When OpenAI and Anthropic hit the public markets, a whole lot of employees are going to become gobsmackingly rich. That means it’s time for some high-stakes financial planning.

Both AI labs recently filed initial paperwork to go public, preparing to turn their nearly $1 trillion in private valuations into stock-market windfalls. For employees, life-changing money is on its way.

The workers behind Claude and ChatGPT have major decisions to make. When should they sell their shares? Is it a good time to shell out for a multimillion-dollar house in San Francisco? What’s the right way to donate to charity?

When these workers aren’t getting advice from their chatbots, they turn to accountants and money managers. Business Insider spoke with several financial planners who are already working with OpenAI and Anthropic employees to learn what tax and planning tips the advisors are giving them.

OpenAI and Anthropic workers need to know what they’ve got

Every financial planner Business Insider spoke with offered the same advice: know what you’ve got.

For example, Mark Cecchini, a wealth planning advisor, said that one of his clients at Anthropic has worked at the company for only three years and already has a whopping $40 million in vested equity, with another $30 million still to vest.

These workers won’t be able to sell their shares on IPO day to use all that money immediately. Companies and banks typically impose a lock-up period for employees, delaying when they can cash out. SpaceX revealed its lock-up structure only a few weeks before its initial public offering this June.

Employees should keep an eye on that timeline and closely track the tax bills and credits they’ve already incurred from their stock options, financial planner Bryan Hasling told Business Insider. As an advisor, he tries to stop clients from spending money they don’t yet have.

If Anthropic goes public in October, it could be April before employees can cash out their shares, Hasling said.

“That’s really important because people hear ‘IPO’ and their brain starts going crazy,” Hasling said.

OpenAI and Anthropic staff should decide in advance how much to cash out

Hasling has another go-to piece of advice: “Just know your number.”

People make two common mistakes during and after IPOs, Hasling said: they view their share value as liquid cash — ignoring the future tax hit — and they go in without an established goal for their net worth.

Workers should think about what they’d like to do with life-changing wealth, Hasling said, be it to retire, start angel investing, pay off their parents’ mortgages, or, as is most often the case, buy a home — and then plan for those goals.

The advisor said workers get sucked into the visceral feeling of watching their stock price and net worth go up and down, when they’d have been better off setting a firm cash-out plan before the listing.

“Once you know that big round number, the goal is to capture it, pay tax, improve your sleep score,” Hasling said.

One of Cecchini’s clients, an OpenAI employee, is eyeing a $6 million house in the San Francisco Bay Area’s swanky Marin County. The advisor said he’s helping the client consider loans, potentially against pre-IPO shares, to get the deal done. If employees can’t cash out until spring, Cecchini said, that’ll be a brutal time to buy in the Bay Area housing market.

“You’re probably going to be in bidding wars with people that have potentially unlimited liquidity if everything goes their way,” Cecchini said.

The financial planners largely avoid advising clients on whether to hold or sell their company’s stock, though they generally support diversification.

Minnie Lau, an accountant with clients at both OpenAI and Anthropic, told Business Insider that she poses a thought experiment to tech workers. Would they rather take a bag with a $100,000 cash bonus or $100,000 in company stock options? They’re each taxed as income.

If the client says they’d like the cash, Lau encourages them to view the company going public as a good time to sell. If they’d like the stock, she asks how much they’d be willing to pay per share.

“It’s just a matter of, do you think your company’s stock is going to beat every single thing out there?” Lau said. “Are you comfortable not diversifying?”

OpenAI and Anthropic employees will need to manage the tax bill of a lifetime

California, where the AI labs are based, has the nation’s highest state tax rate. And federal taxes jump up when a worker has an incredibly lucrative year. Cecchini said he spends a lot of time “just prepping people for that sticker shock.”

OpenAI and Anthropic have given different types of stock options to employees.

OpenAI is a rare breed. Because of the company’s former nonprofit status, early employees received equity in the form of Profit Participation Units, a customized payment that’s tied to future profits. More recently, OpenAI has handed out the more traditional Restricted Stock Units, and PPUs have begun converting to regular shares, making tax planning simpler, Cecchini said.

Anthropic, meanwhile, has paid employees with a more classic mix of stock-based compensation, distributing RSUs, Non-Qualified Stock Options, and Incentive Stock Options. Those are a bit trickier to plan around, tax-wise.

Advisors suggested some workarounds and strategies to reduce tax liability. When workers exercise ISOs, they may end up paying the Alternative Minimum Tax instead of their regular tax bill, and it’s possible to use that payment as a credit against future taxes.

Cecchini saw an OpenAI client use the opportunity zone deferral, which incentivizes investment in certain areas by deferring capital gain taxes. He’s also seeing a lot of interest in the “Buy, borrow, die” strategy of borrowing against brokerage accounts to avoid paying capital gains taxes, which he said works best if you feel super confident in your portfolio’s makeup.

Employees who may have been through a failed IPO or held bad investments can use those prior losses to reduce capital gains taxes on their OpenAI or Anthropic IPO shares, Evan Hargreaves, an accountant, told Business Insider.

Hargreaves, who has clients at both labs, said he’s recently seen more everyday people put their stocks into donor-advised funds, which are accounts that give to charities, to reduce their tax liabilities.

That’s a good route for these workers, he said. If they donate the shares that have gained the most value over time to the funds, they both get a deduction for the donation and avoid paying capital gains taxes on the shares.

Hargreaves also suggests the easiest route to clients: maxing out your 401(k) in the year of an IPO can save thousands of dollars.

Finally, advisors say to be prepared, as many IPOs underperform.

“I don’t want to be a doomer and say, ‘Oh, bad things happen,’ but educated people know what the stats are,” Hargreaves said. “Eh, that sounds so negative. You just want to be prepared whether the stock goes up or down on IPO, six months to a year later.”

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