Financial Planning for NVIDIA Employees

We specialize in helping NVIDIA employees with ongoing financial planning and investment management so that you can feel confident you’re making the right decisions with your NVDA RSUs, ESPP, 401(k), Mega Backdoor Roth, and other employee benefits. As an NVIDIA employee, you have the opportunity to save on taxes and maximize the value of your NVDA stock to reach your goals if you get financial planning specifically customized for NVIDIA employees.

In the videos below, we help you understand how you can feel confident you’re making the right decisions in the key financial planning areas for NVIDIA employees.

  • Do You Have Too Much in Your NVDA Stock?
  • 3 Steps to Feel Confident You’re Making the Right Decisions with Your NVDA RSUs
  • How to Put $69k in the NVIDIA 401(k) Mega Backdoor Roth

If you want to chat about your own questions as an NVIDIA employee, please click on the Book a Free Call button.

 

DO YOU HAVE TOO MUCH IN YOUR NVDA STOCK?

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(00:00):

Nvidia employees, do you have too much in your Nvidia stock? In this video, we’ll cover three topics. Why you should care if you have too much in your Nvidia stock. Three simple steps to figure out if you have too much in your Nvidia stock and what you should do if you have too much in your Nvidia stock. Why should you care if you have too much in your Nvidia stock? Well, I talk with clients all the time about this concept of concentration, which simply means you have too much of a single company stock. My general guideline, if it’s more than 20% of your total net worth, then it’s probably too much, and that’s because you have a ton more risk and volatility if you’re holding a single company stock versus a diversified portfolio. Now let me tell you a quick story to help you understand what this risk really means.

(00:47):

So you probably haven’t heard of, there’s a company in the late nineties, a high flying energy company called Enron. And Enron was a stock that everybody loved, main Street, loved it, wall Street loved it. It went from a few dollars a share up to almost $90 up to $90 a share in early 2000. And then some bad news came out through were accounting irregularities and the stock dropped to almost nothing within a few months. Now, the big issue was that there were Enron employees who when they contributed to the 401k, they could actually invest in Enron stock. Their company match for the 401k was in company stock, and they could also invest through an employee stock purchase plan and they could buy stock on their own. So there were Enron employees who had millions of dollars in their retirement account and in stock it was all in Enron.

(01:41):

And so when this bad news came out, they lost all of their, almost all of their retirement, almost all their net worth overnight with something that happened. It was completely beyond their control. So that is the real risk in being too highly concentrated in your Nvidia stock. That is why you should care if you’re an Nvidia employee and you have too much in your Nvidia stock. Alright, well, how should you figure out if you have too much in your Nvidia stock? Okay, here are three simple steps to follow to figure that out. Okay? Step one is calculate the total value of your Nvidia stock. So this could be your RSUs, this can be your ESPP. Uh, any way you have Nvidia stock, just take the number shares times the current value that gives you the value of your NVIDIA stuff. Step two is calculate the value of your other, uh, investible assets.

(02:37):

So those are, that’s, uh, assets like savings, investments, uh, retirement accounts, your 401k add all of that up. You take your value of your Nvidia stock, you add it to your investible assets. And then step three is you count, you, uh, take your, the value of your NVIDIA stock divided by value of your total investible assets. That gives you a percentage. And if that percentage, that’s your percentage of concentration. If that percentage is greater than my general guideline is 20%, then you’re highly concentrated and you should think seriously about diversifying out of your nvidia. So quick example, let’s say you have thousand shares of your Nvidia stock stock’s at $800 share. That’s $800,000. That’s the value of your NVIDIA stock. You add up the total value of other in investible assets. So let’s say saving investments, retirement 401k is a total of 1.2 million. So then you’re 800,000 plus your 1.2 means you have a total net worth of 2 million.

(03:46):

So you take your 800,000 of Nvidia stock value divided by your 2 million. That means you’re at 40% concentration. So you’re more than the 20%. So you’re highly concentrated. So you should think seriously about diversifying out of your Nvidia stock. All right, well if you have too much, you’ve just, you’ve figured out you have too much in Nvidia stock, what should you do next? So I suggest you do take a few steps. One is figure out if you have any valid near term cash needs. That means goals that you have, uh, that you need in the near term. So examples would be you have to pay taxes, you need to set up an emergency fund, you wanna make a down payment in the next year or two. So what I would do is cash out, uh, as much Nvidia stock immediately so that you can meet those goals.

