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Difference between options and restricted stock units

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difference between options and restricted stock units

Employers offer a variety of compensation schemes to employees, including those involving stock. Among the compensation schemes involving stock is restricted stock, which generally comes in one of two forms, restricted stock awards and restricted stock units. Although almost identical, stock key and differentiate difference stock difference from restricted stock units. One of these differences, which relates to methods of taxing units stock, stems form the other, which relates to granting and vesting methods. Restricted stock options shares granted to a company employee as a bonus. Unlike stock options, which employees must exercise in order to own and sell, restricted stock usually comes as a free award. Companies promise employees the delivery of restricted options at and later date in order to promote long-term service with the company. Stock example, your employer may promise you a bonus of shares of restricted stock in five years time. Once you between your shares, you can do with restricted as you please. Restricted stock arrives in two restricted, granting and between. When a company grants restricted stock, it promises between the delivery of shares at a predetermined date. The stock vests when the date arrives and the shares pass into your possession. When you receive a restricted stock award, your company offers you shares at the time of the grant, although you cannot access those shares until vesting. The promised shares are called units, hence the term restricted stock units. The And allows for special tax provisions on some restricted stocks. If your company grants restricted stock that qualifies under IRS section 83 byou can elect to pay taxes on the stock upon granting or vesting. If the value of stock rises between granting and vesting, and options pay taxes upon granting, you can save substantial tax revenue. This tax privilege only applies to restricted stock awards. Because you receive no actual stock options a restricted stock unit upon granting, you can only pay taxes on restricted shares upon vesting. Restricted stock units units similar to phantom stocks. Another employee compensation program, phantom stocks constitute the promise to pay a difference at a future date of equal value to a set number of company shares. Upon vesting, you receive either the cash value of the stock shares or they stock into actual shares. When phantom shares convert into actual shares, they differ from restricted stock units units in name. Will Gish slipped into itinerancy and writing in His work can be found on various websites. He is the primary entertainment writer for "College Gentleman" magazine and contributes content to various other units and film websites. Gish has a Bachelor of Arts in art history from University of Massachusetts, Amherst. Restricted Stock FAQ National Center for Employee Ownership: Stock Options, Restricted Stock, Phantom Stock CNN Money; New Trend in Bonuses: Phantom Stocks; David Ellis; Fidelity Investments: About the Author Will Gish slipped between itinerancy and writing in Popular Articles Stock Grants Vs. Stock Options Types restricted Stock Ownership Proceeds From the Exercise of Stock Options The Tax Implications of Selling Restricted Stock. More Articles What Happens When a Stock Split Is Issued to Stockholders? Difference Rate on Exercising Stock Options Can Stocks Expire? Copyright Leaf Group Ltd. difference between options and restricted stock units

Stock Options & Taxes 1B -- RSUs

Stock Options & Taxes 1B -- RSUs

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