Edward Jones Investments suggests most people sell RSUs right at vest, because keeping vested shares is the same bet as buying your employer's stock with that cash, and few people would make that purchase on purpose. Quick test: sell at vest any shares covering money you'll spend within 5 years, plus any tax still owed. If employer stock is over about 20% of your net worth, sell the rest on a fixed schedule.
Take Lan, an engineer whose June vest drops $150,000 of stock into her account. She never chose to buy it. It just arrived, and the default (do nothing) feels neutral. It isn't. Doing nothing is a decision to own $150,000 more of one company.
Many holders assume that waiting a year saves a lot of tax. It doesn't. Waiting changes the rate on any growth after the vest date, and the vest itself is taxed as ordinary income either way. In client reviews, Edward Jones Investments often finds that people hold for the tax break and never compare it with what a bad quarter could cost.
What follows is the arithmetic for one hypothetical household, a table of three selling schedules, the steps in order, and the questions to ask HR. It is general education, not tax advice. Every investment can lose value, including the money you started with.
Lan's June vest: $150,000 of stock she never chose to buy
Lan is 39, an engineer at a public chip company (hypothetical, round numbers). Her RSUs worth $200,000 vest in June. The plan withholds $50,000 in shares to cover tax, so $150,000 of stock lands in her brokerage account. She and her husband Raj, who works at the same company, rent and have two kids under 8. They already hold $1.4 million of that employer's stock out of a $2 million net worth, which is 70%. They also want a $400,000 down payment in 3 years.
Here is the rule in plain terms. The vest is taxed as ordinary income whether she sells or holds, so keeping the $150,000 is the same decision as taking $150,000 in cash and buying the stock that day. The only fair question is whether she would make that purchase. With 70% of their net worth already in one company, the answer is no.
Lan sells at vest. The down payment due in 3 years sets how much loss that money can take, and that number is close to zero. How bold she feels about the stock doesn't enter into it.
What does holding vested RSUs for a year actually save in tax?
Holding more than 1 year after vest changes only the rate on growth after the vest date. The $200,000 vest is ordinary income no matter when Lan sells. At an assumed 35% combined marginal rate, that is $200,000 × 35% = $70,000 of tax either way.
Now the back-of-envelope for the shares she would keep. She holds $150,000 of stock. Assume it grows 10%, which is $15,000 of gain. Assume the long-term rate is 15 points lower than the short-term rate (for illustration). Then $15,000 × 15% = $2,250 saved.
Put that next to the other side. If the stock falls 30% instead, she loses $150,000 × 30% = $45,000. That is about 20 times the possible tax saving, for a bet that pays a good year only if the price cooperates.
One detail trips people up. The holding period starts the day after vest, so a sale on the 1-year anniversary is still short-term. You need day 366.
Use the 5-year spending test before the shares land
Edward Jones Investments starts from dated spending, not from how comfortable a client feels with a stock. For Lan, that is the $400,000 down payment in 3 years. How much the portfolio can afford to lose comes from that date and amount, and a questionnaire score doesn't change it.
Quick test one: if the tax saving from waiting a year is smaller than one bad quarter's drop, holding isn't worth it. For Lan that is $2,250 against $45,000. Quick test two: if employer stock is over about 20% of net worth, every new vest adds to the problem. At 70%, Lan and Raj sell each vest and move on.
There is one exception. Someone with no spending need inside 5 years and a small position may reasonably keep a slice, sized so that a 50% drop wouldn't change their playbook.
Set the sale order before the vest date, step by step
Do this a few weeks before vest, not on the day. Lan would work through these steps in sequence, and each one has a number attached.
1) List cash needs inside 5 years with due dates: the $400,000 down payment. 2) Compare withholding to actual tax: $70,000 owed against $50,000 withheld leaves a $20,000 gap. 3) Decide the vest-day sale, which is enough for dated needs plus the $20,000 gap. For Lan that means all $150,000. 4) Place a standing sell-at-vest instruction with the plan custodian, or set a staged schedule if your position is smaller.
5) Check your company's trading windows so staged sales don't land in a blackout. 6) Park down-payment money in short-term holdings, not back in single stocks. 7) In January, check that the W-2 includes the vest. In February, check that the 1099-B or supplemental statement shows the $150,000 basis before you file.