(04:40):

Then if this NVIDIA stock goes down, you’ll still have your be able to pay your taxes, have an emergency fund, or be able to pay your down payment. Step two would be most of my clients wanna hold on to a certain percentage, uh, because they believed in the company. And so you need to figure out what percentage you want to hold on for the long run. Long term. I recommend somewhere between five to 10% of your total net worth, but you need to figure out what percent you’re comfortable with. So once you figure that out, then you can, let’s say you say it’s 10%, then take your total stock set aside 10%, you’re left with a remaining 90%. Okay? Step three would be then you need to build a selling plan, okay? And there are a few high level options to do that. One is to sell everything immediately.

(05:32):

That’s simple. You get it done and you don’t have to worry about the stock going up and down. Most of my clients aren’t comfortable with that. Another version is scheduled selling over time. And what that means is, for example, you could say, I’m gonna sell 25% a quarter over the next four quarters. So every quarter comes, I’m gonna sell it. I don’t care if the price is high or low. Uh, it’s on autopilot. Now the benefits are you don’t sell on the single wrong day. So the price will go up and down. You aren’t gonna happen to sell at a low point. The second benefit is you can spread the tax out over multiple years. Okay? So figure out what schedule you’re comfortable with. It could be 25% a quarter over four quarters. It could be 10% a quarter over 10 quarters. You just have to figure out what pace you’re comfortable with.

(06:30):

And then the third way to do this is you could do scheduled selling and you sell more when the price is higher. So you could set price bands every quarter. You sell that percentage. So for example, if you said, okay, if the price is below 800, I’m gonna sell 15%. If the price is between 800 900, I’ll sell 25%. If the price is greater than 900, I’ll sell 50%. So each quarter you say, okay, where’s the price? And then you sell that percentage, okay? Again, you don’t worry about the stock if the stock is up or down. You just follow the plan that you’ve laid out. The benefit of the scheduled selling is, like I said, it is, you aren’t gonna pick the wrong single day. You spread your taxes out over multiple years. Also, it minimizes the emotion because you’re following this plan that you’ve put together and you aren’t worrying about whether it’s up or down.

(07:26)

To recap, the reason you should care if you have too much your Nvidia stock is you can lose a lot of your net worth very quickly with something that happens beyond your control and then told you the three steps to figure out if you have too much in your Nvidia stock. Calculate the total value of your nvidia, calculate the total value of investible assets, figure out the percentage of Nvidia. If it’s more than 20%, you’re highly concentrated and you should consider diversifying. And then what you should do if you do have too much Nvidia stock first, identify if you have any near term cash needs. Sell and cover those. Decide if you want to set aside a certain percentage for the long term. If you do set that percentage of stock aside, step three, decide on a selling plan. You could either sell immediately, you can do scheduled selling over time, so a certain percentage every quarter. Or you could set price ranges and sell that percent depending on where the price is each quarter. So I hope that’s helpful. My name’s Tom Lowe. I’m a financial planner that specialize in helping tech professionals, including Nvidia employees, uh, feel confident that they’re making the right decisions with their R issues. If you want to ask your own specific questions about your Nvidia doc, feel free to go to my website@vestedfinancialplanning.com and you can schedule a free virtual consultation, and I’d be happy to chat with you about it. Thank you very much.

3 STEPS TO FEEL CONFIDENT YOU’RE MAKING THE RIGHT DECISIONS WITH YOUR NVDA RSUS

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Speaker 1 (00:02):

Let’s get started. Welcome everybody. Hopefully you’re an Nvidia employee. My name’s Tom Lowell. I’m going to start with a story and then we’ll get into the content. Today I want to take you back to the late nineties. I was working@a.com and I can remember it today. I was sitting there in my cube. I could hear the sounds of champagne cos popping people high fiving each other because we’d done what every startup in Silicon Valley wanted to do. At that time, we had just had our IPO, and so I was happy. Everybody was happy, kind of the big dream for all dot coms at that time. And then what happened was over the next few months is the stock kept going up and up. And a certain point I thought to myself, you know what, if this keeps happening, maybe I can retire in my late twenties.

