Given that RSUs are W2 income & taxed as such, it is very possible that an RSU could end up costing money (lowering one's net income): when It is taxed when the stock is high (at vesting) and then later value of the stock could be so low that it is less than the taxes paid originally.
And when selling it, the losses can be offset against W2 income with at most $3K/year.
Moral of the story: If the stock is high(ish) on the RSU vesting date: Sell all of it right away.
(I guess one could also opt for stock options instead of RSUs)
Disclaimer: IANAL/IANATP
Also: I know this is strictly not on topic
8 replies (most recent on top)
They are taxed as regular income and some are sold to pay the tax with-holdings based on the expected taxes as if you had received them in cash at that point in time. That gives you the cost basis for them when they are 'vested'. If they go up in value, or down in value between then and when you sell them that difference is taxed as capital gains.
So the comment about selling them and buying different stocks or securities is pretty much spot on. The taxes if you don't do that is the same as if you sold them and then bought them back.
I applaud Oracle. Oracle is bloated—too many layers of management, dev, QA, product managers, accounting, and legal staff. Recent reports show planned cuts of thousands (up to 20k-30k from ~162k employees) to fund AI data center expansion amid cash crunch.
You could slash 50% across the board with little impact. Many work remotely, maybe 6 real hours a week, whining while doing nothing. AI already replaces Dev, QA, support, management, accounting, legal—look in the mirror.
The whole point of RSU's is that they vest over a period of time. They are meant to be golden handcuffs, a disincentive from quitting.
Four years ago O probably wasn't expecting them to appreciate so much, which suddenly made them far more costly than intended. I strongly suspect that having "too many" became one of the criteria for choosing whom to lay off.
@bq his is not always true. The RSU's are taxed at a flat 22% rate so if your marginal tax rate is higher than that, you need to pay additional taxes later
RSUs only cost money when they vest. That’s when you are charged taxes for them. They deduct the taxes immediately when they vest too so there is no further payment to be made when you pay your taxes. You then own them and can sell them for something better. You just pay taxes on any gains they might have after they vest.
Nothing like understanding your benefits to get the most out of them...
Yah, I didn't know this until I sold the RSU's and realized the loss from them. Instead of making money, I lost money cause the company I work for had share price decline for many years and still has not recovered.
RSUs are always to be sold off immediately and reinvested into more broader index funds.