Pension Checklist
services: Equity Management

Year-end can be stressful. Closing the books, planning for the next year and figuring out how it will all get done between holiday closures can be overwhelming. In recognizing these demands, we have compiled a straightforward checklist to help you manage your year-end stock plan reporting, regardless of whether you have a dedicated stock plan manager. Our goal is to help you close out the current year on a strong note and ensure you have all your bases covered.

Year-end stock plan reporting checklist

Our year-end stock plan reporting checklist is broken down into four categories:

  1. Tax filings
  2. Demographic information
  3. Reconciliations and reviews
  4. Exercises and releases

Please note: This list is not exhaustive. Each category has different nuances that may or may not apply to you. Contact us should you have questions.

Tax filings

This section will strictly focus on items someone in a stock plan manager role might handle. The remainder will be left to tax and payroll experts.

  • ISO 3921 filings
    • Under IRS Code 6039, the company granting stock options must file Form 3921 to report information about any ISO exercise that occurred during the calendar year. You can generate the form through an equity management platform, or alternatively, you can prepare it manually. One copy should be filed with the IRS, a second sent to the recipient and a third should be retained by the company.
    • The forms should be filed electronically through the IRS Filing Information Returns Electronically (FIRE) System* by February 28 of the year following the calendar year to which it pertains. Companies must register for a Transmitter Control Code (TCC) at least seven days before filing the forms via IRS FIRE. *Please note: The IRS has created a new system called IRIS for this purpose, and companies should plan to start using IRIS for the 2024 tax year.
  • Taxable events
    • For employees
      • When a taxable event is triggered for an employee (NSO exercise, ISO disqualifying disposition, RSU vest, etc.), notify your payroll team of the taxable compensation amount and corresponding tax withholdings (if applicable). These amounts should be reported, and the taxes should be remitted as part of the normal payroll process. These amounts should ultimately show up in the employee’s Form W-2.
      • This information should be reported to the payroll team in real-time, but at a minimum, quarterly. If the payroll team has not been notified of these taxable events throughout the year, do so as soon as possible. That way, they can make a year-end adjustment, which will still appear in the employee’s W-2. § Public companies that allow employees to sell shares received from ISO exercises before the qualifying disposition period may need to employ a third party to survey participants and determine if disqualifying dispositions have occurred throughout the year.
    • For non-employees
      • When a taxable event is triggered for a non-employee, the income should be reported on Form 1099-NEC, and there is no withholding. An equity management software system does not typically generate these. Thus, the forms should be prepared and filed as part of the standard 1099 process (e.g., if the 1099-NECs for vendors are already filed, add these to that pile) or separately. We recommend using IRS FIRE to file these if they are not incorporated as part of a more extensive 1099 prep and filing process.
    • BPM is available to assist with questions on what is considered a taxable event or what form the participant should receive.

Demographic information

Participant demographic data significantly impacts many processes, such as tax calculations, forms generation, expense and more. Demographic data must be accurate in both the company’s human resource information system (HRIS) and equity platform.

For tax form generation, a company should ensure that the following components of participant demographic information are current:

  1. Legal first and last name
  2. Home address
  3. SSN or TIN
  4. A clear indication of whether the person is an employee or contractor/advisor

For a comprehensive review, we recommend the following demographic information is also maintained and up to date:

  1. Employee ID
  2. Personal email address
  3. Termination dates
  4. Employee cost centers, including the effective date of change if they have moved departments

If this type of information has not been entered into the HRIS or equity platform in the past, consider adding it to help with the reporting and administrative items mentioned above.


Reconciling equity activities for the year is the most significant and time-intensive task. It is also generally the most important, especially if a company is subject to audit requirements. The goal of this section is to help ensure that all equity activities and resulting reports balance. Discrepancies can help identify errors and offer an opportunity to research and make necessary corrections.

