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Boise’s growth into a dynamic hub for technology, healthcare, advanced manufacturing, and public companies has brought with it a sharp rise in equity compensation, especially Restricted Stock Units (RSUs). For executives, corporate insiders, and high-impact employees, RSUs can be a meaningful part of total compensation and long-term wealth creation. But RSUs also sit at the intersection of taxes, trading windows, blackout periods, company insider trading policies, and market volatility. Getting the details right—from tax withholding and cost basis to diversification and Rule 10b5-1 trading plans—is essential to avoid preventable tax surprises and unnecessary compliance risk while staying aligned with your financial goals.
As a financial advisor working with Boise area executives and employees at public companies, I approach RSUs as part of a broader, integrated plan: cash-flow, tax strategy, risk management, and portfolio design. Below is a comprehensive guide so you can move from uncertainty to a clear, repeatable playbook.
Restricted Stock Units (RSUs) are a promise from your employer to deliver company shares (or the cash equivalent) after certain conditions are met—typically time-based vesting or performance milestones. Unlike stock options, RSUs do not require you to pay an exercise price; if they vest, you receive value. Unlike Employee Stock Purchase Plans (ESPPs), RSUs are a grant, not a purchase with payroll deductions.
Why employers use RSUs
RSU life cycle
A practical test I use with clients: “If you received the after-tax value of your vested RSUs in cash today, would you turn around and buy your employer’s stock with that money?” If the answer is no, that’s a signal to sell and diversify rather than increase a concentrated position.
RSUs are taxed as ordinary income at vesting (not at grant). The fair market value of the shares on the vest date is included in your W-2 wages for that year. In addition to federal and state income tax, standard payroll taxes (Medicare, Social Security up to the wage base, and the Additional Medicare surtax for higher earners) apply.
Withholding methods at settlement typically include:
Supplemental wage rates vs. your marginal rate. Many issuers treat RSUs as supplemental wages subject to a flat federal withholding rate (commonly 22% up to a threshold of $1 million and 37% above $1 million). For high-income earners, this under withholds relative to their true marginal tax rate, creating an April tax bill if they don’t plan ahead. On the other hand, for some mid-bracket earners, the flat rate may be close to their effective rate.
While RSUs themselves are taxed at vesting, certain equity grants—like restricted stock—may allow for an 83(b) election. This election lets you pay income tax on the fair market value of the shares at the time of grant rather than at vesting. Why does this matter? If the stock price is low when granted and you expect significant growth, electing 83(b) means you lock in a smaller taxable amount upfront. All future appreciation is then taxed as capital gains when you sell, rather than ordinary income at vesting. For founders, early employees, or anyone receiving restricted stock in a company with strong growth potential, this can be a powerful tax strategy to reduce overall liability and maximize long-term wealth.
Idaho applies a flat state income tax to wages—including RSU income. Boise residents and remote employees taxed in Idaho should plan for both state and federal taxes, plus potential part-year and multi-state allocations for hybrid or relocated roles. Because RSUs hit as lumpy income on vest dates, we often recommend quarterly tax projections and proactive withholding adjustments to avoid penalties and surprises.
Key takeaway: Vesting equals income. Withholding is a best effort estimate—not a precise match. Coordinating RSU vesting with tax projections and estimated payments is one of the highest ROI actions you can take.
Vesting schedule basics
Vesting schedules support retention, align incentives with performance, and often mirror promotion timelines. PSUs add performance triggers—vesting only if targets are met.
Leaving early, retiring, or termination typically forfeits unvested RSUs. Some plans provide acceleration at death, disability, or change-in-control; others require you to be employed on the vest date. Always confirm your plan documents and company policies.
When large tranches vest in bulk (especially during open trading windows after blackout periods), you may face significant concentration risk and market impact if you sell all at once. Pre-planning through 10b5-1 trading plans, staged sales, and dollar-cost averaging can smooth outcomes and reduce behavioral errors.
Forms you’ll see
A common (and costly) mistake is selling vested RSU shares and getting taxed again on the same income because the cost basis isn’t adjusted. The correct basis for vested RSU shares is their fair market value at vesting (the same amount included in your W-2). Confirm that your broker’s 1099-B reflects this; if not, you (or your CPA) may need to adjust basis on your return to prevent double taxation.
Once shares are delivered, any post-vest price change becomes a capital gain or loss upon sale:
Recordkeeping tips
Sell immediately vs. hold for appreciation
Factors that influence timing
Smoothing income over time
Rule 10b5-1 trading plan is a pre-arranged, written trading plan that allows insiders and employees with potential material nonpublic information (MNPI) to sell (or buy) shares according to objective parameters, even during blackout periods, provided the plan was adopted when not in possession of MNPI and complies with SEC rules and company insider trading policies.
Who’s eligible?
