Strategy for upcoming $3M windfall

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andreiz
Posts: 35
Joined: Thu Jan 09, 2014 12:14 am

Strategy for upcoming $3M windfall

Post by andreiz » Tue Jan 31, 2017 6:48 pm

I posted here a couple of years ago asking for portfolio help and implemented some suggestions based on the feedback. However, there’s a big financial event coming up that forces me to ask for your help again.

The company I’ve been at for the last few years (A) has recently been acquired by a much larger public company (B). I was one of the earlier employees, so am anticipating a fairly significant windfall, about $3M pre-tax if all the options/RSUs are cashed out once the deal closes in a couple of months. I have already read the windfall wiki and understand the importance of not rushing things. I am working on this with my CPA, but I wanted to ask for help on some decisions that could affect the outcome and tax burden, so I understand them well myself.

I’ll start with my current financial profile and put the questions I have below that.

Basic Info
Annual income (2016): $205K
Emergency funds: enough to cover 3-4 months of expenses
Debt: $566K remaining on a mortgage (5/1 ARM, 2.75% interest with 2 years until the first adjustment), house worth about $835K according to Zillow/Redfin
Credit cards are paid off every month (no persistent debt)

Tax Filing Status: Single
Tax Rate: 33% federal, 9.3% state
State of Residence: CA
Age: 40
Desired Asset allocation: 70% stocks / 30% bonds (flexible on this)
Desired International allocation: 30-40% of stocks (including EM)

Current portfolio
Approximate size of the total invested portfolio is $300K.

Taxable at ETrade
18.5% Apple (AAPL)
18.4% Facebook (FB)
10.1% American Airlines (AAL)
1.1% Amazon (AMZN)
0.6% AT&T (T)
2.9% (cash)

401k
5.7% Vanguard Total Intl Stock Index Admiral (VTIAX) - 0.12%
7.5% Vanguard Small Cap Index Admiral (VSMAX) - 0.08%
7.5% Vanguard 500 Index Admiral (VFIAX) - 0.05%

Rollover IRA at Vanguard
7.9% Vanguard FTSE Emerging Markets ETF (VWO) - 0.15%
4.8% Vanguard REIT Index ETF (VNQ) - 0.12%
4.6% Vanguard Total Stock Market ETF (VTI) - 0.05%
2.4% Vanguard FTSE Developed Markets ETF (VEA) - 0.09%
1.2% Vanguard 500 Index Fund Investor Class (VFINX) - 0.17%

Roth IRA at Scottrade
2.8% Vanguard Total International Bond ETF (BNDX) - 0.12%
2.6% Schwab US Aggregate Bond ETF (SCHZ) - 0.05%
1.2% Vanguard FTSE Emerging Markets ETF (VWO) - 0.15%
0.4% (cash)

Contributions
$18,000 to company 401k (no company match)

Funds available in 401k
T. Rowe Price Retirement Income R (RRTIX) - 1.07%
T. Rowe Price Retirement 2010 R (RRTAX) - 1.10%
T. Rowe Price Retirement 2020 R (RRTBX) - 1.19%
T. Rowe Price Retirement 2030 R (RRTCX) - 1.25%
T. Rowe Price Retirement 2040 R (RRTDX) - 1.28%
T. Rowe Price Retirement 2050 R (RRTFX) - 1.28%
AllianzGI NFJ International Value Instl (ANJIX) - 0.93%
American Funds EuroPacific Gr R4 (REREX) - 0.85%
Mutual Global Discovery Fund A (TEDIX) - 1.32%
Oppenheimer Developing Markets Y (ODVYX) - 1.05%
Vanguard Emerging Mkts Stock Idx Admiral (VEMAX) - 0.15%
Vanguard Total Intl Stock Index Admiral (VTIAX) - 0.12%
Virtus Foreign Opportunities A (JVIAX) - 1.45%
Vanguard REIT Index Admiral (VGSLX) - 0.12%
T. Rowe Price New Horizon (PRNHX) - 0.80%
Vanguard Small Cap Index Admiral (VSMAX) - 0.08%
Janus Enterprise S (JGRTX) - 0.93%
Vanguard Mid Cap Index Fund Admiral (VIMAX) - 0.08%
Victory Established Value A (VETAX) - 1.06%
BlackRock Equity Dividend A (MDDVX) - 1.00%
Fidelity Contrafund (FCNTX) - 0.74%
Vanguard 500 Index Admiral (VFIAX) - 0.05%
BlackRock High Yield Bond BlackRock K (BRHYX) - 0.54%
Metropolitan West Total Return Bond M (MWTRX) - 0.67%
Vanguard Inflation-Protected Secs Adm (VAIPX) - 0.10%

Questions
  1. It’s unlikely I will stay at company B after the payout. I am hoping to invest the proceeds into a short term portfolio and take 4-6 months off to travel and figure out what I want to do in the future, i.e. go back into tech, consulting, etc. What kind of things should I look at to get some fixed income and safety – short-term bonds, T-bills, something else?
  2. Should I keep Rollover IRA or transfer money to 401k while I’m still employed? It interferes with my ability to do Backdoor Roth conversions, but if I my income is going to be lower than Roth limit next year, that might not matter?
  3. The structure of the deal is such that the exercised options will be paid in cash and the unexercised options will turn into company B options that can be exercised after the deal closes. All options are ISOs. 60% of the options were exercised more than a year ago, so I’m expecting LTCG on them. The other 40% is what I am wondering about. I can either exercise them now, so that they turn into cash as well, but then it’s ordinary income, or exercise them after the closing and hold onto them for a year and a day in order to get LTCG treatment. Of course, company B stock may go down in the meantime wiping out tax savings, and also, not sure whether I would be subject to AMT.
  4. What would be the most tax-effective way to prepay taxes, assuming 2018 income will be much lower? It is likely that I will spend the rest of 2017 and possibly majority of 2018 abroad.
  5. Should I look at paying off my mortgage? It’s a significant chunk of the windfall. The monthly expenses so far are about $3700 for mortgage, property taxes and HOA fees.
  6. Once the money comes in, should I split it into several FDIC insured accounts or transfer to TD/Schwab or some other brokerage that could give me a transfer bonus or something?
  7. I’d like to start transitioning the stocks in my taxable account to a fund portfolio, but they have quite a few accumulated cap gains. What strategy do you suggest for doing that?
Thank you for your advice.

andreiz
Posts: 35
Joined: Thu Jan 09, 2014 12:14 am

Re: Strategy for upcoming $3M windfall

Post by andreiz » Wed Feb 01, 2017 12:26 pm

Update on Question 3 based on the document we received: if you leave the company before the closing, the vested unexercised options will be cancelled and paid out in cash. I assume this will be disqualifying disposition, so would result in ordinary income, which means that it probably doesn't make sense for me to exercise them now, unless I'm missing an obvious tax difference.

