What to Do With Restricted Stock
Patty says her husband receives restricted stock bonuses with his company. She isn't sure how long they're restricted. Are they allowed to sell these options?
QUESTION: Patty in Pennsylvania says her husband receives restricted stock bonuses with his company. She isn’t sure how long they’re restricted. Are they allowed to sell these options?
ANSWER: You are only able to sell those stocks after they aren’t restricted anymore. He works for a large company, so they are doing this as an employee retention move. That’s why they are restricting the stock. They are trying to get him to stay, sort of like not being vested in your 401(k) plan.
They probably have a one-year or two-year limit. I doubt they have a five-year hold on that. If he gets 88 shares a year and the value is $56 per share, that’s about $5,000 a year. Check to see what the restriction is on it. They will tell him when the stock is free to be sold.
I wouldn’t hold too much of it. I don’t hold any single stocks. They have too much risk for me. If you want to hold a little bit, you can. But I wouldn’t hold much.