For many executives and employees of growing companies, a large, sometimes the largest, part of their compensation doesn’t arrive as salary. It comes as equity: stock options, restricted stock units, and similar awards. This kind of pay can build substantial wealth, but it’s governed by a tangle of rules that can quietly cost a fortune in unnecessary taxes if mishandled.

The forms matter, because each is taxed differently. Restricted stock units are generally taxed as ordinary income when they vest, whether or not you sell. Non-qualified stock options are taxed at exercise, on the spread between the strike price and the market value. Incentive stock options carry the potential for favorable tax treatment — but exercising them can trigger the alternative minimum tax, an unwelcome surprise for anyone who exercises a large position without planning for it. The timing of each decision, often within windows the employer controls, can dramatically change the tax bill.

There’s a risk dimension layered on top. Equity compensation tends to concentrate wealth in a single company, your employer, right alongside your paycheck and your career, so a downturn can hit several ways at once. Deciding when to exercise, when to sell, and how much to diversify is as much a risk question as a tax one.

And it all ties back to the broader plan: how equity compensation is timed, taxed, and diversified affects retirement, estate planning, and charitable giving alike.

Your attorney addresses how these holdings fit your estate documents; my role is to plan the exercise and sale timing, manage the alternative-minimum-tax exposure, and coordinate diversification with your overall plan. Helping people turn equity compensation into lasting, well-diversified wealth — without an avoidable tax hit — is the kind of work I do alongside your estate counsel.

Every family’s circumstances are different. To talk through how the ideas above apply to your own plan, contact Tony Atrasz.

At Pence Financial Group, we believe one of the best investments you’ll ever make is in yourself. Education opens doors, creates opportunities, and builds a foundation for lifelong success. Whether you’re saving for a child’s future, investing in your own career, or helping a loved one pursue higher education, planning ahead can make those goals more achievable. That’s why we’re passionate about helping families understand the tools available, like 529 education savings plans, that can turn today’s savings into tomorrow’s opportunities.

What is a 529?

A 529 is an education savings plan that was established by Congress in 1996. It allows contributions to grow 100% federal and state, tax-deferred, and may be withdrawn tax-free if multiple, specific provisions are met. 529 plans have many investment options, depending on the plan provider. The three most common are age-based portfolios, which gradually shift the risk level as the beneficiary ages, static portfolios, which have a fixed risk level that can be manually adjusted as needed, and individual portfolios, which allow the account owner to pick specific investment options.

What Are the Tax Benefits?

Many states offer a tax benefit to the account owner for contributions up to a certain amount. Check with your state’s specific plan rules to find out if you qualify.

Who Can Contribute?

529 plans offer a great way for friends and family to give a long-lasting, meaningful gift to the beneficiary. Most 529 plans offer a shareable gifting link, making it quick and easy to gift funds. Often, people will contribute for birthdays, holidays, and other important life events such as kindergarten or high school graduation.

What Can It Be Used For?

529 plans allow for many qualified withdrawal options. Higher education withdrawals do not have a limit if the funds are used for educational purposes, including room and board, tuition, fees, and supplies. They can also be used for trade and vocational programs, widely expanding the beneficiary’s options for education outside of higher education. A lifetime limit of up to $10,000 can be applied to federal or private student loans. Additionally, it can be used for k-12 education expenses up to $20,000 per calendar year. The ability to use the funds for k-12 education has opened a pass-through loophole. You can now fund the plan and then use those funds to pay for immediate educational expenses. If your state offers tax benefits on contributions, this can allow the account owner some additional tax savings.

What Happens If You Don’t Use All Your 529 Funds?

529 plans are versatile when it comes to unused funds. Let’s look at a couple of the most popular options.

1. Change the Beneficiary if the original beneficiary no longer needs the funds. You can transfer the unused amount to another family member. For example, if you fund a 529 plan for your child and they do not use all the funds, the funds could transfer to future grandchildren, essentially jumpstarting their 529 before they are even born.
2. Rollover to a Roth IRA. Up to $35,000 unused funds can be transferred into the beneficiary’s Roth IRA. Transfers must be made yearly up to the IRS contribution limits.
3. Take a non-qualified withdrawal. Funds can be withdrawn for non-education purposes. However, the earnings may be subject to applicable federal and state income taxes, as well as a 10% penalty.

If you’re ready to start planning for your child’s, grandchild’s, or even your own educational goals, we’re here to help. Visit us at Pence Financial Group, and let’s create a 529 savings strategy that fits your family’s needs and long-term financial goals. Contact our team today to get started! We look forward to helping you invest in what matters most: education and your future.

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Disclosure

Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits, such as financial aid, scholarship funds, and protection from creditors, that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

LPL Financial and Pence Financial Group do not offer tax advice or services.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Please consult a qualified professional regarding your specific situation.

For most of the last decade, high-net-worth estate planning ran on a clock. Advisors and attorneys urged families to act before a looming deadline — the scheduled rollback of the federal estate tax exemption — and “use it or lose it” became the defining phrase of the era.

That clock has stopped. The One Big Beautiful Bill Act, signed in July 2025, permanently set the federal estate and gift tax exemption at $15 million per individual — $30 million for married couples — beginning in 2026, indexed for inflation, with no sunset. The deadline that shaped years of planning is simply gone.

It’s tempting to read that as “I’m under the threshold, so I’m finished.” That conclusion is where expensive mistakes begin.

A permanent exemption doesn’t end estate planning — it changes what matters. The urgency that drove aggressive lifetime gifting has eased, and in its place the real priorities come into focus: state-level estate taxes, which apply at far lower thresholds than the federal exemption and reach families who own property in multiple states; income-tax efficiency and how assets receive a step-up in basis at death; liquidity, so heirs aren’t forced to sell a business or property to cover costs; and flexibility, so a plan can adapt the next time the law shifts — because in tax law, “permanent” means “until Congress decides otherwise.”

And for families above $15 million, exposure hasn’t gone anywhere. The planning conversation has simply moved from beating a deadline to building a durable, long-term strategy.

Here’s the quieter risk: many existing plans were drafted for a different law. Trust formulas that reference the exemption amount can now distribute assets in ways the family never intended, precisely because the number jumped so far. A plan that was perfectly calibrated three years ago may quietly do something else today.

The exemption is settled. Whether your plan still reflects your intentions is the question worth asking — and it’s best answered by your attorney and your financial advisor reading the same plan side by side. Coordinating that review, and keeping your financial strategy aligned with your legal documents, is exactly the work I do alongside your estate counsel.