Stock options are so 1990s. Restricted stock is now the most popular type of equity compensation, especially for corporate execs and other highly skilled employees. Amazon, for instance, caps all salaries – including that of Jeff Bezos — at $160,000 a year. Restricted Stock Units (RSUs), allotted based on position and performance, make up the rest of compensation.

Checking in to see how much equity comp you have or are being offered is great. But to make the most of what you’ve worked hard to earn, you also need to know the following key things:

#1. WHAT DO I OWN AND WHEN? Currently, these are the most opular types of equity compensation:

***Incentive Stock Options (ISOs) — the right to buy a set number of company shares at a fixed price (strike price), with offer expiring after a period of time.

***Restricted Stock Units (RSUs) – a promise of shares at a future date (the vesting date) if you meet certain requirements, usually continuing to work at the company and/or meeting certain performance goals.

***Restricted Stock Awards (RSAs) – actual shares of stock issued to you, but you cannot sell them until they vest, usually according to a vesting schedule or a liquidation event – sale of company or IPO.

With stock options, you do not actually own anything until you exercise the option to buy shares. If the market price of the stock drops below your strike price, the option can expire worthless. Also, if you do buy shares at a strike price – say at $10 — the stock price has to be above $10 when you sell for you to lock in a profit.

With RSAs and RSUs, you are actually issued shares of stock, either right away or in the future, at no cost to you or at very little cost. Unless the issuer goes bankrupt, RSAs and RSUs will be worth something when they vest. They may be worth less than when you were issued them, but chances are they will be worth something.

Some Seattle lenders, for example, have recently started allowing income from un-vested RSUs to be taken into account when Amazon employees apply for mortgages. For new Amazon hires, it is their first two years at Amazon (before most of their RSUs vest) that qualifying for a large mortgage can be difficult.

A major difference between RSAs and RSUs: With RSAs, shares are actually issued at the grant date. Even though you cannot sell those shares until the vesting date, you can transfer the RSA shares to a family member or put the shares in a trust before vesting. You can also vote the shares and receive dividends. With RSUs, shares are not actually issued until the vesting date, so you cannot transfer the shares before they vest.

#2. WHAT TAXES ARE DUE WHEN? Taxes on equity comp differ and often catch people by surprise. Knowing what to expect allows you to strategize about how and when to pay the IRS. If you meet the holding requirement, incentive stock options are taxed at the long-term capital gains rate (now 23.8% max), assuming you sell for a profit. The requirement is that you hold them for at least 2 years after the grant date and at least 1 year after the exercise date.

Restricted stock is trickier because it requires two-step taxation: (1) You pay income taxes when your shares vest; and (2) you pay capital gains taxes if you at some point sell at a profit. Why? Because at the time of vesting, your employer recognizes compensation for you (and gets to write that off as a corporate expense), equal to the number of shares vested at the market price (minus anything you might have paid for the shares). This compensation is taxed to you as regular income, plus Medicare and FICA taxes, even though you have not sold the shares. Employers can automatically cover the income tax you owe by selling some of your vested shares.

When you actually sell restricted stock determines how much you will pay in capital gains taxes. If you sell within 12 months of vesting, any gain between the market price at vesting and the sales price is taxed as a short-term gain (same as your highest income tax rate). But if you sell after a year, any gain is taxed at the long-term rate, which is now 23.8% max (20% plus the 3.8 tax on net investment income for high-earning taxpayers).

RSAs give you a bit more wiggle room as to when to pay taxes, through what is known as an 83(b) Election. You can opt to pay income taxes due at the grant date (when your gain is probably lower), instead of the vesting date. But if you pay the tax at granting, and the share price drops from there, you could end up overpaying taxes.

#3. WHAT HAPPENS IF I LEAVE THE COMPANY? Typically, cessation of employment for any reason – you get sick, quit, get fired – means you forfeit your unvested shares. In case of death, at some companies your unvested shares are forfeited, while at others the shares automatically vest and your heirs can then own them. So it’s very important to know your employer’s specific policy. You can then decide if it makes sense to purchase life and/or disability insurance to cover the amount of unvested stock.

What if your company is acquired or merges with another company? The vesting schedule might be accelerated. It’s important to find out how the deal will affect your options or restricted stock before taking any action.

Here at LNWM, we believe equity compensation is an asset that should be strategically managed in line with your overall financial plan and life goals.That is what we help our clients do, whether they are just starting out in their careers, changing jobs/careers, or retiring.