There is not a way to do what you want to do. Peter Theil contributed cash into a self directed IRA and then bought options in private companies with the cash.
If you actually want to own the shares after exercising the options, then you need cash. You could withdraw the cash from the IRA and pay any applicable taxes and penalties. There’s also usually an option where you can sell immediately upon exercise and they just give you the white meat. In that case you don’t need the cash.
I do not understand what you’re telling me here.
What peter thiel did sounds like what I want to do. I have an IRA (not sure what “self directed” means in this context precisely, I have both a traditional and roth IRA at fidelity, I can sell enough index fund shares in either account to get the cash I need to exercise the options.
the goal is to have the exercised shares inside one or the other IRA, not to withdraw cash from the ira to buy the shares outside the IRA, that seems like the absolute worst thing I could possibly do. I would probably rather leave the shares unexercised than do this.
FWIW I have enough cash on hand in my credit union savings account to both exercise the options and pay the taxes (shouldn’t be a huge tax hit since the FMV isn’t that much above the strike price).
additional context: these options are in my current company, it’s privately held VC-backed startup (series A). I am probably leaving the company this month and I will have (I think) 90 days to either exercise the vested options or forfeit them.
Yes, but Peter Thiel’s stock options were purchased inside of an IRA. Your stock options were granted outside of an IRA. There’s no way to get them inside of the IRA.
If pvn’s company was 100% cooperative, is there a way that could have been done?
Well your employer really has nothing to do with your IRA.
If we are talking 401k or some other kind of non-qualified deferred compensation plan, I assume there’s nothing preventing the company from providing compensation in the form of stock or options rather than cash.
So the company could have found a way to put it in the 401K and then he could roll it over?
As an alternative, is there any way that they could sell him the options to purchase within his IRA? Then maybe they give him a cash bonus at the end of the year that is equal to what he paid.
I definitely don’t know if it’s permitted for a company to make a discretionary contribution into an employees 401k with stock options. Cash and company stock are for sure ok. I’ve certainly never heard of it. I assume it would make it hard for the company to comply with all the ERISA regs regarding HCEs and plan participation.
If you have a self-directed IRA, then yes in theory you can make a deal with your company for any number of exotic derivatives to be created and purchased by you in your IRA. This is what Thiel did. But I assume this would be super unusual outside of private equity high-finance circles.
ah, ok THAT is the clarification I needed. The options themselves would have to get inside the IRA before exercising them, this makes sense.
Thanks.
I doubt @pvn has enough pull in his company to pull this off, but it sounds like this is the only way.
NVDA up 10%+ today, let me get out of my 1 share with a 16% gain after waiting a month for it to go up again. RMBS refuses to come back which is annoying though.
These clowns are probably wasting the opportunity to run the biggest legal pump and dump in world history. Tell me more about efficient markets.
Gamestop has been on every value screen there is for over a decade (when not pumped) for all the worst reasons. The reason it had a ton of short interest is that it was inevitably eventually going to zero.
Of all the Wall Street types to hate I don’t get hating shorts. They actually add some real value by taking out the trash. Especially in this index fund dominated era that’s a more than thankless and dangerous job for finance.
Compared to private equity the pro short sellers are literally saints.
What makes you think that’s not what this is?
Because nobody likes the people who bet the Don’t Pass and Don’t Come lines.
Somehow they hate the people who bet Don’t Pass and Don’t Come more than they hate the worst/largest landlords in America who also ruined the work experience of most of the jobs in the country.
People are dumb.
Shorts are an easy target and easy to give bad press to. Most of these folks don’t know what PE is, nor could they connect the dots of what they’re doing and why it’s so bad.
Levine is, as always, great today. He’s written a bit over the past couple weeks about like, if you were Keith Gill and had a singular ability to move a stock, what would/should you do with that power? Very relevant to today!
A little on the nose there.
I mean DFV’s not making this stuff up in a vacuum I’m sure. He’s in that weird Nate Silver around August 2020 state right now, everyone’s just waiting for him to mess up. Because for sure he’s not going to cause millions of retail investors to make a bunch of money at the cost of the hedge funds again, right? Right Anakin?