(01:11):

So those of you who know history know that the.com bubble burst and my company that I was at shut down and all of my stock went to zero. And so that was a couple of important things came out of that. One was I realized I needed to really learn how my equity compensation worked. I didn’t really understand. I had a bunch of options, how they worked, and they needed to educate myself because that was an important part of my compensation working in tech. And then the other thing that happened is as I started to educate myself, it actually put me on the path to making a career change in financial planning, which I did about a decade ago. And the reason I built this firm today is to help people like you who work in tech, who have worked hard for their equity, but you want to make sure you make the right decisions with that equity and you don’t end up where I ended up in that case of the.com with a lot of equity that wasn’t worth anything. So that’s my story. Let me start by sharing some slides with you.

(02:46):

All right, so we’re going about the three steps for Nvidia employees to feel confident you’re making the right decisions with your RSUs. Okay, I am sure you guys have been watching the stock, especially over the last couple of months, and it’s been tough for you and exciting. So this of course, presentation is for educational informational purposes. You should always talk to your own professional. So here’s what we’re going to cover today. I already told you a little about my background and why I do this. And then we’re going to walk through the three steps. Step one is understand how your NVIDIA issues work and how to avoid surprise tax bill with them. Step two is determine if you have too much in your Nvidia rsu. Step three is decide when you should sell your NVIDIA issues. Okay, you guys should come out of this feeling understanding.

(03:47):

Here’s a framework for how I can feel confident about that I’m making the right decisions with my Nvidia rsu. At the end, we’re going to talk about next steps. We’re going to have a live q and a session, and so happy to answer any questions you have. If you guys have questions as we are going through the presentation, feel free to drop into the chat and I, I’ll answer ’em at the end. Now, I’ve done a number of these webinars and I find some people are perfectly happy to ask their questions in a live q and a, but some people prefer to have a more personal setting. And so what I want to do for everybody who’s on the webinar today is offer the chance for you to have a free virtual consultation with me. So let me just put this on your screen now, and this is for you to answer any questions you have about your specific situation. You just click on the button schedule. Now it’s going to take you to my calendar. You put time on my calendar for a Zoom call. We have a Zoom call, and I’m happy to talk to you about whatever questions you have. Okay, so let’s get started. This should take around half an hour or so.

(05:11):

So that’s the plan. All right, so let’s start. Oops. Okay. My background is, this is my background. I worked in tech for almost 20 years and then as I said, made a career change in financial planning. And my firm, the only people I work with are tech professionals with equity, including NVIDIA employees. All right, so let’s start with step one. Let’s understand how your RSUs work. Make sure we have that foundational understanding. And then also how to avoid surprise tax bill. So the way they work is you can think of your NVIDIA RSUs just as compensation in the form of NVIDIA shares, right? And it invest over time. The most common schedule I see now for NVIDIA employees is you’re investing quarterly over four years with a one year cliff. That means you start today into year one, you’ve asked 25% or a quarter of your initial grant.

(06:23):

Year two, every quarter you’re going to invest 6.25%. At the end of four years, your initial grant will be fully vested. And then also what happens typically is every year you get a refresh, may or may not get a refresh for additional RSUs. Now, I’m going to talk to you about the tax treatment of RSUs, which is critical to understand. The way they work is when you’re granted. So when you start there or future grants, there are no taxes. You don’t have to pay any taxes whatsoever. Now, what you do is when you vest, that’s when you start to pay ordinary income tax, ordinary income taxes, just like tax on your salary when the fair market value of that stock when it’s vested, okay? So the day you vest, that counts as stock counts as income, you get tax on it, okay? Now, one way that I talk to clients about your RS U is you can think about your Nvidia RSUs, just you can think about it as a cash bonus in the form of Nvidia stock.