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patrick013
Posts: 2258
Joined: Mon Jul 13, 2015 7:49 pm

Re: Strategy for upcoming $3M windfall

Post by patrick013 » Wed Feb 01, 2017 1:36 pm

andreiz wrote: It’s unlikely I will stay at company B after the payout. I am hoping to invest the proceeds into a short term portfolio and take 4-6 months off to travel and figure out what I want to do in the future, i.e. go back into tech, consulting, etc. What kind of things should I look at to get some fixed income and safety – short-term bonds, T-bills, something else?
50% ST investment grade and 50% IT investment grade
andreiz wrote: Should I keep Rollover IRA or transfer money to 401k while I’m still employed? It interferes with my ability to do Backdoor Roth conversions, but if I my income is going to be lower than Roth limit next year, that might not matter?
Transfer to 401k
andreiz wrote: The structure of the deal is such that the exercised options will be paid in cash and the unexercised options will turn into company B options that can be exercised after the deal closes. All options are ISOs. 60% of the options were exercised more than a year ago, so I’m expecting LTCG on them. The other 40% is what I am wondering about. I can either exercise them now, so that they turn into cash as well, but then it’s ordinary income, or exercise them after the closing and hold onto them for a year and a day in order to get LTCG treatment. Of course, company B stock may go down in the meantime wiping out tax savings, and also, not sure whether I would be subject to AMT.
Look in Barron's at their earnings forecast. If positive wait for the LTCG taxes for sure.
The Institutional Broker Estimate Service provides the most current forecast for most
ticker symbols.
andreiz wrote: What would be the most tax-effective way to prepay taxes, assuming 2018 income will be much lower? It is likely that I will spend the rest of 2017 and possibly majority of 2018 abroad.
Get an online tax estimator, possibly spread some taxes out if possible.
andreiz wrote: Should I look at paying off my mortgage? It’s a significant chunk of the windfall. The monthly expenses so far are about $3700 for mortgage, property taxes and HOA fees.
At that rate I would keep it. Have you ever explored selling the house when a
low tax rate would be in effect ? Sometimes appraisals are higher than current
offers available.
andreiz wrote: Once the money comes in, should I split it into several FDIC insured accounts or transfer to TD/Schwab or some other brokerage that could give me a transfer bonus or something?
That's up to you.
andreiz wrote: I’d like to start transitioning the stocks in my taxable account to a fund portfolio, but they have quite a few accumulated cap gains. What strategy do you suggest for doing that?
If not 15% for LTCG, spread them out over 2 years perhaps.


Hope the above helps a little bit. :)
age in bonds, buy-and-hold, 10 year business cycle

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Pranav
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Location: Texas

Re: Strategy for upcoming $3M windfall

Post by Pranav » Wed Feb 01, 2017 1:46 pm

I like the simplicity of using the windfall to pay off the mortgage, while making sure you maximize your tax-advantaged accounts.
https://www.bogleheads.org/wiki/Main_Page

fantasytensai
Posts: 450
Joined: Fri Sep 30, 2016 3:30 pm

Re: Strategy for upcoming $3M windfall

Post by fantasytensai » Wed Feb 01, 2017 2:01 pm

To be honest, as long as you don't do what this guy did, you will be fine.

https://www.reddit.com/r/wallstreetbets ... /?sort=new

Liberty1100
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Re: Strategy for upcoming $3M windfall

Post by Liberty1100 » Wed Feb 01, 2017 2:02 pm

Pranav wrote:I like the simplicity of using the windfall to pay off the mortgage, while making sure you maximize your tax-advantaged accounts.
I disagree. With a 2.75% interest rate and the tax deduction from the interest effectively making it a lower rate, I wouldn't use the windfall to pay down the mortgage, YET. In two years, if the interest rate jumps up high, then pay it down. I would invest the windfall in the meantime. I am sure the other answers might give more information about that.

andreiz
Posts: 35
Joined: Thu Jan 09, 2014 12:14 am

Re: Strategy for upcoming $3M windfall

Post by andreiz » Wed Feb 01, 2017 9:55 pm

fantasytensai wrote:To be honest, as long as you don't do what this guy did, you will be fine.

https://www.reddit.com/r/wallstreetbets ... /?sort=new
Reading that was akin to watching a slow motion wreck. Was wincing the whole time.

I don't know anything about puts and calls, so I think I'm safe from that at least. :)

andreiz
Posts: 35
Joined: Thu Jan 09, 2014 12:14 am

Re: Strategy for upcoming $3M windfall

Post by andreiz » Wed Feb 01, 2017 9:57 pm

Liberty1100 wrote:
Pranav wrote:I like the simplicity of using the windfall to pay off the mortgage, while making sure you maximize your tax-advantaged accounts.
I disagree. With a 2.75% interest rate and the tax deduction from the interest effectively making it a lower rate, I wouldn't use the windfall to pay down the mortgage, YET. In two years, if the interest rate jumps up high, then pay it down. I would invest the windfall in the meantime. I am sure the other answers might give more information about that.
Leaning that way too. The only complication is that in 2018 my income is likely to be low if I don't get back to a full time job, so the tax deduction won't be as high as now.

andreiz
Posts: 35
Joined: Thu Jan 09, 2014 12:14 am

Re: Strategy for upcoming $3M windfall

Post by andreiz » Fri Feb 03, 2017 1:14 pm

patrick013 wrote: 50% ST investment grade and 50% IT investment grade
Should I look into Muni bonds at all?
patrick013 wrote: Look in Barron's at their earnings forecast. If positive wait for the LTCG taxes for sure.
The Institutional Broker Estimate Service provides the most current forecast for most
ticker symbols.
Good point, looks like it's positive for both Q2 and Q3 2017.
patrick013 wrote:
andreiz wrote: Should I look at paying off my mortgage? It’s a significant chunk of the windfall. The monthly expenses so far are about $3700 for mortgage, property taxes and HOA fees.
At that rate I would keep it. Have you ever explored selling the house when a
low tax rate would be in effect ? Sometimes appraisals are higher than current
offers available.
You mean, selling it when I would not be able to write off much interest/property taxes?
patrick013 wrote:
andreiz wrote: Once the money comes in, should I split it into several FDIC insured accounts or transfer to TD/Schwab or some other brokerage that could give me a transfer bonus or something?
That's up to you.
I guess what I was really asking was whether it's safe to keep that large of an amount in any one broker or bank, however capitalized it is.
patrick013 wrote: If not 15% for LTCG, spread them out over 2 years perhaps.
Yeah, it'll be 23.8% for me.

