Turn Your Equity Compensation Into a Retirement Strategy

Working at Amazon, Microsoft, Google, or a funded Seattle-area startup means a meaningful share of your total compensation arrives as equity, and every vesting event carries both a decision and a tax consequence. At A5 Financial, RSU and equity compensation planning is a core specialty, built around the specific grant structures, vesting schedules, and benefit programs your employer uses.

The Equity Compensation Decisions That Can Define Your Financial Future

Most financial advisors treat stock grants as a line item. We treat them as a planning event. The gap between the two approaches shows up in your tax bill, your retirement timeline, and how much of your equity you actually keep.

 

Here is what we address with every equity compensation client:

 

  • RSU tax timing: The IRS withholds at a flat 22% supplemental rate when your shares vest — but if you are earning $300,000 or more, your actual marginal rate is likely 32–37%. That gap does not correct itself. It shows up as a balance due in April, often for thousands of dollars. We model your vesting calendar in advance and recommend estimated payments or timing adjustments to close it before it costs you.
  • ESPP participation strategy: Employee Stock Purchase Plans offer a built-in discount, but the tax treatment varies based on how long you hold the shares after purchase. We help you decide when to sell, how to report the income, and how ESPP proceeds fit into your broader plan.
  • ISO vs. NSO exercise timing: Incentive Stock Options and Non-Qualified Stock Options are taxed differently, and exercising at the wrong time — or in the wrong year — can trigger AMT exposure or push ordinary income into a higher bracket. We model the scenarios before you act.
  • Concentrated stock diversification: Holding a large position in a single employer's stock is a risk most tech employees understand intellectually but struggle to reduce systematically. We build a multi-year diversification plan that reduces concentration without triggering unnecessary tax events in any single year.
  • Mega-backdoor Roth contributions: Many Seattle-area tech employers allow after-tax 401(k) contributions that can be converted to Roth — a high-value strategy for high earners that most advisors never surface because they are not familiar with it. If your plan allows it, we will find it.
  • Net Unrealized Appreciation (NUA): For clients with employer stock inside a 401(k), NUA treatment can result in significantly lower taxes than a standard rollover at retirement. It applies in specific circumstances and requires advance planning — we work with it regularly.
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Ready to Turn Your Equity Into a Plan?

Schedule a consultation with one of our advisors to discuss your equity compensation strategy and how it fits into your broader financial plan.

Amazon RSU Planning

Amazon's back-loaded vesting schedule — 5% in year one, 15% in year two, 40% in year three, 40% in year four — means many employees spend years in a relatively low-equity phase before a significant income spike arrives. We plan for that inflection point in advance, building a year-by-year tax projection that accounts for the vesting curve, the withholding gap, and how the proceeds should be deployed when the larger tranches land.

Microsoft and Google Equity Planning

Microsoft's ESPP offers a 10% purchase discount with a six-month offering period — straightforward in structure, but the holding period decision and tax reporting require attention. Google's total compensation packages often combine RSUs with performance bonuses in ways that compress income into specific years. We stay current on how these programs are structured because our client base depends on it.

Startup and Pre-IPO Equity

Funded startups introduce a different set of variables: early exercise elections, 83(b) filing windows, and the question of what to do with ISO grants when a liquidity event may be years away. If you are holding pre-IPO equity, we can model the scenarios — exercise now, wait, or let options expire — based on your current tax position and retirement timeline.

Equity Compensation Is Not a Silo — It's Part the Whole Plan

Equity proceeds do not exist in isolation from the rest of your financial picture. At A5, we build a multi-year tax map that aligns your vesting events, exercise windows, and RSU sales with your retirement income strategy, Roth conversion opportunities, and investment allocation.

 

When a large tranche vests, we are already looking at three questions simultaneously: how much tax is owed and when, how the proceeds should be invested or deployed, and whether this is a year to accelerate a Roth conversion or hold back. Stock proceeds are intentionally integrated into the income ladder we build for retirement — not treated as a windfall to figure out after the fact. That integration is what separates a transaction from a plan.

A Boutique Firm Built for the Seattle Tech Community

John Carruthers, CFP®, and Neil Fenning, CFP® work directly with every A5 client. There is no handoff to junior staff after the first meeting. For tech employees with complex equity situations, that continuity matters — your advisors need to know your vesting schedule, your tax position, and your retirement goals well enough to act when a decision window opens.

 

A5 operates as a fee-based fiduciary, which means no product commissions and no incentive to recommend strategies that benefit anyone other than you. Our client base is concentrated in the Seattle–Eastside corridor — Bothell, Bellevue, Kirkland, Redmond, and surrounding communities — and our equity compensation work reflects the specific programs and structures that tech employees here encounter. That is not something a national generalist firm can replicate.

Frequently Asked Questions About Equity Compensation Planning

  • What is the difference between RSUs and stock options, and does it affect how I plan?

    RSUs are grants of actual shares that vest over time and are taxed as ordinary income when they vest — you don't pay anything to receive them. Stock options give you the right to purchase shares at a set price, and the tax treatment depends on whether they are ISOs or NSOs, when you exercise, and how long you hold the shares. The planning approach for each is meaningfully different, which is why we look at your specific grant structure before making any recommendations.

  • Why do I often owe more taxes in April after my RSUs vest?

    When RSUs vest, your employer withholds taxes at the IRS supplemental flat rate of 22%. If your total compensation puts you in the 32–37% marginal bracket, that gap doesn't get corrected until you file — and it can add up to thousands of dollars owed. We model your expected vesting income each year so you can make estimated payments or adjust withholding before April arrives.

  • Can I still contribute to a Roth IRA if I work in tech and earn a high income?

    Roth IRA contributions phase out at higher income levels — in 2024, the limit begins phasing out around $146,000 for single filers and $230,000 for married filing jointly, which rules out direct contributions for many tech employees. However, a backdoor Roth IRA conversion is available regardless of income, and your workplace Roth 401(k) has no income restrictions at all, making it a straightforward way to build tax-free retirement savings even at high earning levels. We help you identify which combination of accounts makes the most sense given your vesting income and overall tax picture.

  • Should I sell my company stock as soon as it vests?

    There is no single right answer, but concentrated exposure to a single employer — especially one that also provides your paycheck — carries real risk that many people underestimate. We look at your total financial picture, including how much of your net worth is already tied to your employer, and help you build a disciplined diversification plan that balances tax efficiency with reducing concentration risk.

  • How does equity compensation planning connect to my retirement strategy?

    Vesting events are planning opportunities, not just income events. We build a multi-year tax map that aligns your RSU sales, exercise windows, and ESPP proceeds with your retirement income timeline, Roth conversion strategy, and investment allocation — so the proceeds from your equity are working toward your long-term goals rather than simply landing in a brokerage account without a plan.