(07:38):

And that’s because it’s taxed as soon as it is vested. And that is different from stock options, incentive, stock options, non-qualified stock options. They have a different tax treatment. So don’t get that mixed up. Your RSUs get taxed as soon as you vest. And I want to help you give you an example to help illustrate why you can think about it as a cash bonus. So for example, one version is, let’s say you get a hundred thousand dollars, you vest a hundred thousand dollars of your RSUs. So Nvidia gives you that to you. And then what they do is they sell, say, let’s say 40,000 of those RSUs to cover taxes, any other withholdings, and then they leave you with $60,000 worth of NVIDIA stock in your employee’s stock account. That’s your RSU version. Now, let’s say the cash bonus version is Nvidia gives you a hundred thousand dollars cash bonus, just like your salary. They’ll take out, say, $40,000 for taxes and withholding. Now you got $60,000 sitting in your checking account. You take the 60,000, you go in the stock market, you buy $60,000 worth of Nvidia stock. Now you own $60,000 worth of NVIDIA stock. So in both this Nvidia RSU version and the cash bonus version, you end up in exactly the same place you own $60,000 of Nvidia stock.

(09:14):

All right? So the question I ask clients once they hear that example is, so if Nvidia gave you a cash bonus today, would the first thing you do with that cash be to go buy more Nvidia stock? Some clients say yes, most clients say, no, probably not. That’s not the first thing I would do with it. Okay? So if you choose to hold your RSUs, your Nvidia RSUs, then it is the same as buying the stock at the current price. Okay? If you wouldn’t take a cash bonus and go buy stock, right? Today, that wouldn’t be the first thing you do. Then you should consider selling your Nvidia R shoes. Okay? Now, when you sell is going to depend on your specific situation, right? You want to think about your goals, concentration, taxes, we’ll talk about that in a little bit. You should talk to professional ideally, but in general, I’d recommend selling as soon as you vest because there’s no tax benefit for holding. Remember, you get taxed, right? The same day you vest. Okay? And one thing to clarify, sometimes clients will say to me, well, if I hold it more than a year, then it qualifies for long-term capital gains. And that is not true because let me explain why. If you vest today, let’s say this stocks at 800, you go a year from now, it’s 900.

(10:53):

You sell, it qualify for long-term cap gains. You get that long-term capital gains tax treatment, which is lower. You get it for the $100 difference, you vested at 800, you sold at 900, you get that, but you don’t get it on the first 800, that first 800 you’ve paid ordinary income tax on. Okay? So no tax benefit for holding. All right? Now, speaking of taxes, clients come to me, they say, Hey, I got a huge tax bill and I wasn’t expecting it. So what’s going on? Most commonly what’s happening is you’ve had taxes on your RSUs, but they have been under withheld. All right? So remember, you’re going to pay the ordinary income tax rate on the fair market value, your RSUs, your Nvidia rsu when they’re vested. Now, Nvidia typically withholds the standard is a 22% federal tax rate for those RSUs. Now, let’s say you made a lot more this year, then you may be in the 37% tax bracket, the federal tax bracket, which means if you’re 37%, they withheld at 22%, then you’ve been under withheld 15% on those RSUs. So for a hundred thousand dollars of RSUs, you vested, you could still owe $15,000 of taxes. So once you get to the end of the year, if you haven’t been paying that difference, then you’re going to get a big bill. Now, the way to avoid this is I usually have my clients work with a tax professional every quarter. They’ll make quarterly estimated taxes so that you keep up with it every quarter, you get to the end of the year, you don’t have any big tax bill.

(12:53):

Alternatively, if you want to do your own, you can use TurboTax, calculate that. But what I suggest you do is you sell your RU or enough of your RSUs to cover the taxes, and you set that aside in a tax reserve in some liquid account, safe account, like a savings account, and then tax bill comes. You got it all saved. All right? Again, just to remind you, if you have some specific questions about your taxes, your situation, then feel free to just click on the schedule now button. Happy to talk to you about that. Okay, step two. So let’s determine if you have too much in your NVIDIA issues. And this is the case for a lot of Nvidia employees now, given what’s happened with the stock. All right? So I talk with clients about this concept of a concentrated stock position. That just means you own too much of a single company stock. And the guideline I use is if it’s more than 20% of your investible net worth, probably too much. And when I say too much, that means that when you compare it to a single company stock versus a diversified portfolio, there’s just a ton more risk or volatility.

