As a former Plaid employee with options that vested after I was shitcanned last year, this is some pretty welcome news.
Company A, 0.05% or 9000+ options vested, IPO, post-lockout sale at net ~$300k, was an early engineering employee
Company B, <0.001% or 10000+ shares vested, very late engineering employee, not liquid yet, hypothetical value in low-mid 6 figures
Make sure you do proper tax planning, taxes take an enormous bite, even with long term capital gains.
If your company IPOs they will withhold shares for you. Only thing to watch for is depending on your income they might underwithold. There isn’t much more to it than that.
Even if you have RSUs (where taxes are customarily withheld), the company will withhold at the minimum statutory rates, which may not match up with your personal tax bracket.
If a company hasn't IPO'ed, an 83(b) election may also make sense.
After whatever lockup you have some fraction of shares remaining. When you sell those and if the price is greater than the IPO price then you have capital gains on whatever shares you still hold.
You still owe tax from the IPO. My point is the company will withhold shares from you, but you might need to pay more if they underwitheld for the IPO. This has nothing to do with your capital gains from selling your remaining shares.
All said, the better companies offer partial recourse loans to early exercise.
This is days later, so not sure if you'll see this, but could you explain what QSBS has to do with it?
If you've been at a private company for a while you may have options that have vested approaching the ten year expiration with a large spread between strike and the fair market value.
If these options are ISOs then exercise has a lot of tax consequences to get right (AMT particularly to save some money). If you have NSOs you've still got a lot of tax to deal with on exercise, but you don't have to benefit of getting some tax free below AMT.
Most states tax capital gains at the same rate as ordinary income.
And then 10 states don't tax income at all.
The part where CA chases your stock grants/options for years after you leave the state is a bit less reasonable to me. (But I'd guess some other states do the same)
(Everyone, including the IRS, treats short term gains as regular income.)
imo it’s hard to shake how awkward it is when everyone around you is rich and you’re being offered a regular salary that is now dictated by Visa HR
I was hired by Sun. Just before my start date, Oracle announced they would be buying Sun. I was worried, but it turns out acquisitions are pretty slow processes. There was months of waiting for government approvals, then months more before the culture really started feeling like "Oracle" instead of "Sun."
In short, there's a decent chance that anyone applying now could be on payroll for months or years before Visa actually meaningfully changes anything about Plaid's workflow.