Restricted Stock Units (RSUs): What They Are and How to Make the Most of Them

If you work for a publicly traded company. there’s a good chance Restricted Stock Units (RSUs) are part of your compensation package.

For many professionals, RSUs can become a significant source of income and long-term wealth. But despite how common they are, RSUs still cause a lot of confusion. You may wonder “When do I actually get the shares?” or “Why did some shares disappear when they vested?

Let’s walk through the basics so you understand how RSUs work and what to think about when they start vesting.

What Are RSUs?

Restricted Stock Units are essentially a promise from your employer to give you shares of company stock in the future. When your company grants RSUs, you don’t receive the shares immediately. Instead, they are tied to a vesting schedule, which typically requires you to stay employed for a certain amount of time before the shares officially become yours.

Let’s assume you get granted 1,000 RSUs with a four-year vesting schedule. The vesting schedule may look like:

• Year 1: 250 shares vest

• Year 2: 250 shares vest

• Year 3: 250 shares vest

• Year 4: 250 shares vest

Once the shares vest, they’re delivered to your brokerage account. Depending on your company’s trading policy, you can usually sell them right away if you so choose. Should you sell them right away? That is not always an easy answer and will depend on a litany of factors.

So How Am I Taxed With RSUs?

This part tends to surprise people. RSUs are not taxed when they’re granted. They are taxed when they vest.

At vesting, the value of the shares is treated as ordinary income, just like salary or a bonus.

Let’s say 250 RSUs vest and the company’s stock is trading at $100 per share.

Congratulations, you’ve just received $25,000 of taxable income. This income shows up on your W-2, and it’s subject to federal, state and payroll taxes.

To help cover those taxes, most companies automatically withhold some of the shares at vesting. That’s why if 250 shares vest, you might only see 150–180 shares land in your account. The rest of the shares were sold to help cover the associated tax bill. Depending on what tax bracket you are in, the company’s withholding may be insufficient compared to your specific tax situation.

Once RSUs vest and the taxes are handled, the shares are yours just like any other stock investment.

From that point forward, any price movement is treated as a capital gain or loss.

If the shares vest at $100 and you later sell them for $105, that extra $5 per share would be taxed as a capital gain.

If you sell the shares immediately after vesting, there’s usually very little additional gain or loss since the price hasn’t moved much.

Should You Hold the Shares or Sell Them?

This is one of the most common questions we hear from clients.

Many employees feel a sense of pride and loyalty to their company and instinctively want to hold onto their RSU shares after vesting. Sometimes that works out great.

But it’s also worth remembering that your salary and career may already depend heavily on the success of that same company. Holding too much employer stock can create concentration risk where too much of your financial life is tied to one company.

Ask yourself this question: if your RSUs vested and your company paid you the equivalent value in cash instead of stock, would you immediately turn around and buy your company’s shares with the money?

If the answer is no, it may make sense to diversify soon after vesting.

How Opulent Wealth Helps Navigate RSUs in Your Financial Plan

RSUs can add a lot of value to your compensation over time, but they also introduce some planning considerations.

Life is busy. Work. Taking the kids to soccer practice. Dance recitals. Life is too short to stress about RSUs.  

Opulent is here to do the heavy lifting for you.

Whether it’s helping manage tax brackets during large vesting years, planning for irregular income spikes, diversifying company stock exposure and coordinating RSUs with other equity compensation such as stock options or employe stock purchase plans, we proactively plan so that you aren’t left scratching your head at tax time scrambling to come up with cash to pay Uncle Sam.  

Restricted Stock Units are a powerful benefit that can help build meaningful wealth over time. Understanding when they’re taxed, how vesting works, and how to manage the shares once you receive them can make a big difference in the long run.

If RSUs are a significant part of your compensation, they shouldn’t be treated as an afterthought—they deserve to be integrated into your broader financial strategy.

At Opulent Wealth, we help busy professionals navigate equity compensation and make thoughtful decisions around taxes, diversification, and long-term planning so more of their hard-earned money stays in their pockets rather than government coffers. Reach out today to schedule an introductory meeting.