Steps to implement
Benefits & limitations
Coordination matters. Work with your tax advisor and financial planner to align plan parameters with tax projections, vesting calendars, and concentration thresholds.
If you hold RSU shares and they appreciate, donating highly appreciated shares to charity or a donor-advised fund (DAF) avoids capital gains and yields a deduction for the full fair market value (subject to AGI limits). In high income vesting years, bunching gifts into a DAF can materially offset RSU income.
Maximize 401(k) (pretax or Roth), HSA, and (if available) 409A deferred compensation contributions in heavy vest years to reduce current taxes and enhance long-term tax diversification. For some plans, a mega backdoor Roth can convert after-tax contributions into tax-free growth.
If you also hold stock options (NQSOs/ISOs), coordinate exercises and RSU vesting across different years to manage marginal tax exposure and Alternative Minimum Tax (AMT) for ISOs. In a down year for bonuses or base compensation, realizing equity income can sometimes occur at a lower marginal rate.
Post vest, if shares decline, realize capital losses to offset other capital gains or a limited amount of ordinary income. Watch wash sale rules by using diversified ETFs or different tickers for replacement exposure.
Consider a line of credit secured by a diversified portfolio (not your company stock) to avoid forced sales during blackout periods or market dislocations, used judiciously and as part of a broader risk management plan.
Boise residents benefit from straightforward state taxation of wages—including RSU vesting—under a flat structure at 5.3% (2025). While the exact rate can change, the planning principle is constant: RSU income is fully taxable to Idaho residents and may require estimated payments in heavy vest years.
Boise’s relative affordability compared to coastal hubs can magnify the impact of RSU income on your cash flow, housing, and investment decisions. We often help clients translate RSU proceeds into tangible goals: home upgrades, college funding, or accelerating financial independence.
If you moved to Idaho or split time with another state, you may face multi-state taxation. RSU income is sourced by vesting location in some jurisdictions; others use residency at vest or at sale. Coordinate with your CPA to avoid double taxation and to file part year returns where needed.
Who is a corporate insider? Under SEC rules, corporate insiders often include officers, directors, and beneficial owners above certain thresholds. Many companies also treat other employees as “restricted” if they regularly access material nonpublic information (MNPI).
Most public companies enforce quarterly blackout periods around earnings and other sensitive events. Outside of blackout, trading windows open for a limited time and still require adherence to insider trading policies and pre-clearance procedures.
A properly structured 10b5-1 plan can operate through blackout periods if it was adopted when you lacked MNPI and complies with the company’s documentation, approval, and disclosure requirements. Coordination between your broker, legal, HR, and the compliance team is essential.
Expect to provide plan documents, certifications, and periodic confirmations. Keep copies of approvals and amendments; avoid overlapping 10b5-1 plans unless explicitly permitted and understood.
RSUs are not an island, they touch every part of your plan:
Most plans require you to be an active employee on the vest date; otherwise, unvested RSUs are forfeited. Exceptions may exist for approved leaves of absence, disability, or change-in-control. Review plan documents and coordinate with HR.
RSUs are a grant that settles into shares or cash at vest; no exercise needed. Options provide the right to buy shares at a set price; value depends on the stock being above the strike. RSUs typically carry less decision complexity but produce ordinary income at vest; options have different taxation and timing choices.
If your RSUs vest at or after the IPO, the vesting value is ordinary income and will appear on your W-2. Lockups may limit your ability to sell, but taxes still apply at vest. Consider estimated payments and liquidity planning.
Once vested and delivered, you can generally transfer shares like any other stock, subject to company policies, trading windows, and insider trading rules. For estate and asset protection goals, coordinated trust planning can help—ensure your 10b5-1 and broker setups reflect the proper account titling.
Future appreciation after vest is taxed as capital gains upon sale—short-term if held ≤1 year; long-term if >1 year. You remain exposed to company risk, so weigh the benefit of long-term rates against concentration and volatility.
If you’re subject to blackout periods, frequently exposed to MNPI, or want to automate diversification while minimizing insider trading risk, a 10b5-1 plan is worth considering. It’s most effective when aligned with your vesting calendar, tax projections, and portfolio targets.
My planning approach with Boise executives and employees is comprehensive and coordinated:
If you have RSUs vesting in the next six months—or if you’re considering a Rule 10b5-1 plan—now is the right time to put a structure in place. In a consultation, we’ll:
Let’s turn your equity compensation into a clear, confident plan. Schedule your complimentary conversation before your next vesting date or trading window—so you can reduce stress, stay compliant, and maximize opportunity.
Sources:
https://www.schwab.com/learn/story/rsu-taxes-and-psu-taxes
https://www.irs.gov/publications/p525
https://www.investopedia.com/articles/tax/09/restricted-stock-tax.asp
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