(14:27):

You guys have already lived this, but you’ve seen that volatility. But here’s why concentration is an issue. So you guys probably haven’t heard this. Back in the late nineties, there was a company called Enron. It’s an energy company. Everybody loved it. Wall Street, loved it. Main Street, loved it. What happened was stock went all the way up to 90 bucks a share, 2000, and then some bad news came out counting issues, and within mud stock dropped to nothing. Okay? Now, what happened was you had a bunch of employees in their 401k at Enron, their contributions could be put into Enron stock. The company matched and Enron stock, and then there was also ways for you to purchase it. Company stuck outside. And so you had Enron employees who had all of their retirement, all of their net worth in Enron, and it worked well for a while. But then once this happened, you had employees who lost hundreds of thousands of dollars, if not millions of dollars overnight, their net worth finish. And so that is the real risk. Something bad happens beyond your control. You could lose. If you’re too concentrated, you could lose everything. And if you guys don’t remember Enron, you think about more recent examples like Silicon Valley Bank employees there had lots of stock overnight, it was worth nothing. That’s the risk.

(16:23):

So the question is, how do you figure out if you got too much in your NVIDIA issues? So here are the steps. Step one, just calculate the total value. You’re vested. Nvidia equity, right? Current stock price, whatever you have vested. Step two is calculate the total value of your investible assets. So that’s everything else. Savings, investments, retirement, 4 0 1 Ks. You add that all up, you add your NVIDIA to that. Step three is divide your total value of vested equity by the value of total investible assets. That gives you percentage of concentration. Step four, if your concentration is more than 20%, you’re highly concentrated. You should think about diversifying. So let me give you a quick example. Let’s say you got 500 vested Nvidia RSUs, right? 800 bucks a share. That’s $400,000. You add everything else up, saving investments, 4 0 1 Ks, about 600,000. You add those two up, you got a million. So your NVIDIA is $400,000. Out of your million, 40% concentration, 40% is more than 20%. You’re highly concentrated. So you should think about diversifying. Now, just so you guys are aware, because I work with Silicon Valley tech people, it’s not uncommon. Not uncommon to be highly ated. So I have clients who come to me regularly with 50%, 70%, 90, 95% concentration in a single company stock.

(18:03):

It’s common, but we then figure out a way to reduce that concentration. Okay? All right, so let’s talk about step three. You got all this Nvidia stock. Say, Hey, I’m concentrated. How do you decide when you should sell? Okay, so here’s a framework for thinking about when you should sell your Nvidia RSUs. The first step that I would start with, if you have any valid near term cash needs, then I would just sell immediately. So for example, taxes on your equity. So if you know you’re going to owe taxes, go ahead and sell so that you don’t get to April of next year, owe a bunch of taxes and the stocks dropped a lot, okay? Or for example, if you don’t have an emergency fund for job loss, medical issues, three to six months, living expenses would be great. Or if you said to me, Hey, I want to buy a house in the next year. Okay, that house, you’re going to buy a $2 million house. You want 20% down, you want 400,000 down payment, alright? Get that into cash now, because again, let’s say a year from now, you’re raided by the house. It’s in Nvidia stock, but stock has dropped 50%. You’re going to have to sell twice as much stock to get that same amount. If you know have a need, get the cash out so that you can say, okay, I’ve taken the money off the table, I I’ve got that covered.

(19:52):

You may or may not have something. If you do, then that’s what I would do sell immediately. Next step is I would decide if you want to keep some percent for the long term. So clients say to me all the time, Hey, I believe in the company long term mission viability. I want to keep some stake in it. That’s fine. So you got to figure out what you’re comfortable with. I would recommend something like five to 10% of your net worth, but you need to figure out what number that is, what you’re comfortable with. And then you can say, okay, that number, let’s say it’s 10%. I’m going to carve that out. Now, what’s left?

