Metamates, here’s how to completely screw up today’s RSU vest: (I’ve done 4 of these) 1. Not calculating that your marginal tax rate is above the default 22% ↳ Bay Area FAANG salaries usually put you in 32%+ territory, not the RSU default 2. Don’t check your withholding rate ↳ It’s probably still set to that 22% while you actually owe 32%+ 3. Think holding = tax benefits ↳ Your RSUs are taxed as ordinary income whether you sell or hold 4. Hold for a year expecting long-term gains treatment ↳ Only the GAIN above vest price gets preferential treatment 5. Have zero plan for selling or deploying the money ↳ I’ve seen folks accumulate multiple 6-figure concentrated positions because they didn’t have a plan and didn’t take action What’s your biggest RSU lesson learned the hard way?
Great list! #5 alone can save people from 7-figure mistakes over a career.
So much confusion around [3] is caused by ESPP and equity in private companies. The IRS tax code is terrible
Nishant, number 1 usually turns into a very unpleasant surprise during the tax season!