GLOSSARY · INVESTING

Restricted stock units (RSUs)

A promise by an employer to give you company shares once a vesting condition, usually continued employment, is met. When the shares vest, their market value is taxed as wages whether or not you sell them, and employers usually withhold some of the shares or cash for tax. Later growth or loss after vesting is a capital gain or loss.

Also called: RSU, RSUs, stock units
FORMULA
Wage income at vesting = shares vested × market price on the vesting date
COMPUTE IT WITH YOUR NUMBERS
RSU vest tax and 22% withholding gap →How much tax when RSUs vest and is 22% enough?
LEARN IT PROPERLY
CHAPTER · GROWING YOUR PRIMARY INCOME · STRATEGIESTotal Compensation: Valuing the Whole Package
RELATED TERMS
VestingTotal compensationMarginal tax rate
SOURCES
All terms →The Library →