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How does this work when they haven't vested yet?
by mattm 5y ago
How does this work when they haven't vested yet?
- richardxia 5y agoIf your company allows for it, you can early exercise and file a 83(b) election so that even as your options vest over time, you only pay taxes for the spread between your strike price and the fair market value at the date of the early exercise, rather than the date of vesting. The taxes can be 0 if you early exercise when the fair market value _is_ the same as your strike price. https://www.investopedia.com/terms/e/earlyexercise.asp https://www.investopedia.com/terms/e/earlyexercise.asp https://www.investopedia.com/terms/1/83b-election.asp https://www.investopedia.com/terms/1/83b-election.asp
- alain94040 5y agoIt's called election 83(b). For it to work, the company grants you restricted stock instead of options. The restriction is that the company can buy back the stock on a vesting schedule, so it's effectively equivalent to stock-options. The difference is that you can buy all of them on day 1 at fair market value and pay no tax. It's usually done for early employees who join before multiple rounds of funding occur.