ESOP: Anyone ever figured out how to account for it in Quicken?

There are numerous posted questions on the Quicken board, in this group and elsewhere on Google about how to account for an Employee Stock Ownership Plan (ESOP). Not an Employee Stock Purchase Plan and not a Stock Option Plan, but a true ESOP. I'm talking about where all of the stock and cash are contributed by the employer and the employee contributes nothing and where there is vesting. There seems to be no easy way to do it in Quicken and I could find no very few responses to the posted questions. Anyone help?

Reply to
Heather
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I am struggling with this myself. I got a very modest grant recently. My employer calls it a grant of "restricted stock units (RSUs).

For my first act, I attempted to enter my RSU grant as an employee stock option grant with a strike price of $0. Quicken refused, and suggested that I just add the shares to my account. Perhaps this is correct in terms of tax law, but it is inconvenient.

Here is what I am doing instead:

  1. I create an employee stock option grant with a strike price of 1. I create an employee stock option grant with a strike price of $0.01 per share. This allows me to model the vesting of the RSUs with no manual effort. 2. After each vesting event, I manually enter a transaction to exercise-and-hold all of the RSUs that vested. I enter a commission fee to compensate for the $0.01 strike price in step 1. For example, if I vest 12 shares, then I enter a Quicken transaction to exercise-and-hold 12 shares, with a commission cost of $0.12. As a result, the cash balance in my Quicken account remains zero, which is desired..01 per share. This allows me to model the vesting of the RSUs with no manual effort.
  2. After each vesting event, I manually enter a transaction to exercise-and-hold all of the RSUs that vested. I enter a commission fee to compensate for the 1. I create an employee stock option grant with a strike price of $0.01 per share. This allows me to model the vesting of the RSUs with no manual effort. 2. After each vesting event, I manually enter a transaction to exercise-and-hold all of the RSUs that vested. I enter a commission fee to compensate for the $0.01 strike price in step 1. For example, if I vest 12 shares, then I enter a Quicken transaction to exercise-and-hold 12 shares, with a commission cost of $0.12. As a result, the cash balance in my Quicken account remains zero, which is desired..01 strike price in step 1. For example, if I vest 12 shares, then I enter a Quicken transaction to exercise-and-hold 12 shares, with a commission cost of 1. I create an employee stock option grant with a strike price of $0.01 per share. This allows me to model the vesting of the RSUs with no manual effort. 2. After each vesting event, I manually enter a transaction to exercise-and-hold all of the RSUs that vested. I enter a commission fee to compensate for the $0.01 strike price in step 1. For example, if I vest 12 shares, then I enter a Quicken transaction to exercise-and-hold 12 shares, with a commission cost of $0.12. As a result, the cash balance in my Quicken account remains zero, which is desired..12. As a result, the cash balance in my Quicken account remains zero, which is desired.

If you use my method, and you also import your Quicken data into TurboTax, then you might run into problems. Otherwise, I think this method is good enough. The main disadvantage is that it requires manual effort each time some RSUs vest. Its main advantage is that it creates a series of future vesting events, just like a stock option grant. You can use these vesting events in your reports and forecasts.

Reply to
David Arnstein

And now I think that this is exactly WRONG. Since the employer paid for the shares with (taxed) salary, I believe that the strike price should be the full market value of the share on the day of vesting.

I feel bad about posting bad information. The OP's question involves taxes, and I don't have confidence in myself to deal with such issues. It is too complicated for me.

Apologies to the OP.

Reply to
David Arnstein

I'd go so far as to argue that, UNTIL vesting date, you have a PROMISE ... and nothing else. And, even the promise, is conditional upon your future actions (i.e., staying with the company).

Therefore, I'd record a recurring reminder somewhere (Q, Outlook, paper calendar? -- it doesn't matter where) to enter an appropriate transaction ON the posting dates. Until that time, you've got nothing of identifiable economic value.

db

Reply to
danbrown

David, thanks for your help. Don't worry about the tax issue: no tax issue, at least not for me. I don't use Quicken for tax purposes. I just want to know how to get the darn thing in Quicken properly.

Dan, you are right about having nothing until vesting date. My very cheap, stingy and greedy employer uses five-year cliff vesting, so right now I have nothing but a promise. I say cheap/stingy/greedy because the ESOP plan was implemented a few years ago and cliff vesting applies to *all* employees - regardless of length of service. Employees who have been with the company for 20+ years are still not vested!

Dan, how would you record it once vested?

Reply to
Heather

Depends upon tax treatment at the time of vesting. If it's taxable income at that time, I'd 1) record cash into the account that will eventually hold the stock -- using an income category to offset the cash. 2) record a buy of the stock, using the cash.

If it's non-taxable, I'd probably just use a "Shares Added" transaction.

db

Reply to
danbrown

replying to danbrown, David L McNeal wrote: I enter the annual contributions as cash and categorize the entire account as tax deferred. There is no taxable event until I make a withdrawal.

Reply to
David L McNeal

I was struggling with this issue as well. What I did was change my "Action" from 'Bought' to 'ADDED'. Since these Stocks are not purchased by me but granted to me by my employer, it made sense to change the action. My Securities Value now equals my ESOP account with Fidelity.

Reply to
IrishIke

You are responding to a literally 14 year old question....

Reply to
Evan Platt

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