What OpenAI Employees Should Do Before Your IPO

Key Takeaways:

• Determine how concentrated you are in OpenAI equity. A large share of your net worth may sit in legacy Profit Participation Units PPUs, converted OpenAI Group stock, restricted stock units (RSUs), or future grants, and sizing that up is the first step.

• Understand when you can actually sell. Tender windows, secondary sales, lockups, blackout periods, and company trading policies all shape when liquidity is real, with or without an IPO.

• Plan for taxes before you sell. Legacy PPUs, converted stock, and RSUs can be taxed very differently, so confirm what your documents say before making any sale decision.

OpenAI confirmed on its own blog that it submitted a confidential draft Form S-1 to the Securities and Exchange Commission (SEC), while making clear it has not settled on timing.¹ That makes an initial public offering (IPO) a real possibility to plan around, even though the price range, share count, and final date are still open.

For employees, that means variables like taxes, lockups, liquidity windows, concentration, and investment choices can all land in a short stretch, and the hardest calls are easier to make before pricing, headlines, and trading limits are already in motion.

Determine How Concentrated You Are in Your OpenAI Equity

I start with concentration with equity-heavy tech employees early, well before any liquidity is on the table. A concentrated position simply means too much of your financial life rides on one employer, one valuation, and one outcome you do not control.

My general guideline is that once a single company makes up more than 20% of your investable assets, you are highly concentrated. That does not mean you should sell everything, but it does mean the risk deserves a deliberate plan.

Silicon Valley Bank is the example I keep coming back to. Some employees reportedly received up to half of their pay in company stock, and one employee described holding more than $1 million in shares that became worthless when the bank failed.²

Diversifying is not a verdict on OpenAI’s technology, mission, or future. The real question is how much of your net worth should depend on a single company, even one you believe in deeply.

How to Calculate How Concentrated You Are in OpenAI Equity

You can calculate your concentration by estimating the value of your vested OpenAI equity using the most reliable company-approved figure you have, such as a recent tender price, a conversion statement, or an equity-portal value. Next, total your investable assets: bank balances, brokerage accounts, retirement accounts, and your vested OpenAI equity.

Divide the OpenAI figure by that total, and the result is the share of your financial life tied to one company. A 90% reading calls for a very different plan than a 10% reading.

Measure Concentration Before Liquidity Opens

Do this work before a tender window or a lockup expiration, because once pricing and headlines start moving, level-headed decisions get harder. A complete review looks past the equity you could sell today to weigh these factors:

• Current exposure: Your vested OpenAI equity as a percentage of total investable assets, which sets the baseline for how much already depends on one company.
• Future exposure: Unvested units, converted equity, restricted stock units (RSUs), and future grants shown in your documents, since continued vesting can raise concentration even after you sell part of today’s position.
• Minimum liquidity needs: Taxes, a home purchase, education funding, family support, debt payoff, and cash reserves, separated from long-term upside before the first window opens.
• Target concentration range: The amount of long-term OpenAI exposure you are comfortable holding, which keeps the choice from becoming all-or-nothing.
• Sell-to-target math: Working backward from that target to estimate how much may need to be sold through tender or post-IPO windows, turning a broad goal into a number.

Understand When You Can Sell Your OpenAI Equity

Before anything else, get clear on when you are actually allowed to sell, because an IPO does not automatically make your equity liquid.  Lockups, trading windows, blackout periods, and company policy can all stand between you and a sale.

Lockup Period

Employees and other insiders generally cannot sell during an IPO lockup, a restriction meant to keep a flood of insider shares from hitting the market right after a company goes public. In a conventional IPO, you wait out that lockup before selling covered shares. Most lockups run 180 days, though the exact terms vary and would come from OpenAI’s own offering documents.⁴ 

Traditional IPO With Early Releases

Some offerings allow employees to sell a limited number of shares before the full lockup ends, with timing, percentages, and eligibility varying by company and deal. A company might permit a small early release and then open up more sales once the full lockup lapses. As always, the offering documents, not assumptions, govern what applies to you.

