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Restricted Stock: Restricted Stock Units


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FAQs

Does this website's content on restricted stock also apply to restricted stock units (RSUs)?

Generally, yes, with two exceptions. First, with RSUs you cannot...

What is the difference between restricted stock and restricted stock units (RSUs)? This is premium content

While they are siblings, they have important differences. The traits of restricted stock include the following...

UPDATED! Which do companies grant more often: restricted stock or restricted stock units (RSUs)? This is premium content

Starting with the broad grants of RSUs at Microsoft and Amazon, recent corporate practices suggest it is more likely that your company will grant you...

Why would my company grant me restricted stock units (RSUs) instead of restricted stock?

Each type of grant has its supporters and its own benefits. By using RSUs, the company accomplishes the following...

How does the taxation of restricted stock and restricted stock units differ? This is premium content

Technically, different tax code sections apply, though under most grants the tax results are similar. With restricted stock you are taxed at vesting or earlier at grant if you make a timely Section 83(b) election. Most experts believe that with RSUs you cannot make...

What is a lapse election, and why do I need to make it before the restricted stock or restricted stock units vest? This is premium content

The "lapse" is the end of the restriction that prevented the shares from vesting and being transferred to you. The lapse election is the method by which you choose withholding methods and what will be done with the...

W-2 diagram! What will my W-2 show after the vesting of restricted stock units? This is premium content

Restricted stock units result in ordinary income to you. This occurs when...

Schedule D diagram! When my restricted stock units vested, my company automatically withheld shares to cover the tax. Do I need to report these shares on my Schedule D? This is premium content

The tax reporting for the withholding and the later sale of the remainder can cause confusion. You should definitely report a sale for taxes at vesting if you...

Schedule D diagram! How do I report a sale of shares from restricted stock units (RSUs) on my federal income-tax return? This is premium content

You need to complete a Schedule D, Capital Gains and Losses, for the year of the sale of your stock and file it with your Form 1040 federal income-tax return. You do this even if you are only...

Do I get dividends with restricted stock units (RSUs)? How are they taxed? This is premium content

When a company pays dividends on outstanding shares of stock, it can choose...

When does my capital gains holding period begin for grants of restricted stock and restricted stock units (RSUs)? This is premium content

For restricted stock, it begins on the day after vesting, unless...

Can I make a Section 83(b) election for a grant of restricted stock units (RSUs)? This is premium content

Restricted stock and RSUs are governed by separate sections of the US tax code. Most experts say that you...

Can my company convert restricted stock into restricted stock units? This is premium content

The American Jobs Creation Act of 2004 (AJCA) creates uncertainty about...

With restricted stock units and performance shares, can I defer delivery of the shares at vesting? This is premium content

Delaying the delivery of RSU shares (and thus ordinary income taxes) at vesting depends on whether your company has a provision for this in its stock plan. The deferral needs to be structured correctly, as otherwise it can lead to tax penalties. Deferral is not...

As a director, can I elect to take part of my retainer as "deferred stock units"? This is premium content

Receiving deferred stock units, or RSUs that let you delay the delivery of shares (and thus taxes) at vesting, depends on...

I am a senior executive. When do I make my Form 4 filing for restricted stock, restricted stock units, and performance shares? This is premium content

Within two business days of the grant, you file Form 4 electronically under the SEC's Section 16 rules. At vesting, depending on the withholding method...

Will my company be able to take a tax deduction for the value of my restricted stock, restricted stock units, performance shares, or stock options if my compensation already exceeds $1 million? This is premium content

This depends on what triggers vesting. Section 162(m) of the tax code limits your company's deduction to $1 million unless a senior officer's compensation over this amount meets the performance-based exception. Stock grants are structured to meet this by...

Return to top of FAQs

Featured FAQs
NEW! What happens to my performance shares in an acquisition of my company? This is premium content
For a change in control (e.g., a merger or acquisition), the performance period for measuring whether goal(s) are reached is cut short. Commonly, performance share plans...
NEW! What would happen to my performance share grant if I were to lose my job, retire, become disabled, or die? This is premium content
When you terminate for standard reasons before the end of the performance cycle, you usually lose all rights to receive the grant, even if the goal appears very obtainable. If you have overlapping or concurrent grants that are outstanding...