(20:35):

And then for those remaining shares or RSUs, there are three versions that I would think about. Okay? One is sell immediately. All right? So you just sell everything. Then you don’t have to worry about the stock price dropping. And you go, okay, I’ve got it all. I’m done. I can take all of these funds and use them to get to my other financial goals, make work optional, buy a house, pay for college. Very few of my clients want to do that. That feels like a big deal. So two other ways to think about this are sell over time on a schedule. And let me explain what that means. You want to come up with a clear, rational, objective plan for diversifying out. So you may say, all right, I’m going to sell every quarter. I’m going to sell 25%, whatever’s remaining a quarter over the next four quarters. Or you could do it over the next six quarters or over the next eight quarters, whatever you think. I’m going to sell the same amount every time. The price is going to go up and down, and I’ll sell it when it’s time to sell it. I’m not going to worry about that. So the benefit is, one, you’re not going to pick the single wrong day to sell when the price is low, okay? It’s going to go up and down. And then two, you’re able to spread your taxes over multiple years.

(22:28):

So that’s a very reasonable way to think about it. And then the third version is you sell overtime on a schedule, but you do sell more when it’s the price is higher and less when it’s lower. So you could say to yourself, okay, I’m going to set different price bands. So you could say, all right, if the price is seven to 50 or below, I’m going to sell 15%. Okay? If the price is seven 50 to 800, I’m going to sell 25%. If the price is 800 or more, I’m going to sell 50%. You need to figure out what price range you’re comfortable with, what percentage you’re comfortable with, but the idea behind both of these, and then each quarter, see where the price is, where it is in the range, and sell that percentage, okay? The idea behind these two sell over time on a schedule, these two versions is that you come up with some objective plan, not when the stock is going up and down and you just execute that plan. So you’re trying to make it as rational as possible so that you don’t get caught up in the emotions of the stock is going up or the stock is going down. Okay? So very, those are ways that I would suggest you think about selling those shares. So that’s the framework I would use.

(24:15):

Alright, so let’s talk about next steps.

(24:31):

So again, if you want to chat about your situation with your Nvidia or shoes, no cost, no obligation, put time on my calendar, go this link here, or actually click on the schedule now button. So I want to end with one more story and then we’ll do some q and a. This is what I call my happy past story. This is just help you understand. So I had a client come to me, this was a couple of years ago. He had about $5 million of equity, big tech company, and he said, married kids, said, Hey, I’ve got all this equity, but I’m not sure exactly what to do with it, how to use it, how to sell it. I’m not feeling confident about the decisions I’m making with the RSUs. So we sat down, we put together a plan, and we said, okay, what are your priorities? What are your goals? What is it you want to do with these funds?

(25:51):

And the client said, okay, well, a few things. We want to buy a house. We want to make sure our kids’ education is funded. We want to make work optional sooner rather than later. And so we put together the plan. We also put together a selling plan for diversifying out of the big tech RSUs. And first they bought a house. So now they’re happily living a house in the South Bay. They funded college. So they have two kids they know they’ve got college paid for. They put together a plan towards making work, optional financial independence. They’re on track to do that earlier than they were playing due before. And they feel confident about all the decisions they’re making with their RSUs because they know what they’re using it for. And this is the opportunity that you guys have, is you have Nvidia RSUs, you have a lot of value there you want, and the value is going to be is how am I going to use this to get to do the things that are important to me, like buy a house, pay for college, make work optional, start my own business, whatever goals you have.

(27:17):

And that’s, that’s what the happy path is. Okay?

(27:26):

Okay. So I want take, as we talked about here, I want to take a minute here to see if there are any questions. So if you guys have any questions, then feel free to drop them into the chat. And again, if you guys want to prefer to talk to me one-on-one, then just click on the schedule now. But let me check. Take a moment. Check the chat here. I’m not seeing any questions in a minute, so any questions? Okay, thank you. I have a question in the chat from Moore. Don’t you suggest doing technical analysis on the Nvidia stock graph? Okay. So Moore, I think what you’re asking, so technical analysis for the rest of you out there is looking at history of a stock to determine when you should buy or sell. So there’s a whole school of thought out there that says, okay, you can do technical analysis to help you predict the future.

(29:12):

So the question is, do I suggest that the answer is, the short answer is no. If you look at all the academic research, it’s very clear that in general, technical analysis doesn’t work. And think about it just logically. If somebody had a way where they could consistently over the long-term predict the stock price of any stock, then first of all, they would keep it to themselves. They certainly wouldn’t share it. Secondly, if they did, they would’ve been retired years ago, because that’s something no one can predict the future. So if you could predict the future, then you would be the only one. Okay, so more, I think that’s what you’re asking. So if that’s something that works for you, you believe makes sense, then you by all means can do that. That’s not something that makes sense to me. The logic doesn’t make sense to me. So with my clients, I don’t recommend they use technical analysis.

