Six Questions for an Equity Compensation Advisor: How Modera Wealth Management Would Answer Them

A $300,000 tender offer and three advisors on the shortlist

Shane and Celeste hold about $650,000 of company shares, mostly on paper, and the tender offer would turn $300,000 of it into cash. The window is a few weeks. Every dollar of proceeds has three possible jobs: loans, charity or investing. They judge each advisor on the same three things. Does the advisor price the tender's tax bill lot by lot? Does the advisor ask for exercise and acquisition dates? Does the advisor say which account (taxable, 401(k) or Roth IRA) each dollar goes into?

A portfolio-only advisor answers with a model portfolio and skips the tax. A CPA-only route prices the tax but doesn't place the proceeds. An equity compensation specialist should do all three before anything is tendered. Start with the first row of the table, because it's the one you can't repair after the window closes.

Here's a shortcut: the advisor who asks for your dates before talking about investments is the one doing equity work. One honest limit. No advisor can change the tender price, the company's share cap or the IPO timing, and if your equity is a few RSU vests at a public company and under a fifth of your net worth, a tax preparer and the plan administrator may be enough for now.

Which papers should Shane and Celeste pull before the first call?

Shane and Celeste should pull four sets of papers: the tender offer document, the grant agreements and exercise confirmations from the stock plan portal, last year's Form 1040 with both W-2s, and their student loan statements. Together these show the price, the dates, the option type and their tax bracket.

The tender document gives the per-share price, the expiration date, withdrawal rights and how many shares each holder may sell. The plan portal shows grant dates, exercise dates, strike prices and whether each grant is an ISO or an NSO (incentive or nonqualified stock option). Loan statements add rates and balances. An advisor who never asks for the 1040 can't estimate AMT, the alternative minimum tax, or tell which bracket the sale lands in.

• Tender offer document
• Grant agreements and exercise confirmations
• Last year's Form 1040 and W-2s
• Student loan statements with rates

Six interview questions, in the order a tender forces them

A tender settles the lots first and the account last, so Shane and Celeste ask in that order. They put the same six questions to every advisor.

Question two has an extra layer for ISO shares: both the two-year-from-grant and the one-year-from-exercise marks must pass. Question three asks whether a planned ISO exercise this year would trigger AMT, and whether the advisor has run IRS Form 6251. Question four matters if either of them later joins a public company with an ESPP. Question six is the retirement-distance question, because the catch-up opens at 50 and grows at 60.

To question four, a weak answer is 'just hold a year.' The real rule is more than two years from the offering date and more than one year from the purchase date. To question five, 'we'll put it in a balanced fund' names no account at all. If the advisor can't say taxable, 401(k) or Roth, that's a fund pick, not asset location.

Hiring after the tender window closes is the first timing error, because the lot choice is gone. Tendering lots seven or eight months old when older lots qualify is the second. Paying down loans before the estimated tax for next April is set aside is the third. Generic advice makes the second one worse: 'pay off student loans before anything else,' followed to the letter, leads a couple to tender every share allowed, including lots exercised seven months earlier. That turns $80,000 of gain an advisor would have kept out of the tender into short-term gain. At assumed rates of 35 versus 15 percent, it adds $16,000 ($80,000 × 0.20) to the tax bill.

What a weak answer sounds like

Three timing errors with a price tag

• 1) What's our after-tax amount on each lot?
• 2) Which lots crossed the one-year mark?
• 3) Would an ISO exercise trigger AMT?
• 4) What makes an ESPP sale qualifying?
• 5) Which account holds the proceeds, and why?
• 6) How does our playbook change at 50 and 60?

Same tender, one difference: a $50,000 gap that compounds for 14 years

For illustration, take two hypothetical couples who are identical except for one date. Shane and Celeste tender $300,000 of startup common stock with a $50,000 basis, so the gain is $250,000, and they've held the shares more than one year. The second couple exercised theirs eight months before the tender. At an assumed 15 percent long-term rate, Shane and Celeste owe $37,500 ($250,000 × 0.15) and keep $262,500. At an assumed 35 percent ordinary rate, the other couple owes $87,500 ($250,000 × 0.35) and keeps $212,500. Both still hold $350,000 of unsold startup stock ($650,000 minus $300,000).

The $50,000 gap, invested at an assumed 5 percent annually for 14 years, grows to about $99,000 ($50,000 × 1.98), which is where Shane and Celeste stand by their mid-40s. That's an illustration, not a forecast. Markets fall as well as rise, and the original $50,000 itself is not protected. Someone 12 years from retirement sees the same gap grow to about $90,000, still large, with fewer years to compound. Our calculator runs this comparison with your own numbers, and IRS Form 8949 is where each lot's sale gets reported.

Find the 'Tender year' row first, then read down to see when each catch-up year arrives.

Asset location is the next step at Modera Wealth Management. Broad stock index funds go in the taxable account first, because they throw off little taxable income. Whether a Roth IRA is open depends on income: the IRS 2026 phase-out for married filing jointly is $242,000 to $252,000, which a two-startup couple may exceed. The 2026 IRS 401(k) deferral limit is $24,500 each, and from age 50 the catch-up adds $8,000.

The two couples, side by side

Where the proceeds go by account

Can a tender sale be undone once the window closes?

No. Once the offer expires, the sale is final. Until that date, most tender documents let you withdraw tendered shares, so read the withdrawal section the day the packet arrives. Three things stay open afterward: which account holds the cash, how much each spouse defers into the 401(k), and which lots stay unsold. If your income allows it, a Roth IRA contribution for the year still counts when it's made by the April filing deadline.

Where Modera Wealth Management starts with a startup tender

Modera Wealth Management goes through the tender packet and the lot dates with families over video, sharing the spreadsheet as we go. We estimate the tax bill lot by lot and sketch which account the proceeds would land in. Fees are written into the agreement you sign before we start, and the request form opens that conversation. Nothing here promises a result; the point is to have the numbers in front of you while the window is still open.