How to Maximize Rsu Benefits

"Hold your RSUs for one year" That's what a co-worker said… But here's what they aren't thinking about My client works at a large public company, earning $450K with significant equity comp. Her co-worker's advice sounded logical: → "Hold for long-term capital gains treatment" → "You'll pay less in taxes" → "Just wait one year after each vest" But there's major pieces missing. For one: You already pay taxes on the stock upon vesting And what about her unique situation/goals? → 40% of her net worth was going to be in company stock → She was taking massive concentration risk → Her cash flow was unpredictable due to stock volatility → She was nervous about the stock price dropping The real issue wasn't tax "optimization." It was risk management. She implemented a different approach: → Sell 75% upon vesting → Hold 25% for long-term → Diversify proceeds → Create predictable cash flow for goals Results shortly after: → Reduced reliance on a single stock → Built a diversified portfolio she's confident with → Eliminated stress about daily stock movements → Still able to capture potential upside from growth the stock and long-term capital gains The lesson? Your co-worker's tax advice might be technically correct… But it could be financially dangerous. Every RSU strategy should balance tax efficiency with risk management.

"Chris - I want to better understand a tax plan for my RSUs & get your thoughts on diversifying wealth outside of my company stock". 🤔 1️⃣ Understanding what taxes you will owe & when they are due is a big piece of this equation. I typically start by modeling what one's actual tax liability is projected to be. From there, I then provide recommendations on opportunities to mitigate their tax exposure as well as making sure they earmark sufficient cash reserves to cover any remaining tax balance. 2️⃣ Once we've identified what one's tax exposure upon RSUs vesting, then we have a conversation about how liquidity from their company stock could be used to improve their life today. A question I like to ask to help folks - "If the value of your Shareworks account was in your bank account tomorrow, would you change anything about your life?" A few responses I've heard from clients: ▪️ Family vacation this summer ▪️ Nanny services to help with laundry, house chores, & meal prep ▪️ Remodeling the backyard ▪️ Putting a lump-sum payment toward their mortgage ▪️ Building up a stability fund so he can "press eject" if he no longer enjoys the work he is doing The cool thing - all of these opportunities are totally doable for these clients! ✅ 3️⃣ Once we've identified what taxes you will owe, how you could use equity proceeds, then we discuss the investment piece of the equation. 🔸 What assets do you currently own? (e.g. stocks, bonds, ETFs, real estate, cash, business interests, etc.) 🔸 How accessible are these assets? (i.e. In what types of accounts do you own these assets) 🔸 What % of your investment portfolio is comprised of one company? 🔸 How would you feel if the value of your company stock decreased by 20% or it took 2 years for you to receive liquidity from your shares? Based on the responses to these questions, as well as the risk capacity one has the ability to take based on their stage of life and number of people financially dependent on them, we determine how much company stock to sell & diversify into other investments. I've shared an example of this process below. These are inputs that I then use to build one's financial plan to ensure they & their loved ones are set-up for a strong financial future! 😊

Restricted Stock Units (RSUs) are a popular type of equity compensation awarded by mature companies, such as Apple, Meta, and Google. RSUs issued by Alphabet are called Google Stock Units (GSUs). The tax consequences of poor planning can be surprising, so it’s a good idea to educate yourself about this valuable benefit. Here are 3 proactive tax- and risk-reduction moves you can make if you’ve been awarded restricted stock. 1. Grants and Vesting: Create an Inventory—Upon receipt of an RSU or GSU grant, there are no tax consequences. Upon vesting (or lapse of restrictions), you receive the shares of company stock, and they are taxed at your ordinary income tax rate, based on the share price on the vest date. Create an inventory of your awards to understand your cash flow. 2. Tax Withholding: Increase as Needed—RSUs are considered supplemental income and subject to a federal withholding rate of 22%. That’s much lower than the top tax rate of 37%. Thus, if your RSU/GSU tax withholding is not high enough, you may get a surprise tax bill. That’s why we recommend that clients in the top tax bracket increase RSU and GSU withholdings to 37% for federal. If you’re in California, it’s a good idea to increase your state withholding up to 13%, as well.  3. Concentration Risk: The Risk That Increases Over Time—If a large chunk of your wealth is held in the stock of one company, we advise that you strategically diversify. Start by targeting your ideal amount of stock to hold. Then, identify shares with a high cost basis and low gain to sell to pare down your holdings. Diversifying is especially important if you’re no longer working at the company (I see you, #Xooglers), as you’re removed from the day-to-day news. Analysis paralysis can easily set in when you’re busy at work and used to your company’s stock price rising steadily over the years. Plan wisely with these 3 RSU/GSU strategies. #GSU #RSU #equitycompensation #Googler

What would you do with a $20k bonus? Important question if you have RSUs. Here's Why: When that company stock vests, it's basically the same as getting a $20k bonus…. But most people don't treat it that way. They just let it sit there in company stock. Not because they believe it’s the best move for that money… But because it’s already there & they don’t have a plan with what to do with it. The problem with this? Most people wouldn't take a $20k cash bonus & put 100% of it into your company's stock, would you? But that's what you're doing when you don't diversify out of your RSUs. Had a client at a major tech company: -His RSUs were worth $200k -Stock dropped 40% in 6 months -His "bonus" went from $200k to $120k just like that The pros treat RSU vesting like a cash bonus: -Sell immediately when they vest -Then diversify into a broader portfolio This way, instead of everything being on one company, you’re invested in 1,000+ different ones. You still get a ton of upside with a whole lot less risk. Your company gave you RSUs as compensation, not as investment advice. Treat them like the bonus they are…. Take the money & diversify. A good rule-of-thumb is to never have more than 10% of your investments in your company stock. Diversification isn't about not believing in your company. It's about being smart with your money. When you get RSUs... Make sure to do what’s smart, not what’s easy.