If you’ve ever looked at your benefits portal and thought, “Cool, I got RSUs… I’ll pretend I understand that later,” you’re not alone.
RSU stands for Restricted Stock Unit. In plain English: it’s company stock your employer promises to give you, but you don’t actually own it yet. It becomes yours later, on a schedule, if you still work there (and meet whatever rules your plan has).
Here’s the key: with RSUs there are three moments people mix up—grant, vest, and sell. Getting those in the right order is the difference between “Oh, that makes sense” and “Why did my paycheck do that?”
1) Grant (the promise)
You get a notice that says something like, “You’ve been granted 1,000 RSUs.” That’s real… but it’s not spendable. Think of it like a gift card that hasn’t been activated yet. You can’t pay rent with it, and you can’t sell it.
2) Vest (the “it’s yours now” moment)
When RSUs vest, you actually receive shares. And here’s the surprise: vesting is usually when the tax bill happens. The IRS basically treats the value of those shares as compensation (kind of like a bonus), so it shows up as income.
Most companies withhold some shares (or cash) at vesting to help cover taxes. This is often called “sell to cover” or just withholding. Helpful… but it can still come up short, especially for high earners, because RSU withholding rates don’t always match your real tax bracket. Translation: you can do everything “normally” and still owe more at tax time.
3) Sell (the investing decision)
Selling the shares is a separate decision. Yes, selling can create additional tax (capital gains or losses) depending on the price change after vesting. But the big “I just got taxed” moment is usually already behind you.
This is where our philosophy matters: money is a great tool and a horrible master. When RSUs show up, it’s easy to react fast, because taxes feel urgent and stock prices feel dramatic. But we’d rather make calm, planned decisions that support your goals and give you peace.
One more “gotcha” people miss: concentration. If your paycheck comes from one company and a big chunk of your net worth is that same company’s stock, you’re carrying more risk than you think. It’s like your job and your investments are on the same boat. If the boat hits a wave, everything gets wet.
A simple RSU checklist (before you do anything)
- When do my shares vest (dates and share counts)?
- What tax withholding will happen at vesting?
- If withholding is short, where will the extra tax come from?
- How much company stock do I already own (including in my 401(k), if applicable)?
- If I sell, what am I trying to accomplish—cash flow, diversification, a goal, or just nerves?
If you want, we can walk through your vesting schedule and connect it to the bigger picture (taxes, goals, and how much risk you’re taking in one stock). The goal isn’t to “beat the market” with your RSUs. The goal is to use them wisely, so they serve your life, not run it.
These are the opinions of Legacy Wealth Management, LLC and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Dan Funderburk is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice. Copyright ©2026 Dan Funderburk. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.
