The most efficient way to handle early exercise and 83(b) elections is to build a documented, repeatable workflow that triggers the moment a grant is issued, so the 30-day IRS window is never at risk of being missed. The process itself is straightforward. What breaks it is the absence of an assigned owner and a clear sequence of steps.
The 30-day window: why timing is everything
The IRS 83(b) election window is exactly 30 calendar days from the exercise date, when the employee actually purchases the shares. For RSAs, the clock runs from the date of stock transfer. Not business days. Not from when the employee opens their equity portal.
If that window passes without a filed election, the employee loses the ability to lock in their tax treatment at today's valuation. As the company grows and the 409A increases, so does the tax exposure on unvested shares. The tax bill that could have been near zero at grant can become significant by the time vesting completes.
There are no extensions and no exceptions. The IRS has been clear on this. Once the deadline passes, the opportunity is gone permanently.
The 5-step early exercise and 83(b) workflow
Getting this right every time requires a repeatable process. Here's what that looks like:
1. Grant issued: notify employee same day.
The moment a grant is issued, the employee needs to know their option to early exercise exists and that the 30-day clock has started. This notification should include the grant date, the exercise price, and a clear explanation of what early exercise means for their specific grant.
2. Employee files within 30 days, online or by certified mail.
Form 15620 can now be filed online via the IRS portal. If filing by mail, the postmark date counts, not the date it arrives. Certified mail with return receipt creates the paper trail that proves it was sent in time. The employee should send two copies: one to the IRS service center for their state, one to the employer.
3. Collect proof of filing.
The IRS does not reliably stamp and return copies. Acceptable proof is a certified-mail receipt plus a postmarked copy, or an e-file confirmation if filed online. File this against the relevant grant record immediately. Do not wait for anything from the IRS.
4. Record in cap table.
The early exercise should be reflected in the cap table as soon as it's confirmed. Unvested shares (subject to the company's repurchase right) need to be tracked separately from vested shares. This distinction matters for future financing rounds, secondary transactions, and exit calculations.
5. Platform surfaces the form and reminds the employee.
Cake surfaces the 83(b) form at the right time and sends the employee a reminder. Uploading proof of filing back to Cake for audit tracking is coming, not live yet.
Who needs to file: not every option holder should early exercise
Early exercise is not right for everyone. Before an employee decides to file, they should consider a few practical criteria.
The best candidates are early in their vesting cycle, because the favorable tax treatment applies to unvested shares. They should also have a low current 409A FMV, meaning the spread between the exercise price and fair market value is small (or zero), so the tax at exercise is minimal. The company should have meaningful expected appreciation ahead, making the future tax savings material. And the employee needs the cash to exercise upfront, since they are buying shares before they vest.
The counter-case is worth naming directly. If an employee is late in their vesting cycle, if the company is already at a high 409A FMV, or if the spread between exercise price and FMV is already significant, early exercise may not produce meaningful savings. In some situations, it can create tax exposure with little upside.
Cake's 83(b) tax savings calculator lets employees model the tax difference themselves before making a decision.
A workflow that protects your team's equity
The 30-day window is the most consequential administrative deadline in early-stage equity. Miss it once and the cost is permanent. Build the workflow before the first grant goes out, assign clear ownership, and treat it as standard operating procedure from day one.
Automated 83(b) reminders for early exercise
Cake's early exercise feature handles the cap table split automatically: unvested shares (subject to repurchase) and vested shares are tracked separately from day one, without a manual update step.
When an employee exercises early, Cake automatically sends an 83(b) election reminder within 30 days of exercise — the window that matters for the tax election. Cake surfaces the reminder at the right time so founders aren't fielding individual questions about deadlines.
This article is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.