Decide When You Should Sell Your OpenAI Equity

I walk clients through the framework below before the first possible sale date, to separate cash needs, long-term conviction, and the remainder before any window opens:

1. Near-term cash needs first. Estimated taxes, a home down payment, debt payoff, education funding, family support, or reserves are the dollars you may need to raise as soon as liquidity is available.
2. Decide on your long-term hold. Many employees believe in OpenAI’s future and still benefit from a ceiling. I often suggest keeping company stock near 10% of investable assets, but you need to figure out what percentage you are comfortable with.
3. Plan the remainder. Once cash needs and the long-term hold are set aside, a written selling strategy can handle what is left without letting emotion drive each trade.

Selling Strategies for Remaining OpenAI Equity

With the remainder defined, a written framework keeps execution steady. The right mix depends on your taxes, concentration, conviction, and cash needs. Here are selling strategies for your remaining equity:

• Sell when first allowed: This quickly reduces concentration and can fund taxes or major goals, at the cost of selling on a single day or stacking a large taxable event into one year.
• Sell on a schedule: A set percentage each quarter or each window reduces timing risk and takes much of the emotion out, since the rule is set in advance.
• Sell on a schedule, more when higher, less when lower: Selling on a schedule, more at higher prices and less at lower ones, where policy and taxes allow, adds structure while keeping some flexibility.
• Sell to fund specific goals: Tying sales to a tax reserve, a down payment, a gift, or a financial independence target makes the decision less about guessing the perfect price.

Confirm the Details of Your OpenAI Equity Before You Sell

The best planning starts with your own documents, not a headline valuation or an informal estimate. Confirm the core facts before you make any sale decision:

• Equity type: Identify exactly what type of equity you hold because that determines the tax treatment, whether that is legacy PPUs, converted OpenAI Group stock, RSUs, or another grant type in your records.
• Grant and ownership dates: Grant, vesting, conversion, settlement, tender, and sale dates can all affect basis, holding period, and how a sale is taxed.
• Cost basis: Basis drives future gain or loss, and it can be especially nuanced for legacy PPUs, converted stock, prior tenders, and any elections you filed.
• 83(b) election records: Confirm whether an 83(b) election was filed for any restricted or profits-interest-style grant. The IRS requires that the election be made within 30 days of the transfer, so the paperwork matters.⁶
• Conversion documentation: If you held PPU-related interests before the restructuring, gather the records that show what changed and how it was treated.
• Vesting and settlement terms: Vesting tells you when an interest is earned, while settlement tells you when shares or another economic interest are actually issued and potentially taxed.
• Tender history: Prior sales can affect basis, holding periods, taxes already paid, and how much of your wealth is still tied to OpenAI.
• Trading restrictions: Tender rules, transfer limits, lockups, blackout windows, and insider-trading policies may ultimately decide when you can sell.

Minimize Your Taxes for Each Type of Your OpenAI Equity

A strong plan connects each equity type to the tax event it can create. For OpenAI employees, the key is identifying whether the taxable moment comes from a tender sale, a public sale, an RSU settlement, a conversion-related event, or another document-specific trigger.

The IPO itself may not be what generates the tax bill. The outcome depends on what you hold, which elections were filed, the timing, where you live, and how your records describe the equity.

Legacy PPUs: Hold for Long-Term Capital Gains to Save on Taxes

Under the 2019 capped-profit structure, returns for OpenAI’s investors and employees were capped, with the cap negotiated in advance.⁷ A PPU represented a contractual right to share in those profits rather than outright stock ownership, and that distinction drives how a sale is taxed.

Because a PPU only entitles you to a share of future profits, its value at grant is generally treated as $0. Filing an 83(b) election locks in that zero value, so no tax is due at grant.

Hopefully, you filed an 83(b) election when you started working at OpenAI.  The 83(b) election represents a huge opportunity to save on taxes sooner!  The 83(b) election starts your clock on your PPUs qualifying for the lower long-term capital gains tax rate when your PPUs are granted vs. vested, which typically means you start your clock one year earlier on qualifying for long-term capital gains.  The highest Federal tax rate on ordinary income is 37%, vs. the highest Federal long-term capital gains tax rate is 20%, which means you can save up to 17% in taxes.  For every $1M in gains in your OpenAI equity, you could save up to $170,000!

