Restricted Stock Units: Common Mistakes

Since you are typically paying taxes when you take ownership of the restricted stock unit (RSU), your employer will automatically withhold some amount…this is where the first mistake occurs for most employees. Typically, employers will automatically withhold 22%, and that works if you are in the 22% tax bracket, but most equity-compensated employees have income that puts them well above this bracket. That means you might owe some tax come April…and it could be a fair amount. 
Additionally, remember that each RSU that vests will increase your taxable income unless you have elected to defer through the 409a election. This could jump you up into additional tax brackets, especially if the stock has appreciated significantly, or if it is a large grant or grants are vesting. 
For most, it’s better to know beforehand than to get surprised with an IOU from the government. There may be certain deductions you want to take advantage of in a high-income tax year, an area we help our clients out with. 
The second mistake our advisors see is overconcentration. As the RSUs vest, the employee often builds up a large concentration in their company’s stock...and the “feels” start to set it. 
“I feel like I should hold on until we get back to $75 because we were at $75 just six months ago.” 
“I feel like we are headed to $78 a share because our earnings will be pretty strong.” 
These are intuitive statements, and unfortunately, intuition can feel good when it’s right and not so great when it’s wrong. Having both your income and a large chunk of your net worth attached to one company’s well-being is likely an “uncompensated risk,” which many employees may have been reminded of when their company performance is declining in conjunction with their stock price or during general market declines. 
Understandably, there is a sense of paralysis here, maybe because of the complex questions you may be facing:  
“How much should I sell, and why?”  
“What will the tax bill be?” 
You may understand that you need to diversify away, but what should you diversify away to?  
This is where we can help. Not only will we provide an equity compensation report, but being a full-service financial planning firm, we will consider the entirety of your financial plan.  
#RestrictedStockUnits #RSU #RSUs
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These videos are limited to the dissemination of general information and are not intended to be legal or investment advice. Nothing herein should be relied upon as such. The views expressed are for informational purposes only and do not take into account any individual personal, financial, or tax considerations. There is no guarantee that any claims made will come to pass.     
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[@cainmenard5720]

Thanks for the information

[@jrhine81]

Well Explained. What a great video. The voice is so assuring! You need to turn this into a CPE video.

[@uub23]

How does tax refund work if the marginal rate that they text you at is larger than your effective rate? Do they give back the additional money they took by selling your stocks at the beginning to pay for income tax?

[@STEALTHADS]

the question is once a stock is restricted but then the company goes to uplift to nasdaq , doesn't that make the stock automatically NON RESTRICTED ?

[@johnj4094]

@Mariner Wealth Advisors Thanks you for your great program..My employer SOld some Shares before giving me remaining on Vesting. Also I see it on my pay check and shows some Payroll taxes taken out..is that not double taxation?
Question. Using Turbo tax will it figure all this out and correct what is owed or to be refunded?

[@Adr_Jim]

I use TurboTax and my company stocks are managed using E-Trade. There is a "supplemental tax document" that TurboTax will NOT automatically sync. Using this document (or the equivalent with other trading platforms) you must fix the "cost basis" column it will say $0 because E-Trade doesn't report that part to the RIS. Hope this helps.

[@7radtech]

Is it better to sell older or newer RSUs stocks

[@AccessMariner]

“It depends on a variety of factors - what does the cost basis look like? What do your current tax projections look like? A number of tax questions to think through.”

[@BrainCoachJosh]

I am your 1,000th subscriber. Can I get some equity 😉

[@pythonwithpankaj3469]

Can some sell vested RSUs after quitting the company? Will vested RSUs exist in account after quitting company?

[@AccessMariner]

Once they are vested, you own them - typically, that individual account will remain open. Whether or not you should keep them/sell them is typically a much larger question.