There is no easy way to put it. Your Procore stock compensation is complicated.

And depending on what type of equity you have, how many you have, and other equity you already own –along with all your other unique financial planning needs– understanding what to do with your Procore equity can become even more difficult to figure out.

Depending on when you joined and your role, you could have a few types of Procore equity.

If you are a more recent hire, particularly post IPO, your equity package could consist of some sort of combination of Restricted Stock Units (RSUs), the Employee Stock Purchase Plan (ESPP) and Performance Share Units (PSUs).

If you have been around a while (like back when Joe joined in 2016), you might have all 3 of those, plus Incentive Stock Options (ISOs) and Non Qualified Stock Options (NQSOs).

It’s great to have all this information, but how do you put it all together?

And most of all, how do you put it together for your unique circumstances?

That’s where financial planning comes into play (shameless plug, raises hand). There is no one answer, but here are some questions we help our clients answer to create a strategy:

* With stock options, when should I exercise and how much?

* How do you want to pay for the exercise?

* I’ve held on to a bunch of Procore stock. Should I diversify? If so, how?

* What's the tax hit going to be?

* What mistakes can we avoid?

* If I give to charity, how can I incorporate this into my plan?

The Procore 401 (k) plan allows for contribution in two ways; as Traditional 401(k) contributions or as Roth 401(k) contributions

BREAKING DOWN THE TAX TREATMENT OF EACH OPTION

Traditional: These are made pre-tax aka save on taxes now. Earnings grow tax deferred. In retirement, you will pay taxes when you take the money out.

Save now, Pay taxes later

Roth: You will pay taxes on the money you put in today. Earnings and contributions grow tax free. When you take out your money in retirement, you won’t owe any taxes.

Pay taxes now, save later

Procore matches 100% on the first 3% of base salary. On the next 2%, they match 50%.

So if you contribute 5%, they will match 4%.

There’s very few scenarios where you shouldn’t be contributing a minimum of 5% to your Procore 401k.

Everyone’s favorite agency, the IRS, only lets you put so much money into your 401k each year.

For 2022, your total contributions are capped at $20,500 (total of Roth + Traditional). If you are 50 and older, you can make an additional $6,500 “catch-up contribution.”

So you could do $20,500 to the Roth.

Or $20,500 to the Traditional.

Or $5,500 to the Roth and $15,000 to the Traditional.

But you can’t do $15,000 Roth and $15,000 Traditional. I appreciate the effort, but that’s over the $20,500 limit.

Note: If you switch employers mid year, make sure the new job knows how much you contributed for the year!

Should you be maxing out your 401k each year?

Resoundingly…it depends. But it’s true.

Traditional financial wisdom will tell you that you should focus on maxing out retirement accounts before anything else.

But deciding how much to put into retirement accounts can’t be done in a vacuum!

It completely depends on where you are at and what your goals are.

Consider questions like these:

• Are you saving up for a house in 3 years and need help building your down payment to get there?

• Do you want to take a year off / sabbatical in 5 years?

• Do you want to send your kids to private school in the next few years?

• Are you planning on retiring before age 60?

While the Procore 401k is great because it offers tax advantages (now or in the future) and helps with retirement, what about money before retirement?

Depending on your goals and where you live, you may have different priorities.