If you hold legacy PPUs, gather grant records, vesting history, 83(b) documentation, tender confirmations, and conversion files. Those are what let a tax professional determine your basis, holding period, and how a sale will be taxed.

Converted OpenAI Group PBC Stock: Confirm Basis and Post-Conversion Treatment

The conversion is an OpenAI-specific planning issue worth real attention. After the October 2025 recapitalization, OpenAI says all stockholders in OpenAI Group, now a public benefit corporation (PBC), hold conventional equity that participates proportionally in any increase in value.⁸

What still needs confirming is whether your basis, holding period, and vesting history were carried over, and how the conversion is reported. That review matters because it can affect sales reporting, capital-gains modeling, estimated payments, and your overall tax exposure.

RSUs: Hold for Long-Term Capital Gains Rate to Minimize Taxes

RSUs only apply if your documents actually show them. Some newer OpenAI employees may hold double-trigger RSUs, while others hold legacy PPUs, converted stock, or another grant type entirely.

Double-trigger RSUs mean that two triggers or events need to take place before this type of RSU is vested.  The first trigger is time-based or your traditional vesting schedule, which means you get paid RSUs over time as you work at OpenAI.  For example, you could vest 25% of your initial grant after one year, and then the rest vest quarterly over a total of four years.  The second trigger is typically a liquidity event, which includes an IPO.  This means at the IPO, you immediately vest all of your RSUs that you have vested on your time-based schedule.  This also means you owe taxes on those vested RSUs for the tax year of the IPO.

One way to save on taxes for your RSUs is to hold them for more than one year after you vest to qualify for the lower long-term capital gains tax rate.  To remind you, the highest Federal tax rate on ordinary income is 37%, vs. the highest Federal long-term capital gains tax rate is 20%, which means you can save up to 17% in taxes.  For example, if you vest an RSU at $100, hold it for more than one year, then sell it for $190, you would pay the lower long-term capital gains rate on the $90 gain.

4 Tax Strategies to Diversify Your OpenAI Equity Without Triggering a Huge Tax Bill

No matter what type of OpenAI equity you have, you likely have lots of gains in your equity.  Four tax strategies can help you diversify your OpenAI equity without triggering a huge tax bill, including direct indexing, long/short direct indexing, exchange funds, and Charitable Remainder Unitrusts.  These strategies assume that OpenAI equity is publicly traded.

The first two strategies are based on a strategy called tax-loss harvesting.  The IRS lets you use investment losses to offset gains.  This means you pay $0 in taxes on any capital gains that are offset by capital losses.  Tax-loss harvesting is a strategy to take losses strategically to save on taxes.  

Direct indexing is a strategy in which you match an index e.g., S&P 500, by buying individual stocks vs. ETFs or mutual funds.  By buying individual stocks, you have more opportunities for tax-loss harvesting because even when an overall index is up, there are still individual stocks that are down.  For example, in 2024, even though the S&P 500 was up~23%, there were more than 100 stocks that were down more than 5% at some point during the year.  Direct indexing enables you to build up tax losses that you can then use to offset gains in your OpenAI equity and pay $0 on those gains.

Long/short direct indexing is a souped-up version of direct indexing.  This strategy adds a long/short extension.  Going long means you make money when stocks go up.  Going short means you make money when stocks go down.  The long/short extension gives you more opportunities for tax-loss harvesting because you can take losses when markets both go up and down.  Long/short direct indexing enables you to build up tax losses faster than direct indexing, so you can offset your OpenAI gains sooner.

Exchange funds are a strategy to diversify immediately without triggering taxes.  You contribute your OpenAI shares to a fund in exchange for an equal value of units of the fund.  Other individuals contribute shares from their companies to the same fund.  The exchange fund typically tracks a broader index, e.g., S&P 500.  A critical tradeoff is that this is an illiquid investment that you typically need to stay in the fund for a minimum of seven years.

