There is a question of having to take some of the gains immediately or potentially after 2-3 years (or never). Here are the specifics:
- I live in California, USA and Married Filing Jointly - age 45yrs, spouse 40yrs (non working)
- Gross (pre-tax) Salary Income projected for this year (excluding the payout event) - $275,000 Guaranteed (barring job loss - unlikely)
- About 10K in Qualified Dividends income, no other investment income other than one below.
- Payout event non-optional - $147,000 (taxed as Long Term Cap gains with zero basis)
- Payout event OPTIONAL - $150,000 (would also be taxed as LTCG zero basis)
If the Optional Payout is not immediately taken, the vested interest does remain under my ownership but is not liquid until either I quit/am let go OR the company goes public - (at least 2-3yrs away if at all). Any of these events do not guarantee the same level of payout - could be a lot more or less depending on price terms active at that point.
I do not need the money at this point (JUMBO Mortgage/Car/Kids education/Medical expenses) etc and have Emergency Funds about 9-12 months. Everything else is invested in a 3 Fund Portfolio + Playmoney.
Question to the Bogleheads - should I take the Optional Payout?
Are there Tax implications one way or another, (NIIT, AMT, anything else?)
Any other factors to think about? Biden admin tax rules, upcoming tax hikes? Is there a right way to take the payout to minimize taxes?