CoAndy
Posts: 514
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Re: Strategy for upcoming $3M windfall

Post by CoAndy » Fri Feb 03, 2017 1:19 pm

If it were me, I would just probably pay the house off (assuming you're planning on staying there a long time), set aside money for taxes, set aside some money for fun (travel, new car) and invest the rest.

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patrick013
Posts: 2258
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Re: Strategy for upcoming $3M windfall

Post by patrick013 » Fri Feb 03, 2017 1:56 pm

andreiz wrote:
patrick013 wrote: 50% ST investment grade and 50% IT investment grade
Should I look into Muni bonds at all?
Calc the tax-equivalent yield (see wiki) for any Muni fund you're interested in.

patrick013 wrote:
andreiz wrote: Should I look at paying off my mortgage? It’s a significant chunk of the windfall. The monthly expenses so far are about $3700 for mortgage, property taxes and HOA fees.
At that rate I would keep it. Have you ever explored selling the house when a
low tax rate would be in effect ? Sometimes appraisals are higher than current
offers available.
andreiz wrote:You mean, selling it when I would not be able to write off much interest/property taxes?
Many sell their houses for the capital gain if high offers are available. Real Estate is
streaky, one year several customers other years none at all. Not an expert at the taxes
except there's usually a pretty high favorable treatment for RE cap gains. Just look
into it.

patrick013 wrote:
andreiz wrote: Once the money comes in, should I split it into several FDIC insured accounts or transfer to TD/Schwab or some other brokerage that could give me a transfer bonus or something?
That's up to you.
andreiz wrote:I guess what I was really asking was whether it's safe to keep that large of an amount in any one broker or bank, however capitalized it is.
Yes, several banks to stay insured, and even several brokers if more than a million
or so at each broker.
age in bonds, buy-and-hold, 10 year business cycle

andreiz
Posts: 35
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Fri Feb 03, 2017 3:31 pm

CoAndy wrote:If it were me, I would just probably pay the house off (assuming you're planning on staying there a long time), set aside money for taxes, set aside some money for fun (travel, new car) and invest the rest.
I'm planning to rent out the house actually.

ghudson
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Re: Strategy for upcoming $3M windfall

Post by ghudson » Fri Feb 03, 2017 4:32 pm

fantasytensai wrote:To be honest, as long as you don't do what this guy did, you will be fine.

https://www.reddit.com/r/wallstreetbets ... /?sort=new
That post sounds entirely like a gambling post -- except it's about trading.

All the same emotions play out, and all the same inevitable, shameful, regretful loss. Sad to see it.

ghudson
Posts: 127
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Re: Strategy for upcoming $3M windfall

Post by ghudson » Fri Feb 03, 2017 4:35 pm

andreiz wrote:...
When you have $2 million (after taxes), you are doing really well... Depending on your life style, you're very close to being able to retire, imho.

There's no reason, I can think of to push your luck with such a windfall. You can pick a "basic" asset allocation, and ride it out into the sunset. Either 3 fund portfolio, or if you're feeling frisky, a Larry portfolio.

Even something like 60% intermediate bonds and 40% stock will leave you rich for the rest of your life, most likely. :moneybag

Just be careful with taxes, and you're clear for life.

daffyd
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Location: Australia

Re: Strategy for upcoming $3M windfall

Post by daffyd » Fri Feb 03, 2017 7:57 pm

patrick013 wrote:
andreiz wrote: It’s unlikely I will stay at company B after the payout. I am hoping to invest the proceeds into a short term portfolio and take 4-6 months off to travel and figure out what I want to do in the future, i.e. go back into tech, consulting, etc. What kind of things should I look at to get some fixed income and safety – short-term bonds, T-bills, something else?
50% ST investment grade and 50% IT investment grade
Just want to note this is pretty unconventional relative to the wiki on investing a windfall. Investment grade bonds (and even intermediate term treasuries) can fluctuate in value substantially.

In the short-term, several FDIC insured accounts. Maybe some into CDs with lower early withdrawal penalty (given the size of the windfall relative to your tax-advantaged space these could turn into much of your fixed-interest allocation should you wish). There are a few threads on CDs recently. The point is to give you time to consider with minimal volatility, not to earn that extra 1% (and with some CDs if you end up leaving them alone, you'll actually earn more in expectation than investment grade bonds at the moment).

Treat your individual stocks as part of your US equities allocation for now. It depends on the size of the gains vs your comfort level in idiosyncratic risk of holding the individual stocks - If you have a low tax year in 2018 it may be an opportunity to sell more down too. See if individual lots can be sold without prohibitively affecting your tax situation. But ultimately neither losing money on these stocks nor the tax hit of selling them will change your life, if selling them will improve the sleep-well-at-night factor it may be worth paying taxes to do so.

If unsure, you could wait at least until you have a sense of 2018 plans to pay down the mortgage as you note your tax situation could change.

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patrick013
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Re: Strategy for upcoming $3M windfall

Post by patrick013 » Sat Feb 04, 2017 3:06 pm

daffyd wrote:
patrick013 wrote:
andreiz wrote: It’s unlikely I will stay at company B after the payout. I am hoping to invest the proceeds into a short term portfolio and take 4-6 months off to travel and figure out what I want to do in the future, i.e. go back into tech, consulting, etc. What kind of things should I look at to get some fixed income and safety – short-term bonds, T-bills, something else?
50% ST investment grade and 50% IT investment grade
Just want to note this is pretty unconventional relative to the wiki on investing a windfall. Investment grade bonds (and even intermediate term treasuries) can fluctuate in value substantially.
I'm not saying you shouldn't read the wiki. It's a rate anticipation strategy
I agree with. Bogle says 50-50 short/intermediate bonds
age in bonds, buy-and-hold, 10 year business cycle

Scotttheking
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Re: Strategy for upcoming $3M windfall

Post by Scotttheking » Sun Feb 05, 2017 12:20 am

AppD?

