22 Aug What can I do with my employer’s company stock?

Q. I’ve been working for the same company for 10 years and I have accumulated lots of company stock but I can’t sell any of it until after I leave the job, which I don’t plan to do anytime soon. What can I do to diversify better? Can they stop me from selling?
— Too many eggs in one basket

A. We’re glad to hear that you’re a saver and that you are considering the benefits of diversification.

What you can do with the stock will depend on several variables.

Assuming the company is privately held, your employer can restrict you from redeeming or selling your shares until you separate from service, said Ken Van Leeuwen, a certified financial planner with Van Leeuwen & Company in Princeton.

He said your diversification options vary based on how you are accumulating shares.

“If you are receiving shares through grants as compensation, then you lack control over accumulating additional shares and your diversification options are limited,” he said. “If you are purchasing shares through an employee stock purchase plan, you can redirect your deferral elections to a diversified portfolio instead of continuing to purchase the stock.”

If your employer is a publicly traded company, the selling restrictions may be less limiting than those of privately held stock, Van Leeuwen said.

Stock compensation of publicly traded companies is subject to certain restrictions such as vesting schedules and blackout periods, but you may not be required to wait until you terminate employment to sell your shares, he said.

“If this is the case, you will have opportunities to sell shares as they vest, and reinvest the proceeds into a diversified portfolio,” he said.

You should speak to your human resources department or the financial services company that’s managing the account to see what options are available to you.

Either way, it’s important to understand the tax implications associated with each type of stock compensation, so speak with a qualified professional so you’re fully informed before you make a sale.

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This story was originally published Aug. 22, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.