1. What's the best way for a layman — who honestly doesn't want to micromanage or or think about it that often — to learn enough about this to make educated decisions?
Before visiting the MMM forum I was under the assumption that I should hold my shares for 1 year after the RSUs have vested and the ESPP stocks are purchased to avoid the higher capital gains taxes. But it sounds like a lot of you are recommend a cashless exercise / same-day sale.
RSU vesting is generally taxed the same as if the company had paid you in cash on vesting day and you then turned around and spent that cash on company stock at the current market price. Your cost basis will then be the same as the fair market value of the stock on the vesting date. Yes the short-term capital gains tax rate is higher than the long-term capital gains rate, but if your gain is zero (or near zero) the tax rate is basically irrelevant.
ESPP is a bit of a different story.
Here's an old post about how the taxation works here. It's harder to give a one-size-fits-all piece of advice here. If your company stock has gone up a bunch there may be more of a tax incentive to wait a while (often 18 months) before selling than if the stock price has stayed relatively flat or gone down.
You mention the term "cashless exercise" which often applies to stock options more than either RSUs or ESPP shares. Options are yet another thing that has a somewhat different set of factors to consider.
2. I get that it's risky to have all of your eggs in one basket, but don't higher capital gains taxes apply to a cashless exercise? I don't have any reason to expect the stock to go down and it seems like it's worth waiting a year. What am I missing?
1) As I mentioned above with RSU shares the cost basis is whatever the value was on vesting day, so if you sell right away there's basically no capital gains so basically no capital gains tax.
2) Risk. Your company stock may perform very differently from the rest of the market while you're waiting for the capital gains to get long-term status. The long-term capital gains may save you a few percent, but the variation of the stock price compared to the rest of the market will very likely have a higher magnitude (in which direction? who can say?) than this tax savings.
3. About $10k of $90k in my ETRADE account has been held for a year and is in "long term" capital gains status. If I wanted to diversify into an index fund, is it as easy as selling the stock and buying the index fund? Is there any reason to keep this in ETRADE vs some other company?
Yes it is that simple to switch your investments. Just sell one and buy the other. The brokerage you hold this stuff in doesn't matter all that much. They each have their own fee structure and level of customer service but in the grand scheme of things you'll probably do basically as well holding an index fund with Etrade as you will do holding that same index fund in Vanguard or Fidelity or Schwab or pretty much any other low-cost firm.
4. The stock that I've had over a year would be sold at a loss of ~$1,200. I read that losses may not be such a big deal since it would help offset profit from other stock sales (which I'm expecting when more stock matures). Is it as easy as it sounds? If I expect the stock to turn a profit in the next 3 months, is it worth holding onto, or is that a slippery slope?
The capital loss will offset any gains when you compute your taxes in the spring. Your brokerage(s) will send you a 1099-B form summarizing this information.
What reason do you have to expect that this stock will erase the losses over the next three months?