(30:32):

I think the one thing that you guys should recognize is that no one, since no one can predict the future of the stock price consistently over the long term, then you should recognize that when you sell, you’re really never going to be able to sell at the perfect time. If you did, you’d have to be able to predict the future, which you can. So instead, what I’m suggesting is you come up with a reasonable rational plan given what we know today and that we can’t. Alright, more Thank you for the question. Anybody else? Anybody else? Okay.

(31:27):

Yep. So rub Bill, you made an example of vesting at $800 selling a year after at 9,000 or $900. Yeah, and I think you have a question. Okay, so can you please explain the capital gain? So let’s say you vest today at $800, you’re going to get taxed immediately on that $800 as income, ordinary income. So you pay taxes on that. But let’s say you vest it and you hold it, you sell it more than a year later. So then it qualifies for the lower long-term capital gains tax rate, which is the highest federal ordinary income tax rate, is 37%. The highest long-term capital gains tax rate is 20%. So you could say 17%. So let’s say more than a year, you sell it for 900, you’re going to pay that lower long-term capital gains on that $100 gain from the vesting date until you sell it.

(32:46):

Some people get it mixed up and say, oh, I’m going to be able to pay that lower long-term capital gains on the entire $900. So you pay it on the gain from the day you vest not from zero, and that’s why there’s not a tax benefit. So the alternative is instead of vesting, you buy the stock today at $800, you hold it more than a year, you sell it from $900, then you have a hundred dollars gain that you get long-term capital gains tax treatment on. So the RSU is exactly the same as buying it on the stock market. So there is no benefit for holding it, no tax benefit if that. I think that makes sense. Same if you have an RSU versus buying on the stock market. There’s no benefit difference if it’s an RSU.

(33:44):

Okay, great. Glad to hear. Okay, I want to take one more minute. Any other questions? I do want to be sensitive to your time. Any other questions? Okay. Okay, great. So thank you for taking the time. Hope it was helpful. Again, if you want to chat with me then feel free. And then also if you think this would be helpful, any of your coworkers, and feel free to send it. I’m going to send you, sorry, you’re going to get a recording. Should be in the next sometime today. Then feel free to share it with anybody if you think it’d be helpful. Okay. Thank you very much everybody. All.

HOW TO PUT $69K IN THE NVIDIA 401(K) MEGA BACKDOOR ROTH

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(00:00):

If you’re an Nvidia employee and you wanna save lots more into your 401k up to $69,000, if you’re under age 50, up to $76,500 if you’re 50 or older, and you want to be able to put some of those funds into a Roth where it will grow and come out tax free than you wanna learn about the Nvidia Mega Backdoor Roth. The mega Backdoor Roth lets you put in up to $23,000 as a pre-tax contribution in dear four one K in 2024, and then Nvidia puts an additional company match of $9,000 up to $9,000, and you can then make an additional $37,000 in after tax contribution. Then you can move funds from the after tax contribution into a Roth. Those funds will grow, grow, grow over time, say 10, 20, 30, 40 years. When you take it out of the Roth, all of that growth comes out tax free, so that’s a huge benefit for you as an Nvidia employee.

(01:02):

Now, if you’re aged 50 or more, you can put in up to $30,500 in pre-tax contributions. 2024 Nvidia puts in a $9,000 company match. You can put in a $37,000 after tax contribution, can put it in, move that those funds into a Roth and it grows. You take it out, it’s tax free. Now, the way to sign up for this is you need to calculate what pre-tax contribution of your salary, what percent of your salary is gonna let you max out the pre-tax contribution. What percent is gonna let you max out the after tax contribution? Then you need to call Fidelity. Say, Hey, I wanna set up automatic, automatically move my funds from my after tax contributions into Roth, and they’ll help you set that up and it should happen automatically after that. Once you do that, you’ll have your Mega Backdoor Roth and you’ll be saving a ton more into your 401k. My name’s Tom Lowe. I’m a financial planner that specialize in helping Nvidia employees with decisions like, how do I do a mega backdoor Roth? Or how do I feel more confident about making the right decision with my Nvidia RSUs? If you want to chat about your specific situation, then go to my website, bested financial planning.com, click on the book of free call meeting and we can put time on my calendar and we can chat about your specific situation. Hope this has been helpful. Thank you very much.