  • Exercise reconciliation
    • Reconcile the funds received for the year against the exercise records to confirm the company has received all expected funds. Collaborate with the finance or accounting team to complete this step.
    • Review exercises against the equity platform share pool reports and/or with the transfer agent (if applicable) to confirm all outstanding records balance and are accurate.
    • Check to see if there are any early-exercised awards and determine whether the individual is still employed. This can impact accounting and corporate taxes and cause complications if the person is no longer employed. If the person is no longer employed but received shares, additional steps may be needed to correct the issue.
  • Restricted stock unit (RSU)/Restricted stock award (RSA) reconciliation
    • Review released share reports against the equity platform share pool reports and/or transfer agent (if applicable) records to confirm they balance.
    • Check to see that everyone who should have had taxes withheld did, and those who should not have taxes withheld did not. It is easy to mix up these groups. If an error is found, the payroll team may need to make the necessary corrections.
    • Ensure shares were not inadvertently released to someone who was terminated. If this has happened, the next step should be to research what type of correction will be required.
  • Termination review
    • Contact the HR team to obtain the appropriate reports and information to complete these steps.
    • Reconcile the HRIS termination report against equity platform demographic reports to ensure all terminations have been updated in the platform.
    • Ensure that awards receiving non-standard treatment as part of an employee’s departure, such as an acceleration of unvested awards or an extended post-termination exercise period (PTEP), are accurately reflected in the equity platform and copies of the documentation are filed for recordkeeping purposes.
    • For ISO holders who have changed from employee to contractor or received an award modification that disqualifies the award’s ISO status, review the awards to ensure their ISO disqualification dates have been updated accordingly. Ensure that the last day to exercise for all terminated grants is correct. This can be different per person and even per grant.
  • Grant reconciliations
    • Review board minutes against equity platform reports to ensure all board-approved grants are reflected in the system. If they are not, research the discrepancy and document the reason.
    • Ensure any board-approved grant modifications have been updated in the equity platform. If the equity platform allows, note which board minutes the modification can be found to facilitate future follow-up.
    • Run a quick share pool report to see where the remaining share balance stands. Is it enough? Will more shares be needed in the next year? These are great points to discuss in the upcoming year.
  • ASC 718 expense Connect with the accounting team to complete the following steps:
    • Verify that share-based compensation expense has been recorded for the year.
    • Have there been any complex awards or modifications this year? Provide the accounting team with this information for expense impact purposes.
    • For private companies, revisit fair value assumptions such as grants that were awarded between an expired and new 409A date for interpolation considerations and whether the comparable companies for volatility inputs remain relevant.
  • Plan review
    • Review the expiration date of the company’s plan. If the plan expires sooner than expected, involve leadership and legal counsel immediately to discuss next steps.

Exercises and releases

While some of the items in the previous section have been reconciled, portions still need to be addressed.

  • Exercises
    • Double-check to see if there are any outstanding exercise requests still pending. If so, approve or cancel them before December 31. This is especially important for cash exercises because the exercise will cross calendar years and can create reporting challenges.
    • Public companies will want to check with their broker to find out how to handle any “good ‘til” or limit outstanding orders. Questions to ask:
      • Will the orders be auto canceled on December 31 or remain active?
      • If they are auto canceled, will the broker re-enter them, or will the participant need to re-enter them?
      • This is more likely to impact board members and those with 10b5-1 plans, so it is good to know how these are treated and whether the participant needs to take action on their account.
  • RSU/RSA releases
    • For companies with RSUs or RSAs, double-check whether all releases have been processed for the year. If a release is accidentally missed, rectifying it is much easier in the same calendar year than doing so in the next.

How can BPM help with year-end stock plan reporting?

The information presented here is designed to help you as you close out the year. In our experience, these topics impact our clients the most. However, this checklist is not intended to address or explain all the complexities behind each section comprehensively, but to provide an easy-to-follow guide for companies to use. For example, if your company has an employee stock purchase plan (ESPP), it will need to think about not only 3921 forms but also consider 3922 forms.

To further support your year-end responsibilities, we created a worksheet to mark each task as you complete it. You will also find a section in the worksheet to add any additional tasks specific to your role and organization.

Remember that the Equity Management team at BPM is here to help guide you through the various considerations and scenarios. Please feel free to contact us with any questions.

Download the checklist

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