Stock Compensation Planning for Retirement
RSUs, stock options, and company stock—how to make better decisions as you approach retirement
If you’re within a few years of retirement and a meaningful part of your wealth is tied to your company…
You likely have questions like:
- Should I sell my RSUs when they vest?
- When should I exercise stock options?
- What should I do with company stock in my 401(k)?
- How do I avoid a large tax bill as I retire?
These are good questions.
Because at this stage:
Stock compensation is less about picking the right investment—and more about making the right decisions at the right time.
No pressure. Just a conversation to see if we can help.
Quick answer: What should you do with stock compensation near retirement?
If you want the simple version:
- RSUs → often evaluated for sale at vesting based on tax impact and concentration
- Stock options → likely exercised and sold based on tax brackets and timing across years
- Company stock in a 401(k) → may benefit from a little-known special tax treatment called Net Unrealized Appreciation (NUA)
- ESPPs → usually evaluated for disciplined selling based on tax rules and concentration
The key is not the individual decision.
It’s how all of these decisions work together.
Why stock compensation matters more near retirement
Earlier in your career, stock compensation feels like just part of your income.
As you approach retirement, it becomes a key part of your plan.
Because several things are happening at once:
- Your income is often at its highest
- Multiple compensation events can stack in the same year
- Retirement creates a window where your tax situation may change
- A large portion of your net worth may be tied to one company
This is why many people say:
“There are too many decisions at once.”
They’re right.
The 5 types of stock compensation (in plain English)
Restricted Stock Units (RSUs)
- Typically taxed as ordinary income when they vest
What to think about:
- Sell or hold?
- How does this affect your tax bracket this year?
Performance Shares (PSUs)
- Similar to RSUs, but tied to company performance
What to think about:
- Timing uncertainty
- Larger-than-expected income in certain years
Stock Options (ISOs and NQSOs)
- The right to buy stock at a set price
What to think about:
- When to exercise
- When to sell
- How to spread income across years
Employee Stock Purchase Plans (ESPPs)
- Ability to buy stock at a discount
What to think about:
- Holding period rules
- Tax treatment based on how long you hold
Company stock in your 401(k) (NUA strategy)
If you have company stock in your 401(k), there may be a tax opportunity called Net Unrealized Appreciation (NUA).
Example:
- $200,000 of company stock
- $60,000 cost basis
You may pay ordinary income tax on $60,000
The remaining $140,000 could be taxed at long-term capital gains rates when sold
- Done right, this could save tens of thousands in taxes
- Done wrong, the opportunity may be lost
The most common issue: decisions made in isolation
Many people make each decision separately:
- “I’ll just hold my RSUs”
- “I’ll deal with options later”
- “I’ll roll over my 401(k)”
That approach feels simple.
But it often misses how connected these decisions are.
Because:
- RSUs increase taxable income
- That affects your tax bracket
- Which affects decisions like:
- Roth conversions
- option exercises
- when to sell stock
- when to start income in retirement
One decision changes the math of the others.
What many advisors miss
Many advisors focus only on investments, or perhaps retirement planning to get you to retirement.
But it’s the transition to retirement when you have the most questions—because now your focused on your retirement income, not your retirement saving.
You don’t need a stock pick.
You need a coordinated plan that answers:
- When should I sell company stock?
- How do I reduce taxes over my whole retirement?
- How does this connect to Social Security and pension decisions?
- How do I manage stock risk as I stop working?
Common questions
Important Disclosure
Keil Financial Partners is not affiliated with or endorsed by Abbott or AbbVie. These companies have not reviewed or approved this content.
This information is general in nature and may not reflect your specific benefits. Please confirm details with your HR department or plan administrator.
How to Tell If You’re Getting Good Advice
If you’re already working with an advisor, here are a few good questions to ask:
- Are they comparing pension options across different retirement dates?
- Have they talked through the age 55 rule?
- Have they reviewed NUA for my company stock?
- Are they planning taxes across multiple years—not just this one?
If those conversations aren’t happening, there may be gaps.
Let’s Make Sure You Get This Right
You’ve worked a long time to get here.
Retirement isn’t just about stopping work—it’s about making a series of decisions that shape what comes next.
If you’re close to that transition and want to think through it carefully, we can help.