What happens to stock options when I retire?

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Once you retire, your stock plan will detail when or whether vesting continues or stops. Retirement is a type of termination under most stock plans. Because ISOs are taxed more favorably than NQSOs when you exercise and hold the shares, you should take a careful inventory of all your options upon leaving your company.

Table of Contents

• What does it mean to receive stock options?
• When do vested stock options have to be exercised?
• When do stock options expire when you leave a company?

What does it mean to receive stock options?

Stock options are a form of compensation. Companies can grant them to employees, contractors, consultants and investors. These options, which are contracts, give an employee the right to buy or exercise a set number of shares of the company stock at a pre-set price, also known as the grant price.

How do stock options work for an employee?

Stock options are a form of compensation. Companies can grant them to employees, contractors, consultants and investors. These options, which are contracts, give an employee the right to buy or exercise a set number of shares of the company stock at a pre-set price, also known as the grant price. This offer doesn’t last forever, though.

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When do vested stock options have to be exercised?

If you have vested stock options (incentive stock options (ISOs) or non-qualified stock options (NQSOs)) that you have not exercised, you may have the opportunity to do so before you leave the company or within a defined period of time after your departure from the company.

When do stock options expire when you leave a company?

When you leave, your stock options will often expire within 90 days of leaving the company. If you don’t exercise your options, you could lose them. Here’s what you need to know about stock options and what you should do with them when leaving a job. Basic Overview of Stock Options

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When to start exercising restricted stock for retirement?

To prevent all of your stock options from becoming due at retirement, consider starting a regular program of exercising options well before your retirement date. Meanwhile, the security restricted stock and RSUs can offer becomes important as you near retirement.