The Hidden Tax Trap Lurking in Your Tech Compensation

The Real Problem Isn't Just Taxes—It's Complexity

Last month, I sat down with a senior engineer at MongoDB who perfectly captured what so many of us feel: "They do this weird thing about taxes. When [RSUs] vest, they report that as income, and then you have to pay taxes on that, which is crazy."

Another client at a well-known large tech company: "I just don't have any models or anything to plan out exactly when it's the best time to sell or think about most optimal times to optimize taxes."

Does this sound like you? The challenge isn't just understanding the taxes—it's creating a coherent strategy that aims to:

• Optimize your tax situation
• Manage concentration risk
• Maintain upside exposure
• Fit your broader financial goals

Why You Might Be Getting This Wrong

Here's what I typically see when tech professionals first come to me:

The "HODL" Trap: You're holding everything because selling feels complicated, but inaction is a decision too.

The Tax Paralysis: You're letting tax fears drive your strategy (instead of the other way around).

The Manual Scramble: As one client recently mentioned, "It was all very manual. Breaking off some in down markets... but I'm trying to be more programmatic about it."

Sound familiar? You're not alone. But there's a more strategic way.

The Strategic Framework You Need

Step 1: Understand Your True Exposure

Take a moment to consider this: Your employer is paying your salary, matching your 401(k), and handing you RSUs.

Let that sink in. Your income, retirement, and portions of your bonus (via your RSUs) are all riding on one company's performance. When I point this out to clients, it's often a wake-up call.

Step 2: Create a Systematic Selling Strategy

The key is automation. I help my clients set up what I call "programmatic selling" where "you could sell the entire position programmatically upon investment to manage the tax impact or start to create a game plan to slowly but surely sell positions in different tax years to spread out the potential tax liability of highly appreciated securities."

This removes emotion from the equation—no more agonizing over timing or market movements.

Step 3: Tax-Efficient Implementation

Here's where the real value can come in. Smart implementation includes:

• Coordinating with your company's trading windows (yes, I know how frustrating these can be)
• Setting up proper tax withholding that works for YOUR situation
• Strategic loss harvesting when applicable (which might be especially valuable in today's volatile market)
• Timing sales around your specific vesting schedules
• Scheduling sales systematically across multiple tax years in an effort to spread out the potential tax implications of making a change.

One of my clients noted that they were able to reduce some of their tax burden by "selling to cover the ordinary income. We don't have any gains or losses associated with the position. And then we elect to rediversify across a more robust portfolio."

Step 4: Reinvestment Strategy

This isn't just about selling—it's about rebuilding your portfolio strategically. I work with clients like you to help:

• Maintain appropriate company exposure (because yes, you still believe in your company)
• Diversify across sectors (without creating new concentration problems)
• Build tax-aware positions
• Create liquidity for major life goals (that house you've been thinking about?)

The Mental Shift You Need to Make

Here's a question that changes everything for my clients: "If your company gave you $50,000 in cash instead of RSUs, would you turn around and buy $50,000 worth of company stock?"

Most say no. This simple reframe helps cut through the emotional complexity of RSU planning and can make the path forward much clearer.

Why This Matters Now

The market volatility we're seeing makes this more important than ever. Just last week, a client shared with me: "We've lost like 60-70% of our value and it's just insane."

This is exactly why having a systematic strategy—rather than making emotional decisions—can be crucial right now.

Your Next Steps

If you're feeling overwhelmed by RSU complexity, you're not alone. The good news is that this is a solvable problem with the right framework and guidance.

Here's what you can do today:

1. Review Your Current Exposure: Calculate your total company exposure across salary, RSUs, and retirement accounts
2. Check Your Tax Setup: Verify your withholding strategy is appropriate for your situation
3. Book a Free Consultation: Let's create a customized RSU strategy that works for your specific needs

Remember: The goal isn't to completely eliminate your company stock position. It's to manage it thoughtfully within your broader financial picture.

Ready to turn your RSU complexity into a clear strategy? Schedule a free consultation with one of our advisors who specializes in tech compensation planning. We've been exactly where you are—and we can help.

Disclosures

Advisory services are provided by Titan Global Capital Management USA LLC ("Titan"), an SEC registered investment adviser. Please refer to Titan's Program Brochure for important additional information. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is an SEC-registered broker-dealer. Both Titan and TGT are subsidiaries of Titan Global Capital Management, Inc.

General client examples are for illustrative purposes only and individual results will vary. Client quotes reflect their personal experience and should not be interpreted as representative of all outcomes. This content is for informational purposes only. It is not to be construed as investment or tax advice, a recommendation to buy or sell any securities, or a recommendation to rollover any retirement account(s). While Titan can provide general tax information and guidance, any information provided should not be taken as tax advice as Titan is not a tax professional. We recommend consulting a qualified tax professional for personalized advice on your specific tax situation. Tax implications and any potential benefits vary by individual circumstances and depend on factors such as income, residence, account types, transactions, and holding periods. Titan assumes no responsibility for the tax consequences to any client of any transaction associated with tax-loss harvesting.

All investing involves risks, including the potential loss of principal. Past performance does not guarantee future results or returns. Diversification is a portfolio allocation strategy that seeks to minimize inherent risks by holding assets that are not entirely correlated. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. Please visit www.titan.com/legal for important disclosures.