Compare selling at vest, staged sales and holding a year
Find the April 15 row first, because the $20,000 of tax still owed is due on every path and only the source of the cash changes. The other rows show how much stock sits exposed in each quarter. Selling at vest leaves nothing exposed after June, staged sales leave a shrinking amount, and holding leaves the full $150,000 for a year.
Staged sales are a fair middle path when your position is smaller and no dated spending is close. For Lan they would still leave $112,500 exposed after the first quarter, which is hard to defend with a down payment coming. Share price is held flat in the table only to keep the arithmetic clean. Real prices move, and they can fall.
| Date | Sell at vest | Staged sales (4 quarters) | Hold 1 year |
|---|---|---|---|
| Vest day (June) | Sell all $150,000 of shares | Sell $37,500 | Keep $150,000 |
| September | Nothing left to sell | Sell $37,500 | Keep $150,000 |
| December | Nothing left to sell | Sell $37,500 | Keep $150,000 |
| March | Nothing left to sell | Sell $37,500 | Keep $150,000 |
| April 15 | Pay $20,000 from proceeds | Pay $20,000 from sales | Pay $20,000 from cash savings |
| Next June, day 366 | Done | Done | First long-term sale possible |
Fix the cost basis on Form 8949 and 2 other overpayments
Filing with the $0 basis a 1099-B printed for sold RSU shares taxes the same $150,000 twice. At an assumed 35%, that is $52,500 of extra tax until an amended return corrects it. Careful people make this mistake because the form looks official. The fix is to report the correct basis on Form 8949 and adjust the amount.
Underwithholding is the second trap. The flat withholding on Lan's vest left $20,000 unpaid, and paying it only at filing can add an underpayment penalty. Raising withholding or making an estimated payment after the vest avoids that.
Third, a wash sale. If you sell earlier shares at a loss and new RSUs vest within 30 days on either side of that sale, part of the loss can be disallowed. Schedule loss sales well clear of vest dates. Net capital losses also offset only $3,000 of ordinary income a year, so a big loss on held shares can take years to use.
What if the stock drops, you get laid off or the tax law changes after you sell?
Whoever sells at vest can't lose the down payment to the stock, but a layoff or a rule change can still happen. Leave room with cash, not with shares.
Raj and Lan share one employer, so a downturn can cut both paychecks and the stock in the same quarter. Keep about 6 months of spending in cash on top of the down payment fund. If one of them stops working, the remaining income must cover rent, so size the reserve to one salary, not two.
Tax law is the third unknown. Capital gains rates and withholding rules can change. Selling at vest locks in the known tax, while waiting bets that the rules stay the same for a year.
What should you ask HR or the stock plan custodian before vest day?
Ask four things before vest day: whether you can raise withholding, whether basis is reported, when the trading window is open, and whether a standing sell order exists. Each answer tells you how much work the sale will be.
Ask HR whether you can elect higher withholding on RSU vests. A worrying answer is no, which means you'll have a tax gap to fund every year. Ask the custodian whether the 1099-B or a supplemental statement reports your vest value as basis. If it doesn't, you'll be making the Form 8949 fix yourself.
Ask HR or the legal team which days the trading window is open. If it closes before vested shares settle, any sale is pushed out a full quarter. Finally, ask whether the plan supports a standing sell-at-vest order. If it doesn't, put the sale on your calendar for the first open trading day.
When to bring your vest schedule to Edward Jones Investments
It's worth a conversation once one year's vests are more than you'd spend in 5 years, or employer stock passes about 20% of net worth. Bring the grant schedule, your last pay stub showing withholding, last year's 1099-B with supplemental statements, and the dates of any planned big purchase. Edward Jones Investments meets clients anywhere by video or phone; use the request form to ask for a first meeting.
More questions readers ask
How soon after my RSUs vest can I actually sell the shares?
Usually on the first open trading day after the shares settle, which is often 1 to 3 business days after vest. A blackout window can delay you a full quarter, so ask HR which days are open and whether the plan accepts a standing sell-at-vest order before the date arrives.
My husband and I both get RSUs from the same company. Should we count them as one position?
Yes. Two paychecks and two stock grants from one employer are one position, because a downturn can hit both at once. Add both spouses' vested shares, unvested grants and any ESPP holdings, then compare the total to your joint net worth. Above about 20%, sell new vests on a schedule.
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This material is general information only and does not address any individual's investment, tax or legal situation. Investing involves risk, including possible loss of principal. Before acting on any information here, speak with a financial advisor, tax professional or attorney about your circumstances.