Mistakes to Avoid with Employee Stock Plans

Employee stock purchase programs and stock options are excellent opportunities to help build financial wealth. When these are managed properly, the benefits can help pay for a number of things for employees, including vacation time, retirement, college expenses and more.

However, there are some investors who become confused. They don’t pay attention to various critical dates and don’t properly manage the employee stock options. As a result, it may be necessary to utilize employee plan services. These can help you avoid mistakes. Some of the most common are included below.

Letting the Money Stock Options Expire

The stock option grant offers an opportunity to purchase a predetermined number of shares of the employer’s company stock at a certain price. In most cases, there’s a vesting period that ranges from one to four years, and in some cases, up to 10 years to exercise the options to purchase the stock.

Third-party employee plan services can help you avoid missing this time period. This ensures you can get the stock you are entitled to receive.

Not Fully Understanding the Tax Consequences of the ISO

There are two types of stock option grants: NSOs and ISOs. Many people don’t fully understand the tax consequences related to the ISO. This is something else the third-party employee plan services can provide assistance with.

Being informed is the best way to protect your rights. If you want to purchase your stock options, it’s a good idea to use the information here. When you know the most common mistakes, you will be prepared to avoid them.

If you need more information, be sure to visit the Colonial Stock Transfer website. The information here will help you along the way.

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