Malik Amine

A restricted stock unit is a promise to deliver shares or cash when its conditions are met. Vesting and settlement may happen together, but the award agreement determines the timing. A stock option is a right to buy shares at an exercise price; receiving an option is not the same as already owning the shares.

For U.S. taxpayers, incentive and nonqualified stock options can have different tax consequences. Exercising an ISO can create alternative minimum tax exposure even before a sale. Know your award type, vesting schedule, exercise terms, and settlement conditions before you count on the number.

At many private companies, RSUs are double-trigger. They vest over time but don’t settle until a liquidity event. When the company goes public, years of vested units can settle at once, and their value is generally taxed as ordinary income in that single year.

Why the number comes up short

Employers usually treat RSU income as supplemental wages. For federal income tax, that often means a flat 22% on supplemental wages up to $1 million in a year, and 37% above that. If your total income puts you in a higher bracket, the difference shows up when you file. State taxes can widen it.

The tax is based on the share price when your units settle. If you’re in a lockup and the stock drops before you can sell, you can owe tax on value you no longer have.

What people do about it

Estimate the real bill as soon as the event date is known. Set aside cash, or plan share sales for when the lockup ends. Consider estimated tax payments; safe harbor rules based on last year’s tax can help avoid underpayment penalties. Ask whether your plan lets you choose a higher withholding rate.

Before an event: identify the award or shares you hold, the conditions still attached, and the documents governing a possible sale. A company valuation is not a promise that every employee can sell at that value.

During an event: review who is eligible, what can be sold, and which restrictions remain. Going public does not automatically make every employee share saleable; lockups and securities-law restrictions can still apply. An acquisition or tender offer has its own transaction terms.

After an event: distinguish the gross proceeds from the amount remaining after applicable withholding, taxes, and costs. The next conversation is about the whole financial picture, including how much remains tied to one company. There is no universal grant-to-cash timetable.

1. Everything is in one stock

Putting everything into the company is how it gets built. It’s also how one bad quarter becomes a personal financial crisis. If most of your net worth sits in one company, you need a diversification plan before a liquidity event forces the question.

2. Taxes get handled in April

Most of the savings happen long before tax season. Depending on your situation, qualified small business stock (Section 1202), charitable strategies, and where you live when you sell can make a meaningful difference. Several depend on decisions made years before the sale.

3. The company has an exit plan. Your money doesn’t.

You’ve modeled the acquisition. Have you modeled the day after? Taxes due, lockups, what you’ll keep, and what the money is for. Starting two to three years before a likely event gives you far more options.

4. Insurance gets skipped

Key person coverage, disability, and umbrella liability get pushed down the list. Your risk changes as the company grows. Review coverage every year.

5. “I’ll sell the company and retire”

Maybe. Or the exit comes later, or smaller, than planned. Depending on your entity and income, a 401(k), solo 401(k), SEP-IRA, or defined benefit plan can build a base that doesn’t depend on the exit.

Start with the next vest

What settles into your account? What is withheld? What restrictions apply? RSUs and options work differently, and the tax treatment depends on the award. The grant agreement and your company’s trading policy are the starting documents.

Count your job and your shares together

If the company has a bad year, your paycheck and your portfolio can take the hit at the same time. Know how much of your net worth rides on one company, and keep cash for what’s coming up.

OpenAI: transfer restrictions

OpenAI says transfers of its equity require written company consent. A buyer’s interest does not replace company approval.

Anthropic: equity compensation

Anthropic lists equity among its employee benefits. Your own award documents explain the conditions attached to it.

Databricks: employee liquidity

The question to ask: is there an approved chance to sell, and does your award qualify? The company’s valuation won’t tell you.

Questions worth asking

How much of your net worth is in this one company today? What would selling a portion let you do? Is there a realistic timeline to an IPO or acquisition? How will this sale be taxed, given your equity type, holding period, and the offer terms?

The tax details matter

Shares from exercised options and settled RSUs have different holding periods and cost basis. ISO shares sold too early can lose their favorable treatment. If a buyer pays more than fair market value, part of the proceeds may be treated as compensation rather than capital gain.

Many people sell enough to change their life in one specific way and keep the rest. You don’t have to predict the outcome to reduce the chance that one company decides your future.

In the United States, an employee stock ownership plan is a qualified retirement plan designed primarily to hold employer securities. It is different from an individual option grant, an RSU award, or an employee stock purchase plan.

Your account balance does not by itself tell you when you can receive a distribution. The summary plan description explains the plan’s rules, including vesting and distributions. Ask the plan administrator how valuation, leaving the company, and payment timing apply under your plan.

When an AI or technology company files for an IPO, the prospectus is a starting point for understanding the business, its risks, and the offering. Look for the actual filing rather than treating a rumored date or valuation as an announced transaction.

For an employee or founder, the next question is how the event interacts with the shares or awards they hold. The offering terms, your award agreement, and any lockup each answer part of that question. SEC review is not an endorsement of the investment.