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White Coat Investor
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Re: Strategy for upcoming $3M windfall

Post by White Coat Investor » Sun Feb 05, 2017 12:32 am

andreiz wrote:I posted here a couple of years ago asking for portfolio help and implemented some suggestions based on the feedback. However, there’s a big financial event coming up that forces me to ask for your help again.

The company I’ve been at for the last few years (A) has recently been acquired by a much larger public company (B). I was one of the earlier employees, so am anticipating a fairly significant windfall, about $3M pre-tax if all the options/RSUs are cashed out once the deal closes in a couple of months. I have already read the windfall wiki and understand the importance of not rushing things. I am working on this with my CPA, but I wanted to ask for help on some decisions that could affect the outcome and tax burden, so I understand them well myself.

I’ll start with my current financial profile and put the questions I have below that.

Basic Info
Annual income (2016): $205K
Emergency funds: enough to cover 3-4 months of expenses
Debt: $566K remaining on a mortgage (5/1 ARM, 2.75% interest with 2 years until the first adjustment), house worth about $835K according to Zillow/Redfin
Credit cards are paid off every month (no persistent debt)

Tax Filing Status: Single
Tax Rate: 33% federal, 9.3% state
State of Residence: CA
Age: 40
Desired Asset allocation: 70% stocks / 30% bonds (flexible on this)
Desired International allocation: 30-40% of stocks (including EM)

Current portfolio
Approximate size of the total invested portfolio is $300K.

Taxable at ETrade
18.5% Apple (AAPL)
18.4% Facebook (FB)
10.1% American Airlines (AAL)
1.1% Amazon (AMZN)
0.6% AT&T (T)
2.9% (cash)

401k
5.7% Vanguard Total Intl Stock Index Admiral (VTIAX) - 0.12%
7.5% Vanguard Small Cap Index Admiral (VSMAX) - 0.08%
7.5% Vanguard 500 Index Admiral (VFIAX) - 0.05%

Rollover IRA at Vanguard
7.9% Vanguard FTSE Emerging Markets ETF (VWO) - 0.15%
4.8% Vanguard REIT Index ETF (VNQ) - 0.12%
4.6% Vanguard Total Stock Market ETF (VTI) - 0.05%
2.4% Vanguard FTSE Developed Markets ETF (VEA) - 0.09%
1.2% Vanguard 500 Index Fund Investor Class (VFINX) - 0.17%

Roth IRA at Scottrade
2.8% Vanguard Total International Bond ETF (BNDX) - 0.12%
2.6% Schwab US Aggregate Bond ETF (SCHZ) - 0.05%
1.2% Vanguard FTSE Emerging Markets ETF (VWO) - 0.15%
0.4% (cash)

Contributions
$18,000 to company 401k (no company match)

Funds available in 401k
T. Rowe Price Retirement Income R (RRTIX) - 1.07%
T. Rowe Price Retirement 2010 R (RRTAX) - 1.10%
T. Rowe Price Retirement 2020 R (RRTBX) - 1.19%
T. Rowe Price Retirement 2030 R (RRTCX) - 1.25%
T. Rowe Price Retirement 2040 R (RRTDX) - 1.28%
T. Rowe Price Retirement 2050 R (RRTFX) - 1.28%
AllianzGI NFJ International Value Instl (ANJIX) - 0.93%
American Funds EuroPacific Gr R4 (REREX) - 0.85%
Mutual Global Discovery Fund A (TEDIX) - 1.32%
Oppenheimer Developing Markets Y (ODVYX) - 1.05%
Vanguard Emerging Mkts Stock Idx Admiral (VEMAX) - 0.15%
Vanguard Total Intl Stock Index Admiral (VTIAX) - 0.12%
Virtus Foreign Opportunities A (JVIAX) - 1.45%
Vanguard REIT Index Admiral (VGSLX) - 0.12%
T. Rowe Price New Horizon (PRNHX) - 0.80%
Vanguard Small Cap Index Admiral (VSMAX) - 0.08%
Janus Enterprise S (JGRTX) - 0.93%
Vanguard Mid Cap Index Fund Admiral (VIMAX) - 0.08%
Victory Established Value A (VETAX) - 1.06%
BlackRock Equity Dividend A (MDDVX) - 1.00%
Fidelity Contrafund (FCNTX) - 0.74%
Vanguard 500 Index Admiral (VFIAX) - 0.05%
BlackRock High Yield Bond BlackRock K (BRHYX) - 0.54%
Metropolitan West Total Return Bond M (MWTRX) - 0.67%
Vanguard Inflation-Protected Secs Adm (VAIPX) - 0.10%

Questions
  1. It’s unlikely I will stay at company B after the payout. I am hoping to invest the proceeds into a short term portfolio and take 4-6 months off to travel and figure out what I want to do in the future, i.e. go back into tech, consulting, etc. What kind of things should I look at to get some fixed income and safety – short-term bonds, T-bills, something else?
  2. Should I keep Rollover IRA or transfer money to 401k while I’m still employed? It interferes with my ability to do Backdoor Roth conversions, but if I my income is going to be lower than Roth limit next year, that might not matter?
  3. The structure of the deal is such that the exercised options will be paid in cash and the unexercised options will turn into company B options that can be exercised after the deal closes. All options are ISOs. 60% of the options were exercised more than a year ago, so I’m expecting LTCG on them. The other 40% is what I am wondering about. I can either exercise them now, so that they turn into cash as well, but then it’s ordinary income, or exercise them after the closing and hold onto them for a year and a day in order to get LTCG treatment. Of course, company B stock may go down in the meantime wiping out tax savings, and also, not sure whether I would be subject to AMT.
  4. What would be the most tax-effective way to prepay taxes, assuming 2018 income will be much lower? It is likely that I will spend the rest of 2017 and possibly majority of 2018 abroad.
  5. Should I look at paying off my mortgage? It’s a significant chunk of the windfall. The monthly expenses so far are about $3700 for mortgage, property taxes and HOA fees.
  6. Once the money comes in, should I split it into several FDIC insured accounts or transfer to TD/Schwab or some other brokerage that could give me a transfer bonus or something?
  7. I’d like to start transitioning the stocks in my taxable account to a fund portfolio, but they have quite a few accumulated cap gains. What strategy do you suggest for doing that?
Thank you for your advice.
Here's what I'd do:

Pay off the mortgage. Set aside enough for you to live on for a couple of years in cash. Go travel. Have a great time. Make your portfolio a little more conservative than it is now and get all that taxable money invested. Be sure to send enough in to cover the taxes. In fact, spend the next Calendar year traveling. Since your taxable income will be so low that year, sell the stocks and maybe even tax gain harvest some funds.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Watty
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Re: Strategy for upcoming $3M windfall

Post by Watty » Sun Feb 05, 2017 1:51 am

andreiz wrote:
CoAndy wrote:If it were me, I would just probably pay the house off (assuming you're planning on staying there a long time), set aside money for taxes, set aside some money for fun (travel, new car) and invest the rest.
I'm planning to rent out the house actually.
Keeping it for the long term as a rental property is likely not a good idea. The problem is that if you have much capital gains you will lose the homeowners capital gains exclusion if you rent it out for too long.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Sun Feb 05, 2017 1:01 pm

Scotttheking wrote:AppD?
Good guess.

Scotttheking
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Re: Strategy for upcoming $3M windfall

Post by Scotttheking » Sun Feb 05, 2017 1:08 pm

andreiz wrote:
Scotttheking wrote:AppD?
Good guess.
Being an early employee this may not be relevant, but in case you weren't aware, last I heard they weren't accelerating vesting of options.

andreiz
Posts: 35
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Sun Feb 05, 2017 1:13 pm

Scotttheking wrote: Being an early employee this may not be relevant, but in case you weren't aware, last I heard they weren't accelerating vesting of options.
Correct, but vast majority (90%) of my options/RSUs are already vested.

Scotttheking
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Re: Strategy for upcoming $3M windfall

Post by Scotttheking » Sun Feb 05, 2017 1:17 pm

andreiz wrote:
Scotttheking wrote: Being an early employee this may not be relevant, but in case you weren't aware, last I heard they weren't accelerating vesting of options.
Correct, but vast majority (90%) of my options/RSUs are already vested.
Enjoy!

I didn't mention before, but I'm a user of your product.

kevinpet
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Re: Strategy for upcoming $3M windfall

Post by kevinpet » Sun Feb 05, 2017 1:20 pm

There's some good info on tax strategies related to ISOs in Kaye Thomas's book Consider Your Options. There are scenarios where you would be subject to AMT and a strategy of doing a same day sale of a portion which drives up your ordinary income to exactly match the cost in AMT of doing an exercise and hold of the remainder.

The disqualifying disposition rules also make it advantageous to do an exercise and hold early in the year so that you can do a disqualifying disposition in December if the price falls sufficiently. This strategy will be a lot harder for you to manage if you're going to be forced to sell when the acquisition closes.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Sun Feb 05, 2017 1:46 pm

White Coat Investor wrote: Here's what I'd do:

Pay off the mortgage. Set aside enough for you to live on for a couple of years in cash. Go travel. Have a great time. Make your portfolio a little more conservative than it is now and get all that taxable money invested. Be sure to send enough in to cover the taxes. In fact, spend the next Calendar year traveling. Since your taxable income will be so low that year, sell the stocks and maybe even tax gain harvest some funds.
I like this approach. :D

I am leaning towards selling off the individual stocks next year as well. The 2018 earned income will definitely be lower than this year's, but if I do exercise and hold the remainder of the options to sell next year, then overall capital gains won't be so low..

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Sun Feb 05, 2017 1:47 pm

Scotttheking wrote:
andreiz wrote: Enjoy!

I didn't mention before, but I'm a user of your product.
Excellent! Hope you find it useful.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Mon Feb 06, 2017 1:04 pm

kevinpet wrote:There's some good info on tax strategies related to ISOs in Kaye Thomas's book Consider Your Options. There are scenarios where you would be subject to AMT and a strategy of doing a same day sale of a portion which drives up your ordinary income to exactly match the cost in AMT of doing an exercise and hold of the remainder.

The disqualifying disposition rules also make it advantageous to do an exercise and hold early in the year so that you can do a disqualifying disposition in December if the price falls sufficiently. This strategy will be a lot harder for you to manage if you're going to be forced to sell when the acquisition closes.
Excellent points. I will ask my CPA to do the calculation on the split of same-day sale to hold portion in order to avoid AMT.

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unclescrooge
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Re: Strategy for upcoming $3M windfall

Post by unclescrooge » Mon Feb 06, 2017 2:13 pm

fantasytensai wrote:To be honest, as long as you don't do what this guy did, you will be fine.

https://www.reddit.com/r/wallstreetbets ... /?sort=new
Thanks! That was highly entertaining!

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Tue Feb 07, 2017 12:25 pm

So I'm planning to move the traditional IRA funds into the 401K. However, since the size of the windfall relative to my tax-advantaged space is so large, the only assets I should probably hold in 401K are bonds or something similar. Looking at the list of funds the 401K provides, I see only these that fit the profile:

BlackRock High Yield Bond BlackRock K (BRHYX) - 0.54%
Metropolitan West Total Return Bond M (MWTRX) - 0.67%
Vanguard Inflation-Protected Secs Adm (VAIPX) - 0.10%

Should I just move the entire account to hold VAIPX?

