Restricted Stock Units (RSUs) are a form of equity compensation where the employer promises to deliver company shares (or cash equivalent) on a vesting schedule. When RSUs vest, the fair market value is taxed as ordinary income (W-2 wages) and added to your tax bracket. After vesting, the shares become yours and any future appreciation/loss is treated as capital gains/losses. Typical vesting: 4 years with a 1-year cliff. Tax strategy: many employers withhold a flat 22% on vesting, often inadequate for high earners — make estimated payments or adjust W-4 to avoid underpayment penalties. Selling immediately at vest avoids concentration risk.
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RSU
August 22, 2026 · Aditya Gupta
Investing
Related terms
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A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
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