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Tracking Restricted Stock in Quicken

This article was written by in Investing, Software. 17 comments.


As I mentioned earlier today, employees in my company have been granted restricted stock, vesting in three years. I decided to do some research to try to determine how to track the value in Quicken, which I use for tracking my personal finances.

From what I can tell through some Google research, you don’t track restricted stock as part of your net worth. Those more familiar with the software than I suggest recording a future transaction (for the date of vestment) or using Quicken’s reminder ferature to set up an alert for the date the restricted stock becomes common stock.

I’m not quite sure if I agree. Quicken tracks stock options, which have no real value until the option is exercised vested. Is restricted stock that much different? There’s the chance that the vestment won’t be realized (if I’m not with the company in 2009, for example), but should the value of the stock be included in my current net worth?

Updated March 6, 2009 and originally published March 15, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 17 comments… read them below or add one }

avatar Inchoate Random Abstractions

When my restricted stock vested last month (around 300 shares), they sold 1/3 of it to pay for taxes. But after the restricted stock was awarded and before it vested, I received dividends on the full number of restricted units. I’m not sure how you would account for that in Quicken.

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avatar Luke Landes ♦127,475 (Platinum)

The way it was explained by the company, we are given an “extra” restricted stock unit, representing the dividends which would be reported between now and the vesting date. So there won’t be any dividends accruing in the account over time.

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avatar FMF

I wouldn’t track/count it at all personally since you won’t own it for three years.

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avatar Anonymous

No, a person’s net worth should not reflect future earnings. It should only include everything you presently own, minus everything you presently owe. If people were to incorporate future earnings in their net worth calculations, then they should also include the NPV of theirs pension, the NPV of their social security income, etc. It just doesn’t make sense.

Just consider the stock grant as a bonus paycheck that you’ll see down the road. You certainly don’t include next month’s paycheck in your net worth; the stock grant is no different.

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avatar Inchoate Random Abstractions

Ah….that’s different than the way my company did it. I actually received the dividends as income in my paycheck once a quarter, even before the restricted shares vested.

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avatar Personal Finance Blog

You may probably track it as a stock option grant with a striking price of zero.

http://www.pfblog.com/archives/813_stock_award_shares_sold.shtml

If you will be paid for dividend for shares not vested, you might have to track dividends separately.

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avatar Orin

stock options, which have no real value until the option is exercised

source

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avatar Personal Finance Blog

Stock option grant has no value until vested, not exercised.

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avatar Jimbo

I am not sure I agree with the assertions that Restricted Stock Units (RSU) should just be ignored until vested. If you are working at the same place, and you are trying to balance your portfolio, you will want to know about those shares. Consider working at company X. In that company, you have an Employee Stock Purchase Plan (ESPP) at a discount, you have a Stock Option plan (SO), and you have the opportunity for RSUs.

If your portfolio contains shares of X from four potential sources (Market, ESPP, SO, RSU) and you are trying to balance your portfolio, you will want to see the full picture of these things so that you could, for instance, decrease your Market purchased shares or ESPP shares by recognizing that you have Company X covered by RSU or SO.

I think Quicken needs to enable this “type” of transaction with a simple extension of the Stock Option type they already have, but encompass the nuances of no cost, and any tax implications that are different (I think they are different, but not clear on the details at the moment).

Comments?

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avatar Scott

I think it’s a really bad idea to ignore these RSUs because you think they have no value. They are worth as much as stock options and need to be tracked.

A few cases in point: A) if I retire, I receive the RSUs no matter what. Do they have value then as a definite occurence?
B) If I die, my wife gets the RSUs. Wouldn’t it just be great if I didn’t record the fact that they’re owed to her and she never gets them?

These aren’t stock options with an exercise price of 0. They can have dividends throughout their life, even before vesting, and on exercise, they’re immediately taxable. In fact, some companies automatically sell a portion for taxes. Quicken needs a way to record this transaction.

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avatar EdP

I pre-entered RSUs as “shares added” at a future time. When vested, I edited the entry to “shares bought” with cash in the account along with three other transactions. One an income entry with a new salary sub-catagory of “RSU Income”. Another a sale to cover witheld shares. A third “withdraw” cash to the US Government with a split to cover federal income tax, FICA tax, and Medicare tax.

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avatar JMT

I agree with this approach the most, as compared with trying to shoehorn RSU’s into Quicken’s Stock Options Wizard. (Note that in Quicken 2010 Premier there is still no RSU choice in that wizard – surprising!). However, I suggest that instead of posting the withholding as one Withdrawal transaction, put it in as multiple “Misc Expense” transactions, each with the right category. When I tried using one WIthdraw with splits, my “Investing Activity” numbers were off, but they were good when I used multiple MiscExpense transactions.

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avatar NG

I simplified it a little more, though you should verify this will work for you. First I created a new sub-category called “RSU Grant” under the “Salary” category. (Similar to EdP above)

1) I entered a Deposit with a split transaction: one “positive” entry for “Salary: RSU Grant” where the amount is the number of shares x market value, and then one entry for each of the tax items involved (Federal, State, Medicare,etc.) So basically the transaction total ends up being the Salary:RSU Grant minus Taxes and the amount is deposited into cash.
2) Using the transaction total from (2) above, buy the remaining shares at the market value.

At the end of these two transactions, I ended up with the RSU Grant expressed in dollars (taxable amount), taxes paid, and remaining shares at market value (which is my cost basis).

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avatar Anonymous Person

Note there are (at least) two different ways companies do these. One is called “restricted stock.” In this method, you are actually the owner of the stock, however you do not get the certificate and cannot sell it until vests. In the mean time, you are the owner, therefore you get both dividends and the right to vote those shares. Typically the dividends would be paid by your regular payroll check with deductions taken, because it is employer-based income. The second method is called “restricted stock units” (RSUs). In this case case, you are granted rights to “units” that represent shares of stock, but not actual stock per se. When you vest, the units are converted to shares of stock. In the mean time, you do not have the right to vote the stock. Also, you will not get dividends but instead will get additional RSUs that represent the dividends you would have earned, and these too will be converted into stock when you vest. If your employment ends before vesting, however, you do not get the stock in either case, and in the case of RSUs you never get the dividends.

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avatar D

I attempted to enter a stock option with exercise price 0 in Quicken to which a pop up window stated the following: “An employee stock option should have an exercise price. If you received or will receive a stock grant, you should just add the shares to your account.” Hope that helps.

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avatar sysengr

It’s much easier than all that. If you’re using Quicken, you’re probably also recording your regular paychecks. You simply do a cash deposit into the investment account in Quicken where you eventually will put your stocks for tracking in the exact same way you do your payroll checks today. List your income account, all your tax deductions, etc. This is because your RSA is recorded as regular income, and regular taxes are taken out. Then you do an entry for buying stock on the same day, in the amount of the money you received. Everything is all covered then.

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avatar sysengr

Sorry, forgot to mention you need to enter the full amount as a negative number, and all the taxes as a positive number, because in the investment accounts, your income account will be a credit balance to increase, and the taxes will be a debit balance… you probably all know this already, just thought I’d mention.

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