you sell shares, gains/losses are taxed as capital gains.)
Enter the cost basis and update manually as needed.
Since NQSOs are invested in your company stock, you can set your rate of return on either:
An assumed equity return rate, or
Actual performance of your company’s stock (update periodically).
Future Shares
Navigate to to My Plan > Income
Add a job and give the job a descriptive name, “ACE Employee,” for example.
Add an income stream to represent the gross income from the NQSOs on the exercise date by selecting the same start and stop dates.
Add a contribution for the the net value you compute for the NQSOs.
Future Sales
Navigate to to My Plan > Money Flows
With NQSOs, you'll be subject to capital gains tax on any increase in value you realize when you ultimately sell the shares. To model the sale of the stock at a later date, enter a transfer from the "Ace Employee NQSO" to an after tax savings account with an Ordinary Income tax treatment on the date you plan to sell the stock. This transaction will incur long term Capital Gains tax but further withdrawals from the savings account will not.
There is a small amount of ordinary income tax that isn’t accounted for with this method, but this is the closest method currently available.