 Charitable Remainder Unitrust (CRUT) is a strategy that enables you to diversify immediately without triggering immediate capital gains.  You put your OpenAI shares into a CRUT.  The CRUT sells stock immediately and pays no immediate capital gains because it is tax-exempt and invests in a diversified portfolio. The CRUT pays you a yearly income for life, and charities receive what’s left at the end.  The key tradeoffs are that you get a lifetime income, but you can’t take the assets back out of the CRUT.

Each of these tax strategies has different diversification speeds, complexity, tradeoffs, and costs.  You should understand those qualities before deciding which strategy is a fit for your needs.

Use Advanced Planning Only Where It Actually Fits

Some planning windows narrow once tender documents arrive, an S-1 is filed, a lockup begins, or public-company trading policies take effect. Employees in senior positions are wise to consider advanced strategies before the timing gets tight.

Coordinate Charitable Giving With Liquidity and Taxes

Charitable giving can be a good fit for employees who already plan to give and expect meaningful tax deductions. The question is not only how much to give, but also which asset to give, when, and how the gift affects the rest of the liquidity plan.

Private or restricted shares are harder to donate than publicly traded ones. Before pledging or transferring, confirm whether transfers are allowed, whether company approval is needed, how the shares would be valued, and whether the charity or a donor-advised fund can accept them.

A donor-advised fund can separate the timing of a deduction from the timing of future grants to charities, which helps when a tender or post-lockup sale creates unusually high income in one year. Even so, charitable planning should follow the core cash-flow work, so generosity does not create a new problem of its own.

OpenAI IPO Planning FAQs

1. What should OpenAI employees do first if an IPO is coming?

Start with your concentration. If most of your investable assets are tied to OpenAI, build a plan before a lockup expiration or a public trading window arrives.

2. How do I calculate how concentrated I am in OpenAI equity?

Divide your vested OpenAI equity by your total investable assets, including bank, brokerage, and retirement accounts, plus the vested equity itself. The result is the share of your financial life riding on one company.

3. What happened to OpenAI PPUs after the structure changed?

After the October 2025 recapitalization, OpenAI says stockholders hold conventional equity that participates proportionally in value increases. If you held PPU-related interests, review your conversion documents, grant records, and tax history.

4. Can OpenAI employees sell shares immediately after an IPO?

Usually not. For Traditional IPOs, employees can typically sell 180 days after the IPO date, after the lockup period ends.  Expect lockups, blackout windows, trading windows, and company policies, with the specifics set by the final offering documents and your own restrictions.

5. Are OpenAI PPUs, converted shares, and RSUs taxed the same way?

Not typically. PPUs, converted stock, and RSUs can create different tax events depending on terms, elections, holding periods, settlement, and sale timing, so confirm your documents before assuming any single treatment.

6. How much OpenAI stock is too much to hold after an IPO?

My general guideline is that more than 20% of investable assets in one company is highly concentrated. The right target depends on your goals, cash needs, risk tolerance, and how much upside you want to keep.

We Help OpenAI Employees Prepare Before an IPO

OpenAI planning is not a single decision. It is a connected set of choices around your financial goals, concentration, liquidity timing, equity type, taxes, and post-lockup execution, and organizing them early makes each one easier.

I can help you identify goals, review grants, conversion documents, 83(b) records, tender history, RSU details, concentration levels, tax projections, and liquidity scenarios. As your financial planner, I can also coordinate investing, estate-planning conversations, charitable planning, and tax strategy while you decide how to use your OpenAI equity to reach your goals.

If you would like help preparing before liquidity arrives, schedule a complimentary consultation with me.

Resources

1. OpenAI, Confidential submission of draft S-1 to the SEC
2. Fortune, SVB staff claim they got up to 50% of their salaries in company equity
3. CNBC, OpenAI completes share sale at $500 billion valuation
4. Investor.gov, Initial Public Offerings: Lockup Agreements
5. SEC, Fact Sheet: Rule 10b5-1 Insider Trading Arrangements and Related Disclosure
6. IRS, Form 15620 (Section 83(b) Election)
7. OpenAI, OpenAI LP
8. OpenAI, Our Structure
9. IRS, Publication 15 (Circular E), Employer’s Tax Guide