I'm sitting on $1.2m of vested employee stock – private company K1 shares. Through vesting grants and a lot of share growth – it now represents about 40% of my investment portfolio – the remainder being index funds.
I'd like to de-concentrate my exposure here and I would like additional opinion on how this plan sounds:
- I can sell up to 25% of my position in the annual liquidity window which is in the fall
- Begin to sell 25% this fall until concentration reaches 10%
- Going to be a while to meaningfully move the needle since company has averaged 20% CAGR since early 2000's but the past is not the future.
- Pay the long term capitol gains taxes and reinvest in index funds
- From a tax perspective – I don't think there's much I can do to reduce AGI other than switch 401k contribution from Roth to Traditional (maxing out already).
- Already maxing out HSA
Wondering about something more tax advantaged like commercial real estate though? Thank you in advance
Deleveraging employee stock guidance
byu/MikeDaRucki inpersonalfinance
Posted by MikeDaRucki
2 Comments
What about commercial real estate?
If you are a high income earner, you should be using at Traditional 401k anyway.
Roth/Traditional will not have any impact on your capital gains taxes from selling stock. They are ordinary income when they *vest* (more reason to use Traditional 401k). Capital gains when sold.
Also just because it might help you research, this has nothing to do with “deleveraging”. You’re de-risking and diversifying.
If it’s a partnership, expect some depreciation recapture with your sales.
$2.5M NW isn’t enough for a commercial real estate investment if you want to remain diversified.