Wealthyist E71 | RSUs Unlocked: How Restricted Stock Units Can Create Wealth

In this episode of Wealthyist, host Brian Lamborne (Senior Wealth Wtrategist) sits down with Tom Berkholtz (Manager of Financial Planning at Annex Wealth Management) for a clear, practical breakdown of restricted stock units (RSUs)—one of the most common forms of equity compensation.They start by defining RSUs as a company grant (a promise of stock value) that vests over time, aligning employee and employer incentives while helping attract and retain talent at competitive firms (especially tech giants). Vesting is typically graded (e.g., 25% per year) or cliff-style (all at once after a set period). Unlike cash pay, RSUs offer upside if the stock appreciatesKey discussion points include:Equity compensation as part of a broader total-rewards package (beyond base salary).Real-world impact: Early-stage or high-growth company grants can create significant wealth (with SpaceX and Meta examples cited).Taxation: RSUs are taxed as ordinary income (plus FICA) at vesting based on fair market value and appear on the W-2. Later sales trigger capital gains/losses. Companies often withhold only a flat 22% federal rate, which can leave high earners under-withheld and facing big tax bills or penalties—making estimated payments or withholding adjustments important.Planning strategies: Projecting tax impact in advance, using charitable tools like donor-advised funds for appreciated shares (avoid capital gains, get a deduction, and reduce concentration risk), and overall diversification.Contrast with stock options (NSOs/ISOs): Options require the employee to exercise (buy at a set price), adding decision complexity and different tax rules, whereas RSUs simply deliver the shares upon vesting.Berkholtz and Lamborne emphasize that the terminology, tax rules, and decisions around equity compensation are complex and frequently overwhelm employees. They strongly recommend working with advisors experienced in this niche to organize grants, model scenarios, avoid “tax torpedoes,” and make informed choices rather than relying on gut feel.