ABOUT THE NVIDIA ESPP

 

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If you’re an Nvidia employee and you want to know why you should sign up for your NVIDIA employee stock purchase plan or ESPP, this video’s for you, we’ll cover three topics, including why you should sign up for your Nvidia ESPP, how your Nvidia ESPP works, and how you sign up for your Nvidia ESPP. Let’s get started. Why should you sign up for your Nvidia ESPP? ’cause you can get your Nvidia stock at a big discount that is only available to Nvidia employees. The way the program works at a high level is, uh, ESPP looks at the price at the beginning of the six month period and the price at the end of the six month period, whichever one is lower. The SPP gives you the stock at a 15% discount of that lower price. So a quick example, if you’d enrolled in August of 2023, the price at the beginning of the six months on September 1st, 2023 was about $498.

(00:56):

The price at the end on March 1st, 2024 was about $800. So the ESPP looks at both prices. September 1st, 23 was lower at 4 98, gave you a 15% discount off of that. So that’s about 4 23. So that means through the NVIDIA ESPP, you would’ve been able to buy a share of Nvidia for $423. That was worth about $800 on March 1st, 2024. So you can see you get a huge discount potentially on your Nvidia stock at least 15%, but could could be even more. Uh, and that’s why you should sign up for your Nvidia ESPP. How does the NVIDIA ESPP program work? The way it works is you sign up for it. You choose to have anywhere between one to 15% of each paycheck put into the ESPP account, and then at the end of the six month period, NVIDIA takes those funds. They find the lower price beginning or end of the period, 15% discount.

(01:54):

They use your funds, buy you shares, and then they deposit those shares into your account. So you have the shares. Now, one other important thing that the NVIDIA ESPP does that’s even better, makes it even better, is it has what’s called a 24 month look back period. What that means is when they’re determining the price that you’re gonna pay, they will look back up to 24 months at the price, at the beginning or the end of each period, and wherever the lowest price is, they’ll give you a 15% discount on that price. So if you sign up, you’re 24 months later and the price was lowest on the first day of the first period you started, they give you that price and a 15% discount. So that makes it even better. That is how the NVIDIA ESPP works. How do you sign up for your Nvidia ESPP?

(02:45):

You can sign up when you’re hired, or during the enrollment periods in February and August each year. If you can’t find the information yourself, I’d contact the Nvidia HR and they can help you figure out how to, how to sign up. When you sign up, you’re gonna choose what percent you want taken of every paycheck, anywhere between one to 15%, and know that the IRS does limit how much you can put into the ESPP each year. So for 2024, it’s a limit of 21,250 per year. So once you sign up, you’ll have that percent taken out of each paycheck. Six months ends. Then the ESPP will figure out what price you’ll get the discount off that price. They’ll take the funds, they’ll buy the shares, and they’ll deposit those into your account. Now, if you wanna minimize the risk of the stock going down and you wiping out your discount, then I would sell as soon as possible so that you make sure you take advantage of this discount.

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If you are okay taking more risk that the stock may go down and wipe out the discount, then you can hold on. But as I tell all my clients, you want to understand what your concentration NVIDIA stock you had between your ESPP shares, your RSUs, and any other NVIDIA stock you may own. And if it’s too large percentage of your total net worth, then you ought to think about diversifying. But you have to figure out what kind of risk you’re comfortable with. That is how you sign up for your NVIDIA ESPD. Hope that was helpful. My name’s Tom Lowe. I’m a financial planner that specialize in helping tech professionals with equity, including NVIDIA employees. Make sure that you feel confident that you are making the right decisions with your NVIDIA ESPP and RSUs. If you have your own questions about your Nvidia ESPP or RSUs, then feel free to go to my website@vestedfinancialplanning.com and schedule a free virtual consultation with you. I’d be happy to chat with you about it Again, hope that was helpful. Thank you very much.