The Moment
Your RSUs just vested. Shares appeared in your brokerage account, and you saw a tax withholding that was larger than expected. Welcome to equity compensation.
RSUs are conceptually simple but emotionally tricky. The tax part is straightforward — your employer handled it at vesting. The hard part is deciding what to do with the shares now that they are yours.
The Tax Reality
At vesting, RSUs are taxed as ordinary income. Your employer reports the fair market value of the shares as W-2 income and withholds taxes — typically at the supplemental rate (22% federal) plus state taxes. If you received 100 shares at $150/share, $15,000 is added to your taxable income.
The withholding is often insufficient. The 22% federal withholding may be lower than your actual marginal rate (24-37%). You may owe additional tax when you file. Check with your CPA.
After vesting, any further gain or loss is a capital gain/loss. If the shares were worth $150 at vesting and you sell at $170, the $20/share gain is a capital gain — short-term (ordinary income rate) if held under 1 year, long-term (15-20% rate) if held over 1 year.
Sell or Hold?
The framework: Would you buy this stock with your own money today, at the current price, in the amount you now hold?
If your RSU vesting delivered $30,000 in company stock, ask yourself: "Would I take $30,000 from my savings account and buy this one stock?" For most people, the honest answer is no. You would not put $30,000 into a single stock — you would invest in a diversified index fund.
Sell and diversify if: - The company stock represents more than 10% of your net worth - Your salary, bonus, and future RSUs already depend on this company - You would not buy the stock at today's price with new money - You are uncomfortable with the volatility of a single stock
Consider holding if: - You have strong conviction the stock is undervalued (and you have expertise to make that judgment) - The position is small relative to your total portfolio (under 5%) - You are close to the 1-year mark for long-term capital gains treatment
The concentration risk: Your salary depends on this company. Your bonus depends on this company. Your unvested RSUs depend on this company. If you also hold vested shares, your financial life is dangerously concentrated. When the company does well, everything is great. When it does poorly (layoffs + stock decline), everything collapses simultaneously. Diversification is not disloyalty — it is risk management.
Run Your Numbers
Enter the value of your vested RSUs to see allocation options.
$50,000 Windfall Allocator
What to explore next
- →How do I manage ongoing RSU vesting schedules?
- →What is the tax difference between RSUs and ISOs?
- →How much company stock is too much in my portfolio?
Frequently Asked Questions
Should I wait for long-term capital gains treatment?
Only if the potential tax savings outweigh the concentration risk. On $30,000 in stock with a $2,000 unrealized gain, the difference between short-term and long-term tax on $2,000 is roughly $200-$400. That is a small amount to risk holding a concentrated position for months. If the gain is large ($10,000+), waiting may be worthwhile.
My company stock has been going up — why would I sell?
Past performance does not predict future performance. The question is not whether the stock went up — it is whether it will continue to outperform a diversified portfolio. Even if you are right about the company, the incremental risk of concentration is not compensated. Diversify and let your unvested RSUs provide future company exposure.