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patrick013
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Re: Strategy for upcoming $3M windfall

Post by patrick013 » Tue Feb 07, 2017 2:55 pm

andreiz wrote:So I'm planning to move the traditional IRA funds into the 401K. However, since the size of the windfall relative to my tax-advantaged space is so large, the only assets I should probably hold in 401K are bonds or something similar. Looking at the list of funds the 401K provides, I see only these that fit the profile:

BlackRock High Yield Bond BlackRock K (BRHYX) - 0.54%
Metropolitan West Total Return Bond M (MWTRX) - 0.67%
Vanguard Inflation-Protected Secs Adm (VAIPX) - 0.10%

Should I just move the entire account to hold VAIPX?
Perhaps keep the same stocks as in the 401k presently. Do your
backdoor Roth IRA (last one), then in 2018 transfer the 401k to a
Vanguard traditional IRA where plenty of bond funds at good fees
are available.
age in bonds, buy-and-hold, 10 year business cycle

betablocker
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Re: Strategy for upcoming $3M windfall

Post by betablocker » Tue Feb 07, 2017 3:25 pm

You may also want to look at a portfolio like the Larry Portfolio with a high tilt to small and value that would allow you to reduce the amount of equity exposure you have. The max drawdowns have been very low while matching a 60/40 portfolio return over the long term. Something worth reading about and considering for wealth preservation.

jpdion
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Re: Strategy for upcoming $3M windfall

Post by jpdion » Tue Feb 07, 2017 3:39 pm

Hmmm . . . Lamborghini? :D

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jainn
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Re: Strategy for upcoming $3M windfall

Post by jainn » Tue Feb 07, 2017 7:02 pm

betablocker wrote:You may also want to look at a portfolio like the Larry Portfolio with a high tilt to small and value that would allow you to reduce the amount of equity exposure you have. The max drawdowns have been very low while matching a 60/40 portfolio return over the long term. Something worth reading about and considering for wealth preservation.

But wouldn't the large amount of bonds be a detractor or wealth reducer over the next 50-60years of the OP planned spending? It's not guaranteed that the Larry Portfolio (20-30% high risk equity / 70-80% short term treasury) will be anywhere equivalent to a standard (60% TSM / 40% TBM), over the next half century?

finite_difference
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Re: Strategy for upcoming $3M windfall

Post by finite_difference » Tue Feb 07, 2017 7:10 pm

unclescrooge wrote:
fantasytensai wrote:To be honest, as long as you don't do what this guy did, you will be fine.

https://www.reddit.com/r/wallstreetbets ... /?sort=new
Thanks! That was highly entertaining!
Apparently it's a troll. Commenters are pointing out the screenshots are for a demo account. (They could be easily photoshopped anyway though.) If anything he's trying to get people to do things one way so he can do the opposite.

Don't believe everything you read on the Internet.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

betablocker
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Re: Strategy for upcoming $3M windfall

Post by betablocker » Wed Feb 08, 2017 11:31 am

jainn wrote:
betablocker wrote:You may also want to look at a portfolio like the Larry Portfolio with a high tilt to small and value that would allow you to reduce the amount of equity exposure you have. The max drawdowns have been very low while matching a 60/40 portfolio return over the long term. Something worth reading about and considering for wealth preservation.

But wouldn't the large amount of bonds be a detractor or wealth reducer over the next 50-60years of the OP planned spending? It's not guaranteed that the Larry Portfolio (20-30% high risk equity / 70-80% short term treasury) will be anywhere equivalent to a standard (60% TSM / 40% TBM), over the next half century?
Of course it's not guaranteed. A decent return on 60/40 isn't guaranteed either. The idea is identifying risk premiums that have delivered over long time periods, across markets, and across asset classes. If you pick the most volatile ones you have a chance at getting 60/40 returns with much less down side. The only evidence we have shows this works but of course it might not. That's why the return exists.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Wed Feb 08, 2017 12:49 pm

jainn wrote: But wouldn't the large amount of bonds be a detractor or wealth reducer over the next 50-60years of the OP planned spending? It's not guaranteed that the Larry Portfolio (20-30% high risk equity / 70-80% short term treasury) will be anywhere equivalent to a standard (60% TSM / 40% TBM), over the next half century?
To be clear, I did not say that I was planning to do early retirement and living off this for 50+ years. I intend to take a year or so off while traveling and then likely start earning again, either from my own business or through joining another promising company. So, maybe semi-retirement at most.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Fri Feb 10, 2017 12:13 pm

kevinpet wrote:There's some good info on tax strategies related to ISOs in Kaye Thomas's book Consider Your Options. There are scenarios where you would be subject to AMT and a strategy of doing a same day sale of a portion which drives up your ordinary income to exactly match the cost in AMT of doing an exercise and hold of the remainder.
Talked with my CPA and he said he was aware of the strategy and that sometimes it makes sense. But he thinks that people too often forget is that the AMT tax attributable to the ISOs generates a credit that can be used against your regular tax in future years when you’re not subject to the AMT. Once you factor in the eventual benefit of the credit you are likely better off paying the AMT and getting the LtCG treatment. Especially in my situation where I'm likely to not be in AMT for 2018 and later. Of course, there's the danger of the stock price significantly declining, but I think the risk could be worth it.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Thu May 31, 2018 10:49 am

Well, it's been almost a year and a half since I wrote the original post, so I thought I'd give an update and ask for further advice.

The acquisition of the company closed last March and I left Cisco (the acquiring company) soon thereafter and moved to Texas, primarily driven by no state income tax reasons. The initial payout from Cisco was $1.7M of which I set aside about $700K for taxes (split between several savings accounts via maxmyinterest.com). The rest, for a variety of reasons, but mainly capital preservation, was given to a RIA to invest 40% into muni and other bonds and 60% into various hedge funds. The bonds have been paying out about 6-7% tax free and the funds are doing about 7-8%. Whether I keep the money with the RIA for much longer or not is a question I intend to address in the near future, but today I have another concern.

After moving, I exercised the remaining Cisco options in May last year (incurring about $300K in AMT), which since then enjoyed the run up from about $33 to the high of $46 a few weeks ago. I was ready to sell off a large portion or all of it, but the stock retreated down below $43 just before the LTCG kicked in (a drop of about $100K in value). The analysts are bullish on the stock with the price target of $50, but, of course, the global markets and economy may have something to say about that. So I'm faced with some questions:

1) Do I sell it all this year, incurring all the cap gains tax at once or split it over 2 years? The income subject to LTCG would be about $1.4M, so I'd definitely hit the 20% bracket, not to mention the 3.8% NIIT. There will not be any state taxes on this.

2) If I sell this year, should I sell 10-15% right now or wait for the stock to bounce back up a bit? And then set a couple of limit orders, let's say @$47.50 and @$50?

3) I rented out my condo in SF after I moved. I have a year left on the original 5/1 ARM, and I'm deciding whether to sell it before next April to capture tax-free gains, or refinance and sell in the future. If I wait to sell beyond April, then I have to pay CG tax because I would not be occupying the condo for 3 out of the last 5 years.

Update on the basic info and such is below.

