- July 14, 2026
If you work in tech or engineering, there’s a good chance a big chunk of your compensation shows up as restricted stock units (RSUs). And if you’re like most of the smart, analytical people I work with, you’ve probably done one of two things with them: nothing, because you’re waiting for the “right time” to figure it out — or nothing, because they’ve been going up and selling feels like quitting a winning game. Both are decisions. Neither is a strategy. Here’s how to think about RSU tax planning, the withholding trap, and concentration risk — without the bull$h*t.
Are RSUs taxed when they vest?
Yes. When your RSUs vest, the IRS doesn’t care that you didn’t sell them. The fair market value on vest day is ordinary income — it lands on your W-2 just like salary. Holding the shares after vesting isn’t “avoiding taxes.” The tax already happened. Holding is a brand-new decision to invest that money in one single stock: your employer’s.
Here’s the engineer’s way to think about it. If your company handed you a cash bonus equal to your vest, would you immediately use all of it to buy company stock? If the answer is no — and for almost everyone it’s no — then holding vested RSUs by default is the same choice wearing a different outfit.
The withholding trap that bites high earners every April
Most companies withhold taxes on RSU vests at the IRS supplemental wage rate — typically 22%. If your actual marginal bracket is 32%, 35%, or 37%, that gap doesn’t disappear. It shows up next April as a surprise tax bill, sometimes with an underpayment penalty attached as a thank-you note.
If you had a large vest this year, check your withholding now, not in March. A quick estimated payment or a W-4 adjustment mid-year is cheap. Penalties and scrambling are not.
How much company stock is too much?
Engineers are trained to design out single points of failure. Then many of them build a personal balance sheet where their paycheck, their bonus, their unvested equity, and their investment portfolio all depend on one company’s stock price. That’s a single point of failure with a badge photo.
There’s no universal magic number, but when one stock — any stock, even a great one — creeps past a modest slice of your net worth, you’re no longer investing. You’re concentrating. Sometimes concentration builds wealth; it’s also how wealth quietly evaporates while everyone’s telling each other the stock always comes back.
A simple default framework for managing RSUs
Every situation is different (that’s not a disclaimer, it’s the actual truth), but here’s a sane starting point:
- Sell at vest as the default. Because the tax is owed either way, selling at vest usually has little additional tax cost. Redeploy into a diversified portfolio aligned with your plan.
- Hold deliberately, not accidentally. If you choose to keep shares, make it a sized, intentional position with a written rationale — not an accumulating pile of “I’ll deal with it later.”
- Coordinate with everything else. Vest schedules interact with your bonus timing, charitable giving, 529 contributions, estimated taxes, and whether this is the year for a Roth conversion. RSUs aren’t a standalone puzzle; they’re one subsystem in the machine.
- Automate the boring parts. Standing sell instructions and automatic reinvestment beat willpower every time. You already know this — you automate everything else in your life.
The bottom line
RSUs are one of the best wealth-building tools tech professionals have — if you treat them like income with a plan instead of a lottery ticket with a vesting date. The tax bill is coming either way. The only question is whether you engineered for it.
Want help pressure-testing your equity comp strategy? That’s literally what I do. Schedule a no-obligation consultation and we’ll look at your vesting schedule, your tax picture, and your concentration risk — without the bull$h*t.
Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.
Steven Grogan is an investment advisor representative registered with Savvy Advisors, Inc. (“Savvy”). All investment advisory services offered by Steven Grogan are offered through Savvy. Atticus Wealth Management is an independent marketing brand name used by Steven Grogan for advertising and marketing purposes only. Atticus Wealth Management and Savvy are not related or affiliated.
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