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Employer Stock: ISOs
Employer Stock: ISOs

This article describes how to enter ISOs in your Plan.

Nancy Gates avatar
Written by Nancy Gates
Updated over a week ago

Employer Stock Options

These instructions refer to employer stock options that are exercised upon vesting.

The spread on ISOs isn’t subject to payroll taxes and ISOs are taxed when you exercise them and/or when you sell them.

For this reason, we recommend creating an after tax account with the Capital Gains tax treatment, creating a lump sum pension for the value of the ISOs coming into your plan, and directing the lump sum pension to the after-tax account as follows:


STEP 1: Navigate to to My Plan > Accounts and Assets and add an after-tax account with the Capital Gains tax treatment

Add a savings account

  • Navigate to My Plan > Accounts and Assets

  • Press Add an account ➕

  • Select Investment/Savings/Checking account

  • Select manual entry

  • Give the account a descriptive name, "ACE Employee ISO," for example

  • Enter $0 for the balance

  • Select Capital Gains as your tax treatment

  • Enter the $0 for the Cost Basis

  • Enter 0 for the turnover rate

  • Select your optimistic and pessimistic rates of return


STEP 2: Navigate to to My Plan > Income > Pensions

  • Press add a pension ➕

  • Select lump sum

  • Give the pension a descriptive name, “ACE Employee ISO,” for example

  • Enter the value of the ISOs coming into your plan

  • Enter the date of the grant

  • Direct the lump sum pension to the new after-tax account

  • Select No for the tax treatment

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