Basic Info
Annual income (2018): salary $100K, dividend from CSCO $40K, rest is muni bonds payouts
Emergency funds: enough to cover 1-2 months of expenses
Debt: $547K remaining on a mortgage (5/1 ARM, 2.75% interest with 1 years until the first adjustment), purchased for $750K, house worth about $880K according to Zillow/Redfin
Credit cards are paid off every month (no persistent debt)

Tax Filing Status: Single
Tax Rate: 24% federal, 0% state
State of Residence: TX
Age: 41

Former 401k with $75,000 rolled into the IRA. No other contributions this year.

grkmec
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Re: Strategy for upcoming $3M windfall

Post by grkmec » Thu May 31, 2018 11:27 am

Here is my two cents:

1) You gave an RIA to invest in munis and hedge funds ?!?! You are paying fees on top of fees. And if you think you are making 7-8% on munis after fees then you are probably taking massive credit risk or the munis are leveraged. You should not assume investments making 7-8% after fees are necessarily safe enough to be classified as “capital preservation”

2) You should sell your SF condo and lock in tax free gains ASAP. You are sitting here debating how to sell Cisco stock in a tax efficient way yet you have a tax efficient gain staring you in the face with SF condo.

3) On Cisco stock. I can’t predict how it will do or what the stock market willl do. I suggest you figure out an exit plan that you feel comfortable with vs. using limit orders that might get triggered or not. If I were if your shoes, I would probably do something like sell 1/3 in tax year 2018, sell 1/3 on tax year 2019 and sell 1/3 in tax year 2020. Then dribble it out 1/36 each month so you don’t drive yourself nuts with the selling price. Basically do an average.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Thu May 31, 2018 12:04 pm

grkmec wrote:
Thu May 31, 2018 11:27 am
1) You gave an RIA to invest in munis and hedge funds ?!?! You are paying fees on top of fees. And if you think you are making 7-8% on munis after fees then you are probably taking massive credit risk or the munis are leveraged. You should not assume investments making 7-8% after fees are necessarily safe enough to be classified as “capital preservation”
Fair point. Though this was meant as a background info to the main Cisco question.
2) You should sell your SF condo and lock in tax free gains ASAP. You are sitting here debating how to sell Cisco stock in a tax efficient way yet you have a tax efficient gain staring you in the face with SF condo.
Why ASAP and not early next year when the deadline comes up?

grkmec
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Re: Strategy for upcoming $3M windfall

Post by grkmec » Thu May 31, 2018 12:47 pm

From my experience, which is admittedly is limited to east coast real estate, properties don’t sell instantly. It could take a couple months to find a buyer and then 2-3 months to close depending if buyer needs mortgage, etc. So waiting until last second to sell isn’t wise, especially if you run the risk of losing a tax free gain. Also while perhaps remote, you also run the risk of stock market crash happening which would be very bad for sentiment. I just don’t see the upside in waiting given what could go wrong.

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sergeant
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Re: Strategy for upcoming $3M windfall

Post by sergeant » Thu May 31, 2018 1:14 pm

Giving your money to a RIA to invest in muni's and hedge funds seems a strange way to preserve capital. :shock:

I would let the SF condo go if you're not planning on going back.
Lincoln 3 EOW!

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Thu May 31, 2018 2:13 pm

sergeant wrote:
Thu May 31, 2018 1:14 pm
Giving your money to a RIA to invest in muni's and hedge funds seems a strange way to preserve capital. :shock:
Yep, I realize it's not the optimal way and goes against the general philosophy of this site, but that's not what my main question was about. No need to beat me over the head with it. :)

Tal-
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Re: Strategy for upcoming $3M windfall

Post by Tal- » Thu May 31, 2018 2:54 pm

Hey there,

Thanks for coming back and giving us an update. I often find the updates very insightful - so thank you for doing this :)

Here are my comments:

1) Do I sell it all this year, incurring all the cap gains tax at once or split it over 2 years? The income subject to LTCG would be about $1.4M, so I'd definitely hit the 20% bracket, not to mention the 3.8% NIIT. There will not be any state taxes on this.

Taxes can be relevant, but as a general statement, I'd avoid letting taxes drive the plan. Taxes are certainly a factor, but should not be the primary favor on virtually any decision... With that in mind, I'd strongly suggest that you eat the tax hit in CY 2018, and exercise what you can sooner than later.

Note that my advice is probably not the most tax efficient advice out there. But, your overall plan seems to be (correctly) to sell these options/stocks and diversify. I'd let that drive your decision.

2) If I sell this year, should I sell 10-15% right now or wait for the stock to bounce back up a bit? And then set a couple of limit orders, let's say @$47.50 and @$50?

The Boggleheads community is really harsh on market timing strategies, and the mantra of "don't try and time the market" is one that I personally support. So, with my personal bias exposed, I'd strongly suggest that you sell sooner than later, and NOT wait for a bump in price.

We all know stories of people who planned to hold a stock until it went up, just a bit, only to see it never go up and instead decline to new lows. This sucks in all cases - but because you have such a high percent of your net worth tied into this stock, your risk here is huge!

Also, keep in mind that you seemed to be fine selling at $33. And it now sits at $43. Forgive me for saying, but keep it because it was at $46 recently seems greedy, and unwise. Sell, and sell today.

3) I rented out my condo in SF after I moved. I have a year left on the original 5/1 ARM, and I'm deciding whether to sell it before next April to capture tax-free gains, or refinance and sell in the future. If I wait to sell beyond April, then I have to pay CG tax because I would not be occupying the condo for 3 out of the last 5 years.

What's your long-term plan for the condo? If your long-term plan (say 10 years) is to keep this condo as a rental, then refi. If your long term plan is to sell it, then sell it sooner than later to benefit from the tax-free gains. With that said, without extra info, I don't expect for a condo in SF to make sense as a long-term rental, and would lean towards selling.

PS: Your Asset Allocation needs heavy revision. 40% muni and 60% hedge fund is something out of a horror movie. Honestly, I'd prefer you hire an expensive/$10k/year financial advisor rather than having that asset allocation. There's no shame in asking for help getting this fixed (from this board, or from an advisor), but I do suggest that you change your allocation...

