How RSUs Work: Why Your $100K Grant Is Actually Worth $60K

February 3, 2026·7 min read

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Last updated: February 3, 2026

You just got a job offer with "$100,000 in RSUs." Congratulations! But before you start planning how to spend it, you need to understand the reality: you won't see all that money, and you won't see it right away.

Between vesting schedules, tax withholding, and potential stock price changes, your actual benefit could be significantly different than the headline number. Let's break down exactly how RSUs work so you can make informed career and financial decisions.

💡 See Your Real Take-Home: Use our RSU Tax Calculator to calculate exactly how much of your RSU grant you'll actually receive after federal, state, and FICA taxes.

What is an RSU?

A Restricted Stock Unit (RSU) is a form of equity compensation granted to employees by their employer. RSUs serve as a long-term incentive to retain employees and align their interests with the company's performance. Unlike stock options, RSUs represent a promise to deliver company shares in the future, typically after a vesting period.

When an employer grants RSUs, the employee does not immediately receive the stock. Instead, the shares are subject to vesting conditions, meaning the employee must fulfill certain requirements (such as continued employment) before gaining ownership.

Example of RSU Grant and Vesting

Let's say an employee receives 1,000 RSUs as part of their compensation package. The employer sets a four-year vesting schedule, meaning the RSUs will vest gradually over four years. A common vesting structure is:

Year	Shares Vested
1st Anniversary	250 shares (25%)
2nd Anniversary	250 shares (25%)
3rd Anniversary	250 shares (25%)
4th Anniversary	250 shares (25%)

If the company's stock price is $50 per share at the time of the grant, the total potential value of the RSUs is:

1,000 RSUs × $50 = $50,000

However, because the shares are restricted, the employee cannot sell or transfer them until they vest. Once vested, the employee can either hold onto the shares for potential future gains or sell them to realize their value.

How RSUs Are Taxed

RSUs are taxed as ordinary income when they vest. The taxable amount is calculated as:

Number of vested shares × stock price at vesting

For example, if 250 shares vest and the stock price is now $60 per share, the taxable income would be:

250 × $60 = $15,000

The employer typically withholds a portion of the shares or cash to cover federal and state taxes.

Risks and Considerations

✅ Potential for Growth

If the company's stock price increases over time, RSUs can become significantly more valuable.

❌ Downside Risk

If the stock price declines, the RSUs may be worth less than their original grant value.

🏦 Liquidity Considerations

Since RSUs are taxed upon vesting, employees may need to sell shares to cover tax liabilities.

Common RSU Mistakes to Avoid

1. Not Diversifying After Vesting

Many employees hold too much company stock, creating concentrated risk. If your company struggles, you could lose both your job and your savings.

Rule of thumb: Company stock shouldn't exceed 10-15% of your total investment portfolio.

Strategy: Sell vested shares regularly and invest in diversified index funds.

2. Forgetting About Wash Sales

If you sell company stock at a loss and RSUs vest within 30 days, you trigger a wash sale, disallowing your tax deduction.

Solution: Plan sales around vesting dates, or use our wash sale calculator.

3. Not Planning for Tax Day

RSUs are taxed as income when they vest, but taxes are often under-withheld (typically 22% federal, but your actual rate might be 32% or higher). Learn why in our RSU Tax Withholding Guide.

Solution: Set aside extra cash or increase W-4 withholding to avoid a surprise tax bill in April. Use our RSU Tax Calculator to estimate your actual liability.

4. Overestimating the Value

Stock prices fluctuate. A "$100,000 RSU grant" at offer time might be worth $80,000 or $120,000 when shares actually vest 1-4 years later.

Don't: Make major purchases (house, car) based on unvested RSUs

Do: Use conservative estimates for financial planning

RSUs vs. Stock Options: Key Differences

RSUs:

✅ Always have value (even if stock drops)
✅ No purchase required
❌ Taxed immediately upon vesting
❌ No upside leverage

Stock Options:

✅ Potential for massive gains if stock price rises
✅ Tax control (can choose when to exercise)
❌ Can expire worthless if stock drops below strike price
❌ Require cash to exercise

Most public tech companies now prefer RSUs. Startups still use options.

For a deep dive into how these compare (including ESPP), read our RSU vs Stock Options vs ESPP Complete Guide.

How to Maximize Your RSU Benefits

1. Understand your vesting schedule

Mark vesting dates on your calendar
Plan major expenses around vest dates for liquidity

2. Calculate your true after-tax value

Don't rely on grant value alone
Use our calculators to model different scenarios

3. Diversify regularly

Sell shares as they vest (or at least quarterly)
Reinvest in index funds for lower risk
See our complete guide: When to Sell RSUs

4. Plan for taxes

Set aside 25-40% of vesting value for taxes
Increase W-4 withholding if needed
Consider quarterly estimated payments if you have large vests

5. Watch for blackout periods

Public companies restrict trading around earnings
Plan sales during open trading windows
Check your company's trading policy

6. Consider a 10b5-1 plan

Pre-scheduled automatic selling program
Allows selling during blackout periods
Provides price averaging and reduces emotional decisions

Real Example: Tech Worker's RSU Breakdown

Sarah gets a job offer at Big Tech:

Base salary: $150,000
RSU grant: $200,000 (at current stock price)
Vesting schedule: 25% per year over 4 years

Year 1 vesting: $50,000 worth of stock

What Sarah actually gets:

Stock value at vesting: $50,000
Federal tax withholding (22%): -$11,000
State tax (9% CA): -$4,500
FICA tax (7.65%): -$3,825
Shares received (after sell-to-cover): ~$30,675 worth of stock

Reality: Sarah's "$50,000" vest becomes $30,675 in actual shares. If she sells immediately, that's her cash. If she holds and the stock drops 20%, it becomes $24,540.

Calculate Your RSU Value

Ready to understand your actual RSU compensation?

Use our tools:

Stock Trade Tracker - Track gains, detect wash sales, and avoid costly tax mistakes
Federal Tax Calculator - Estimate total tax impact of RSU vesting

Key questions to answer:

What's my effective tax rate on vested RSUs?
When do my shares vest?
Should I sell immediately or hold?
Am I too concentrated in company stock?

Final Thoughts

RSUs can be a valuable part of your compensation package, potentially worth tens or hundreds of thousands of dollars over your career. But they're not free money—they come with tax implications, vesting requirements, and market risks.

Key takeaways: