Middlesex Massachusetts Restricted Stock Plan of Sundstrand Corp.

Name: Middlesex Massachusetts Restricted Stock Plan of Sundstrand Corp.
Brand: US Legal Forms
Rating: 4.84 (405 reviews)

Category:

Corporations - Public - Incentive Compensation Plans

State:

Multi-State

County:

Middlesex

Control #:

US-CC-20-171D

Format:

Instant download

Description

20-171D 20-171D . . . Restricted Stock Plan under which a committee of Board of Directors sells shares of common stock to certain officers and senior employees at a price substantially below current market price. The shares are subject to following restrictions: (a) prohibition against any sale or other transfer and (b) obligation that participant (at corporation's option) must resell shares to corporation at price he paid for them if he ceases to be employed by corporation prior to expiration of from five to nine years after shares were sold to him, for reasons other than normal retirement, death, total disability or early retirement with consent of Board or committee. Except as otherwise provided, restrictions lapse as to 1/5 of aggregate number of participant's shares at expiration or each of fifth through ninth years after his purchase of such shares

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FAQ

Restricted Stock Unit Taxes: Looking at Your W-2 RSU income is reported in Box 14 Other on your W-2. It will likely list the total dollar amount followed by the acronym RSU. Any sell-to-cover withholdings will be combined with your regular withholdings in boxes 2, 4, and 6.

When you receive an RSU, you don't have any immediate tax liability. You only have to pay taxes when your RSU vests and you receive an actual payout of stock shares. At that point, you have to report income based on the fair market value of the stock.

Taxation. With RSUs, you are taxed when the shares are delivered, which is almost always at vesting. Your taxable income is the market value of the shares at vesting. You have compensation income subject to federal and employment tax (Social Security and Medicare) and any state and local tax.

Restricted stock units are issued to employees through a vesting plan and distribution schedule after they achieve required performance milestones or upon remaining with their employer for a particular length of time. RSUs give employees interest in company stock but no tangible value until vesting is complete.

Restricted stock units are a way an employer can grant company shares to employees. The grant is "restricted" because it is subject to a vesting schedule, which can be based on length of employment or on performance goals, and because it is governed by other limits on transfers or sales that your company can impose.

Here is how RSUs are taxed: RSUs are taxed as income to you when they vest. If you sell your shares immediately, there is no capital gain tax, and you only pay ordinary income taxes. If instead, the shares are held beyond the vesting date, any gain (or loss) is taxed as a capital gain (or loss).

A Restricted Stock Plan is a common way to share stock with employees in public companies. The shareholder approved plan simply allows for the issuance of stock to selected employees. Unlike stock options, employees receive the full starting value of the shares.

RSUs are appealing because if the company performs well and the share price takes off, employees can receive a significant financial benefit. This can motivate employees to take ownership. Since employees need to satisfy vesting requirements, RSUs encourage them to stay for the long term and can improve retention.

The advantages of restricted stock bonus/purchase plans are (1) the employee can make the §83(b) election; (2) the employee is generally entitled to capital gain treatment on sale of vested stock; and (3) the Company gets a wage deduction without paying cash wages.

Middlesex Massachusetts Restricted Stock Plan of Sundstrand Corp.

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How do I report restricted stock on my W-2?

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Interesting Questions

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