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BlackRock Employees: Smarter Ways to Manage Taxes on Appreciated Stock

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'BlackRock employees with concentrated stock positions may benefit from thoughtful tax planning that allows for tax deferral while balancing liquidity, compliance, and long-term compounding,' Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'BlackRock employees who hold highly-appreciated stock may want to consider tax-efficient strategies that help mitigate their liabilities while aligning with their overall retirement goals,' Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How taxes can affect investment returns, particularly on concentrated stock positions.
Exchange funds and options-based strategies as methods for tax deferral and diversification.
Alternative planning techniques outside ETFs, including charitable trusts and gifting strategies.

By Carlos Hernandez, Wealth Enhancement advisor

When it comes to driving portfolio returns, many investors aim to keep management fees low by investing in low-cost index funds and exchange-traded funds (ETFs). While fees matter, however, the real culprit for lower-than-anticipated performance is taxes. ¹

Wealth Enhancement advisor Carlos Hernandez explains: 'By losing less to taxes each year, investors have access to more capital that can continue to compound over time. This makes tax deferral an important part of an effective financial plan.' BlackRock employees looking for long-term growth strategies could benefit by understanding how to better manage their investment tax burdens.

Trade Money

One area where taxes can take a toll is on the sale of company stock or other concentrated investment positions. BlackRock professionals looking to diversify could face significant capital gains taxes on an outright sale. One way to diversify without triggering immediate capital gains is through exchange funds. By contributing their highy-appreciated stock to a pooled fund, investors can trade their concentrated holdings for shares in a diverse basket of securities. This method can be used by BlackRock employees who want to diversify while postponing taxable events.

Although this method allows for tax deferral, it also requires investors to hold the exchange fund for a period of time, typically seven years. ² This could create a challenge for investors who require liquidity. Additionally, these funds are often exclusively accessible to wealthy, accredited investors—something BlackRock executives should carefully evaluate.

Funds Based on Options

Another way to mitigate taxes on the sale of highly-appreciated stock is by using options contracts. The idea is to hedge risk with put options while covering the cost of those puts by selling call options—a strategy called 'collaring'. From there, the strategy reverses, with investors selling put options and using the proceeds to buy call option on an equity or bond index. ³ If managed effectively, this helps to diversify a concentrated portfolio while still maintaining liquidity.

Given the complexity of this strategy, meticulous planning is necessary. It's generally recommended that investors work with an experienced financial advisor before pursuing this approach.

Things to Be Aware of

Although these strategies can be beneficial for BlackRock employees who hold highly-appreciated stock, caution is recommended. There are costs associated with these approaches, and potential liquidity risks. Additionally, the IRS may eventually contest such arrangements because their tax status has not been thoroughly examined—something BlackRock retirees should keep top of mind.

'Tax drag reduction strategies can be effective, but they must be assessed through the lens of risk, liquidity, cost, and compliance,' warns Carlos Hernandez. What is appealing in theory must hold up to inspection in the real world.

Alternative Strategies

Although they show promise, investors with highly-appreciated stock or those looking to postpone gains have other alternatives besides exchange funds or options. Other tactics could include:

- Prepaid variable forwards (subject to IRS regulations, contracts to sell at predetermined terms in the future).
- Charitable remainder trusts (CRTs), which allow investors to donate appreciated stock to a charitable trust and receive a stream of regular income in return.
- Donor-advised funds (DAFs), which provide investors with a tax deduction for the fair market value of the appreciated stock they donate.
- Other gifting techniques, such as direct donations to charity or family.
Each has its own set of guidelines, advantages, and disadvantages. To limit unnecessary taxes or violating the constructive sale regulations, careful planning is necessary for BlackRock professionals managing complex portfolios.

The Bottom Line

Although the movement to mitigate the tax burden on investments is not new, the instruments are changing. Both exchange funds and options-based structures offer investors a way to manage tax liabilities, especially for BlackRock employees who hold highly-appreciated stock.

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In the end, taxes are unavoidable. However, with the correct set of instruments, they can be controlled and postponed. 'The real value comes from aligning tax strategy with investment strategy,' summarizes Carlos Hernandez.

Sources:

1. BlackRock Advisor Center. ' Investing for After-Tax Returns ,' 2025.

2. Kiplinger. ' Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings ,' by Robert Waskiewicz. Sep. 11, 2025.

3. Financial Planning Association. ' Tax-Efficient Ways to Diversify Concentrated Stock Positions ,' by Peter Lazaroff. Oct. 2024.

What type of retirement savings plan does BlackRock offer to its employees?

BlackRock offers a 401(k) retirement savings plan to its employees.

How can employees at BlackRock enroll in the 401(k) plan?

Employees at BlackRock can enroll in the 401(k) plan through the company’s HR portal during the enrollment period.

Does BlackRock match employee contributions to the 401(k) plan?

Yes, BlackRock provides a matching contribution to employee 401(k) plan contributions, subject to certain limits.

What is the maximum contribution limit for BlackRock's 401(k) plan?

The maximum contribution limit for BlackRock's 401(k) plan follows the IRS guidelines, which can change annually.

Can employees at BlackRock take loans against their 401(k) savings?

Yes, BlackRock allows employees to take loans against their 401(k) savings, subject to specific terms and conditions.

What investment options are available in BlackRock's 401(k) plan?

BlackRock's 401(k) plan offers a variety of investment options, including mutual funds and target-date funds.

Is there a vesting schedule for employer contributions in BlackRock's 401(k) plan?

Yes, BlackRock has a vesting schedule for employer contributions, which means employees must work for a certain period to fully own those contributions.

How often can employees at BlackRock change their 401(k) contribution amounts?

Employees at BlackRock can change their 401(k) contribution amounts at any time, subject to the plan’s guidelines.

What happens to a BlackRock employee's 401(k) if they leave the company?

If a BlackRock employee leaves the company, they can choose to roll over their 401(k) balance to another retirement account or withdraw the funds, subject to tax implications.

Does BlackRock provide educational resources for employees regarding their 401(k) plan?

Yes, BlackRock provides educational resources and tools to help employees understand and manage their 401(k) savings.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

BlackRock announced a significant restructuring plan, which includes substantial layoffs and changes to employee benefits. The company is also reviewing its pension and 401(k) plans to adjust to the current economic conditions. These changes are part of a broader strategy to streamline operations and reduce costs amid market uncertainties.