RSU Double-Trigger IPO Vesting 2027 Calculator
Double-trigger RSUs vest only when both time-based vesting AND a liquidity event (IPO or acquisition) occur. At IPO, multiple years of accumulated RSUs become taxable in one year — often pushing you into the 37% federal bracket while the company withholds only 22%.
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Double-trigger RSUs at a private company create no taxable event until both time vesting AND a liquidity event occur. When the company IPOs in 2027, all RSUs that have satisfied the time portion vest simultaneously — generating ordinary income at the IPO opening price, often pushing recipients into the top 37% federal bracket while the company defaults to only 22% supplemental withholding.
How Double-Trigger RSU Vesting Works
Private company RSUs require two conditions for vesting: time-based service (typically 4-year graded) AND a liquidity event (IPO, direct listing, SPAC merger, or acquisition). Until the liquidity event occurs, no taxable income is recognized even if time vesting is complete. When the liquidity event triggers, ALL time-vested RSUs become immediately taxable as ordinary W-2 income at fair market value (IPO opening price or per-share acquisition value).
The 22% Withholding Trap in 2027
The IRS supplemental wage rate is 22% federal for supplemental income under $1 million annually, 37% above that threshold. Companies default to 22% withholding on RSU vest, even when employees are clearly in the 32-37% marginal bracket. Result: a six-figure surprise tax bill in April. Defense: request supplemental withholding adjustment with payroll, or make Q4 2027 estimated payment to satisfy safe harbor (110% of prior year tax for AGI > $150k).
Lockup Period and Sell-to-Cover Strategy
Standard IPO lockup is 180 days post-IPO. During lockup you cannot sell — but tax is already locked in at IPO opening price. Historical data: 70% of post-IPO stocks decline 20-40% by lockup expiration. Mitigation: maximize company sell-to-cover at IPO event itself, set up 10b5-1 trading plan for systematic post-lockup diversification.
Last updated May 2026. Sources: IRS Supplemental Wage Rules, SSA — Social Security Wage Base