What is the process for non-discrimination testing?
To help ensure that companies extend their 401k plans equitably to employees, the IRS requires that the benefits received by more amply paid employees aren’t disproportionately more favorable than those provided to employees that are paid less. This provision is enforced via “non-discrimination testing.” Types of Employees Non-discrimination testing is performed for two different categories […]
In which state do out-of-state employees pay income tax?
In which state do out-of-state employees pay income tax? Answer If an employee lives in one state and works in another, they will be paying resident taxes to their home state and non-resident taxes to the state in which they work. For example, if the company is located in New York, while the employee lives […]
What is a liquidation preference, and how could it affect an employee’s stock options?
A liquidation preference determines who gets paid first, and how much, among investors when a company is sold or liquidated. It basically establishes a pecking order among stockholders. Liquidation preference means that sales and dissolutions can result in wildly different outcomes for the employees with stock options, depending on the established order. Common Stock vs. […]
What is single trigger stock option acceleration?
Single trigger stock option acceleration is based on one trigger, typically an acquisition, but can also be based on termination of employment for certain reasons. This allows for an employee’s unvested shares to be fully vested or “accelerate” and is designed to reward the employee for his or her contribution to the company.
What is the AMT (Alternative Minimum Tax)?
The Alternative Minimum Tax (AMT) is an IRS rule to ensure that individuals and corporations that benefit from certain exclusions, deductions or credits pay at least a minimum amount of tax.