Episode summary
$1.6M in One Stock? Here's How to Get Out Without Getting Crushed
Your Money Your Wealth
· · 47 min · Hosts: Joe Anderson, Big Al Clopine · Guests: Walter, Jesse, Richard, Bones, Beverly
Summary
The episode focuses on what to do when a concentrated stock position has become too large to ignore, but selling seems to trigger a punishing tax bill. For Walter, who has about $1.6 million of company stock inside a larger taxable account, the hosts walk through ways to trim exposure without blowing past the 15% capital gains bracket, and they discuss whether his job status might help him avoid the 3.8% net investment income tax. They also outline tax-loss harvesting, charitable remainder trusts, and a more technical direct-indexing approach using leverage to generate offsetting losses.
Richard’s oil-heavy Roth IRA becomes the cautionary example of concentration done well and concentration done late. The hosts agree that big gains can be built through a single winner, but retirement changes the math: volatility, spouse readiness, and cash-flow needs matter more than bragging rights. Their advice is to take chips off the table gradually and make sure both spouses know where the money is and how to access it.
The final case centers on Dr. Bones McCoy and Dr. Beverly Crusher, who may inherit a large traditional IRA loaded with company stock. The hosts say the key missed opportunity is net unrealized appreciation inside the 401(k), which can turn ordinary income into capital gains treatment. If that window is gone, they argue for Roth conversions up to a reasonable bracket so the heirs face less tax later.
Key takeaways
- Walter may be able to sell part of his company stock over multiple years and stay in the 15% capital gains bracket instead of triggering the 20% rate.
- The hosts say the 3.8% net investment income tax might not apply if Walter’s stock is tied to the company he works for, but they call that gray area.
- A charitable remainder trust can delay capital gains on appreciated stock and spread taxation over time, but it trades away the remaining assets to charity at death.
- Richard’s oil position shows why the hosts favor taking some gains off the table gradually rather than waiting for a perfect exit.
- For the doctors’ inheritance, the hosts say company stock inside a 401(k) can create a major tax opportunity through NUA, but only if the plan assets are handled correctly before rollover.
Notable quotes
“I might do it over a few years to stay out of the 20% bracket”
“It's a bet to live. Yeah. But the the cool you will pay the capital gains tax, Joe, as the assets come out of the trust”
“the best investment you can ever make is one individual stock. Yeah. Right. And the worst investment you can possibly make is one individual stock”
“you could take the stock out of the 401k plan and pay capital gains tax on the gain instead of ordinary income”
How the episode opens
Join Big Al's Pitball for people sitting on life-changing gains who are just one wrong move away from handing a third of it to the IRS. How should they diversify their concentrated stock positions? That's today on Your Money, Your Wealth podcast number 583.
First up, Walter's a software engineer who got lucky 15 years ago. Now he's got $1.6 million in company stock and a retirement clock ticking down in 6 years. Richard from Staten Island listened to his son six years ago, went big on oil, saw a huge gain, and now 80% of his portfolio is in that one position.
His custodian wants him to sell, but he's not so sure. Finally, doctors Bones McCoy and Beverly Crusher just discovered they'll be inheriting millions, still sitting in an old 401k loaded with company stock. Make sure you're following YMYW wherever you listen so you never miss an episode.
And if you're watching on YouTube, subscribe, hit the bell, and jump into the comments and share your thoughts on concentrated positions. I'm executive producer Andy Last, and here are the hosts of Your Money, Your Wealth, Joe Anderson, CFP, and Big Al Copine, CPA.
Hey, Joe. Big Al. Andy, I'm Walter, and my wife is Jesse. Walter and Jesse found you after Spotify showed me an episode of my financial stuff I probably should have cared about 10 years ago. rabbit hole and we haven't come out for air ever since. We do our weekend a weekend meal prep half watching and half listening to YW her with the spicy margarita and me with the sbesa from Marble Brewery here in
ABQ probably Albuquerque. — Albuquerque. Yeah. — Yeah. — You ever been to Albuquerque? — I have. I've I've driven past I've driven through it on a road trip.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- concentrated stock positions
- tax-efficient stock sales
- diversification
- retirement planning
- 401k inheritance
Watch the episode
Watch “$1.6M in One Stock? Here's How to Get Out Without Getting Crushed” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Your Money Your Wealth, this episode and its artwork belong to Your Money, Your Wealth. Octagon is not affiliated with the show; this page is an independent summary.
