How To Fund with Tax Withholding

See video tutorial here

Magna worked closely with existing customers to design a workflow for distributing tokens with tax withholding calculations performed by Rippling. The workflow includes many design decisions today that can be modified based on customer feedback.

Above: A screenshot for an allocation that will be subject to tax withholding

At a high-level, this workflow works as following:

1. Add Rippling Information: Admins set up stakeholders with taxable allocations by adding their Rippling Employee Number within Magna.

2. Calculate Gross Value: When distributing tokens with tax withholding, the Transaction Overview page will look quite different. Magna will calculate the following fields:

   • Token Price: This is used to calculate the Fair Market Value for the token amount that will be sent for each allocation. Today, the FMV calculation is based on a rolling average of the token price from the day the distribution is carried out. The admin can also specify a custom price to use for the FMV, for example if they would like to use a separate custom valuation.

   • Gross Tokens: The gross amount of tokens that have vested and are queued up to be sent for that particular allocation.

   • Gross Value: This value is determined based on the FMV calculation of the tokens.

3. Export Gross Value to Rippling: Magna will then generate a CSV to import into Rippling as a part of the payroll process. Once the payroll process is completed within Rippling, Rippling will then calculate a Payroll Journal that specifies the Net Value to be distributed.

4. Import Net Value Back into Magna: Admins will then export that payroll journal CSV from Rippling into Magna. This will import the Net Value. Magna uses the FMV above to calculate the Net Tokens to be distributed to the individual.

5. Distribute the Net Token Amount: Admins can then proceed through the distribution flow to distribute the token amount net of taxes to the recipient. The full details will be provided in a final transaction summary view.

6. Review Transaction Information: The full details of the taxable distribution can then be viewed in the future. The stakeholder can see all their tax-withheld distributions to date, and the admin can see all tax-withheld distributions across all allocations.