Why sell at vest is safer?

Employer stock + employer income = correlated risk.

NIIT \u2014 additional tax?

Yes \u2014 3.8% on income > $200K/$250K MAGI.

How to handle large vesting?

Spread sales across tax years if possible.

Use proceeds for IRA?

Yes \u2014 fund Roth IRA, mega backdoor.

Rule of thumb concentration limit?

Max 5-10% of net worth in employer stock.

RSU Vesting Strategy 2027

RSU vesting: sell at vest = no LTCG advantage. Hold 1 year post-vest = LTCG rate. Default: sell at vest to diversify (avoid single-stock risk).

RSU Value Vesting ($)

Marginal Tax Bracket %

LTCG Rate %

Expected 1-Year Stock Appreciation %

Sell-at-Vest Net

—

Hold-1-Year Net

—

Difference

—

Recommendation

—

Vested value	—
Tax at vest	—
Hold value (1 yr)	—
Gain (if appreciation)	—
Tax on hold gain	—
Net: sell at vest	—
Net: hold 1 year	—
Difference	—
Recommendation	—

RSU vesting creates a choice: sell at vest (lock in current value, diversify) or hold for 1 year (qualify for LTCG rate). Default for most: sell at vest to avoid concentrating wealth in employer stock. Hold only if high-confidence appreciation expectation.

Sell-at-Vest (Default Choice)

Lock in vested value at ordinary income tax rate. Reduce single-stock risk (your job + investments tied to same company = poor diversification). Use proceeds to buy diversified index funds. Standard recommendation from financial advisors.

Hold-for-LTCG Strategy

Pay ordinary tax on vest amount as W-2 income (you do this regardless). Then hold for 1+ year — if stock appreciates, additional gain taxed at LTCG (0/15/20%) instead of ordinary (24-37%). Tax savings on appreciation portion only.

Tax Deferral Considerations

83(b) elections not applicable to RSU (no grant-time election allowed). Defer first by holding stock; Roth 401k for next employer; HSA mega-conversions; NUA strategies on retirement. Sell underperforming positions for tax-loss harvesting.

Last updated May 2026. Sources: SEC Stock Compensation Guide.