Understanding Your Equity Compensation and Making the Most of Your NUA Benefits

Working at Costco isn’t just about a steady paycheck, there are real financial opportunities that come with owning Costco stock, whether you’ve got stock options, equity benefits, or shares in your 401(k). If you hold company stock, you should know about a tax-smart strategy called Net Unrealized Appreciation (NUA). But what does that mean, and how can you make the most of these benefits? Let’s break it down step-by-step to show you how they might help shape your financial future. In this next, let’s break down what Net Unrealized Appreciation is and what it means for you as a Costco employee.

What Are Net Unrealized Appreciation?

Net Unrealized Appreciation is the difference in value for any Costco shares you haven’t sold yet. If the share price has risen above what you paid, that’s an unrealized gain (often called a “paper profit”). If the price dips below your original cost, that’s an unrealized loss. Think of it as potential wealth: you haven’t turned it into cash yet, but it’s there, waiting for you to decide what to do with it. Now that we’ve covered NUA, let’s switch gears and chat about equity compensation—another way your company’s stock can play a big role in your financial game plan.

What is Equity Compensation?

Equity compensation means you get to share in Costco’s success by owning a piece of the company. Instead of just offering a paycheck, Costco may give you stock options or Restricted Stock Units (RSUs) to reward your hard work and help you build wealth as the company grows.

At Costco, this often includes:

  • Stock Options: The right to buy Costco shares at a set price in the future.

  • Restricted Stock Units (RSUs): Shares of Costco stock granted to you, which become fully yours once they vest.

Here’s a closer look at what each type of equity compensation means and how it works.

Stock Benefits for Costco Employees

As a Costco employee, you don’t just get a paycheck—you get the chance to own a piece of the company you work so hard for. In fact, Costco doesn’t just stop at stock options. They also offer ways to help you grow your wealth over time:

    • This plan lets you buy Costco stock at a discount—typically up to 15% off the regular price. It works like this:

    • You can set aside a small portion of your paycheck to buy Costco stock.

    • Over time, you’ll build ownership in the company without feeling the pinch of a big upfront cost.

    • The discounted price means you’re already ahead when you buy the stock, which is a great way to grow your savings.

  • For some employees, Costco may grant Restricted Stock Units (RSUs) as part of your benefits. Here’s how it works:

    RSUs are shares of Costco stock given to you for free, but you’ll need to meet certain conditions, like staying with the company for a specific number of years.

    Once the shares “vest” (become fully yours), you can keep them, sell them for cash, or hold onto them as an investment.

How Falcon Wealth Planning Can Help You

We get it—equity compensation, NUA, and all those moving parts can feel confusing. That’s why we’re here. At Falcon Wealth Planning, we’ve guided countless Costco employees through these decisions so they can turn their equity benefits into a solid plan for building wealth.

Here’s how we can help:

  • Simplify Your Decisions: We’ll figure out when and how to best manage your equity compensation, as well as what to do with any shares you already own.

  • Leverage NUA: If you hold Costco stock in your 401(k), we’ll show you how net unrealized appreciation can potentially lower your tax bill when you retire or change jobs.

  • Save on Taxes: We’ll craft a strategy that helps you keep more of your money in your pocket, whether through timing your transactions or making smart moves with your equity.

  • Protect Your Wealth: If you’re overweight in Costco stock, we can help you diversify so you’re not taking on too much risk.

  • Tie It All Together: From equity compensation to retirement savings, we’ll create a plan that suits your personal goals and financial situation.

Your Next Step

Your Costco equity compensation and potential Net Unrealized Appreciation (NUA) aren’t just perks—they’re real opportunities to secure your financial future. The choices you make today can help transform these benefits into lasting wealth. At Falcon Wealth Planning, we’ll guide you through the ins and outs of NUA and equity compensation so you can keep more of what you’ve earned. Ready to take the next step? Schedule a free financial assessment today, and let’s get started.