Why Holding Vested RSUs Might Be Riskier Than You Think
You’ve worked hard, earned equity, and now you’re watching restricted stock units (RSUs) vest into actual shares.
But here’s the problem: many high earners unknowingly take on concentrated risk by holding those shares too long.
Let’s break down the risks, the tax traps, and a smarter way to approach your equity compensation.
What Happens When RSUs Vest
RSUs convert to shares and are taxed as income at vesting
Income taxes are withheld (often only 22% federal by default)
But the shares are yours, and now you hold company stock
Quick Example:
You receive $100K worth of RSUs, but only $22K is withheld federally.
If you’re in the 37% bracket, you still owe $15K or more next April.
The Risk of Concentration
You’re now heavily exposed to your employer’s stock
Salary, bonus, benefits, and investments are all tied to one company
If the stock drops, your net worth and job security take a hit at the same time
Real Talk: This is the same kind of risk Enron employees took.
It may not be that extreme, but it’s still worth being intentional.
Emotional Attachment and Anchoring Bias
“I’ll sell when it gets back to the vest price…”
“I don’t want to sell after it dropped—it’ll bounce back…”
“This stock has so much potential…”
These are all emotionally driven stories.
The market doesn’t care what price your shares vested at.
Anchoring creates inaction.
What a Smart Strategy Looks Like
Set a policy: auto-sell at vest or on a quarterly schedule
Consider a 10b5-1 plan if you’re subject to blackout windows
Reinvest proceeds in a diversified portfolio
Coordinate sales with your tax plan and financial goals
Don’t Forget the Tax Layer
RSUs are taxed as income at vesting
Future gains become capital gains, but only if you sell later
If you hold long enough for long-term treatment, great
But don’t let the tax tail wag the dog
Delaying a sale means tracking cost basis and potentially higher tax prep complexity
Turn Equity Into Opportunity, Not Risk
Your RSUs are a powerful wealth-building tool, but only if used intentionally.
Holding too long can expose you to unnecessary risk, poor diversification, and added tax complexity.
If you’re not sure what to do with your vested equity, we’ll walk you through the options in your free Memento Snapshot.