Just my two cents. Congrats on an overall job well done, and on your windfall. Windfalls like that are almost always earned, and you've done well for yourself.
Debt is to personal finance as a knife is to cooking.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Thu May 31, 2018 4:35 pm

Tal- wrote:
Thu May 31, 2018 2:54 pm
Thanks for coming back and giving us an update. I often find the updates very insightful - so thank you for doing this :)
No problem, I often wished other people posting about advice for their windfall would come back and do the same. :)
Taxes can be relevant, but as a general statement, I'd avoid letting taxes drive the plan. Taxes are certainly a factor, but should not be the primary favor on virtually any decision... With that in mind, I'd strongly suggest that you eat the tax hit in CY 2018, and exercise what you can sooner than later.
Not sure if I was clear on that, but I exercised more than a year ago, so it's in LTCG now. If my calcs are right, the difference in tax between selling it all this year and splitting it over 2 years would be ~$27K. And the difference between splitting over 3 years is ~$55K. Not insignificant, but the stock can certainly decline enough in 2.5 years to wipe out those savings.
We all know stories of people who planned to hold a stock until it went up, just a bit, only to see it never go up and instead decline to new lows. This sucks in all cases - but because you have such a high percent of your net worth tied into this stock, your risk here is huge!

Also, keep in mind that you seemed to be fine selling at $33. And it now sits at $43. Forgive me for saying, but keep it because it was at $46 recently seems greedy, and unwise. Sell, and sell today.
Point well made. Is there any advantage to selling a portion every week, to average it out?
What's your long-term plan for the condo? If your long-term plan (say 10 years) is to keep this condo as a rental, then refi. If your long term plan is to sell it, then sell it sooner than later to benefit from the tax-free gains. With that said, without extra info, I don't expect for a condo in SF to make sense as a long-term rental, and would lean towards selling.
That's what I'm struggling with. I lived in SF for 10 years and I love the city, so the thought of coming back at some point is appealing. If I sell now and the property values keep steady or increase, I will probably be priced out of the market. And you're right about long-term rental in SF, it's barely making money as it is, just happy the rent is covering mortgage/property taxes/HOA fees.
PS: Your Asset Allocation needs heavy revision. 40% muni and 60% hedge fund is something out of a horror movie. Honestly, I'd prefer you hire an expensive/$10k/year financial advisor rather than having that asset allocation. There's no shame in asking for help getting this fixed (from this board, or from an advisor), but I do suggest that you change your allocation...
I did hire a $10k/year advisor and that's what they advised me.. :) Muni bonds to generate some fixed income and hedge for the rest. But yes, this is something I intend on rectifying within a year or so.
Just my two cents. Congrats on an overall job well done, and on your windfall. Windfalls like that are almost always earned, and you've done well for yourself.
Thank you!

InvestorThom
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Re: Strategy for upcoming $3M windfall

Post by InvestorThom » Thu May 31, 2018 5:30 pm

I’m curious. Why did you not use a portion of the windfall to fund a donor advised fund to reduce your taxable income and provide a source for future charitable giving?

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Thu May 31, 2018 5:46 pm

InvestorThom wrote:
Thu May 31, 2018 5:30 pm
I’m curious. Why did you not use a portion of the windfall to fund a donor advised fund to reduce your taxable income and provide a source for future charitable giving?
I just had this discussion with my CPA and here was his summary:
Just following up here on the tax rate, I do agree, the tax rate just isn’t high enough to justify the DAF. I agree with the tax rate being in the 20-25% range, probably on the high side, but with that low of a rate, and no state tax on top of it, I just don’t think it makes sense for any material number. Look, if there is a charitable cause you like, say your university, then the DAF is ABSOLUTELY the way to do it in the new tax world, but with no state income taxes, the donation must then be even larger to get the tax deduction. Simply put, the DAF is the best option to give to charity, I just don’t know that it’s something you should be doing for tax purposes now. If charity is the number one focus, do a DAF. If tax savings is the number one focus, don’t bother.
So it comes back to me to decide whether I really want to give to charities or not.

InvestorThom
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Re: Strategy for upcoming $3M windfall

Post by InvestorThom » Thu May 31, 2018 6:17 pm

andreiz wrote:
Thu May 31, 2018 5:46 pm
InvestorThom wrote:
Thu May 31, 2018 5:30 pm
I’m curious. Why did you not use a portion of the windfall to fund a donor advised fund to reduce your taxable income and provide a source for future charitable giving?
I just had this discussion with my CPA and here was his summary:
Just following up here on the tax rate, I do agree, the tax rate just isn’t high enough to justify the DAF. I agree with the tax rate being in the 20-25% range, probably on the high side, but with that low of a rate, and no state tax on top of it, I just don’t think it makes sense for any material number. Look, if there is a charitable cause you like, say your university, then the DAF is ABSOLUTELY the way to do it in the new tax world, but with no state income taxes, the donation must then be even larger to get the tax deduction. Simply put, the DAF is the best option to give to charity, I just don’t know that it’s something you should be doing for tax purposes now. If charity is the number one focus, do a DAF. If tax savings is the number one focus, don’t bother.
So it comes back to me to decide whether I really want to give to charities or not.
“The initial payout from Cisco was $1.7M of which I set aside about $700K for taxes...”

Seems like your tax rate would have been higher than 20-25%... plus CA taxes given the income was earned while you were working in CA.

andreiz
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Re: Strategy for upcoming $3M windfall

Post by andreiz » Thu May 31, 2018 6:24 pm

InvestorThom wrote:
Thu May 31, 2018 6:17 pm
“The initial payout from Cisco was $1.7M of which I set aside about $700K for taxes...”

Seems like your tax rate would have been higher than 20-25%... plus CA taxes given the income was earned while you were working in CA.
It definitely was last year, and probably will be this year if I sell the stock, but it's that bracket for the salary + investment income.

As for CA taxes, it's a completely different topic that I'd rather not get into here, but I moved to TX before the payout happened. CPA says I'm fine.

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sergeant
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Re: Strategy for upcoming $3M windfall

Post by sergeant » Thu May 31, 2018 10:22 pm

andreiz wrote:
Thu May 31, 2018 2:13 pm
sergeant wrote:
Thu May 31, 2018 1:14 pm
Giving your money to a RIA to invest in muni's and hedge funds seems a strange way to preserve capital. :shock:
Yep, I realize it's not the optimal way and goes against the general philosophy of this site, but that's not what my main question was about. No need to beat me over the head with it. :)
I guess I could have been more gentle with my critique. What were the other reasons you went with an RIA? Gosh, it just seems so easy to pick an appropriate AA and pick a few low cost funds at Vanguard.
Lincoln 3 EOW!

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