RSUs Piling Up? Company-Stock Concentration and When to Sell
RSUs quietly become the biggest position most tech and corporate employees own. Grants vest, the stock sits in the account, new grants stack on top — and one day your employer's stock is 40% of your net worth. Here's the uncomfortable frame: your employer already pays your salary. Holding its stock stacks a second bet on the same company — the scenario where the stock craters is often the same scenario where your job is at risk. Ask anyone who worked at Enron, Lehman, or any of the quieter versions since.
The tax fact that settles most of it
RSUs are taxed as ordinary income at vest, on the full market value, no matter what you do with the shares. That's unavoidable. But it also means your cost basis equals the vest-day price — so selling immediately generates almost no additional tax. There is no tax reason to hold.
Would you take this year's bonus in cash and buy your employer's stock with all of it? That's exactly what holding vested RSUs is. "Sell at vest" is the standard playbook: the shares become cash, the cash follows your normal plan — index funds, debt payoff, whatever your order of operations says is next.
Already concentrated? The threshold and the exit
The common guideline caps any single stock at 10% of your portfolio (many planners say 5%). Above that, the stock's idiosyncratic risk — the part diversification would erase for free — starts to dominate outcomes. If you're past it with long-held, appreciated shares, de-risking has a real tax cost, so do it deliberately:
- Sell newest lots first — recently vested shares have basis near value, so they're nearly tax-free to sell.
- Spread big unwinds across tax years to stay under capital-gains bracket lines (the 15% long-term rate runs to roughly $533k of taxable income for couples).
- Harvest losses elsewhere to offset the gains.
- Set a standing rule — "sell every vest, and 25% of the legacy pile per quarter" — so it stops being a fresh decision each time.
The objections, quickly
"The stock's been my best performer." Every concentrated winner feels that way until it doesn't; you're reading survivorship. "I know the company." Working there gives you information about culture, not future stock returns — and trading on real inside information is illegal anyway. "Selling feels disloyal." Your labor is your loyalty; your savings owe loyalty to your family. Unvested grants keep you plenty exposed to the upside regardless.
Measure yours
Tuesday's company-stock concentration tool (Pro) takes your vested position, basis, and unvested pipeline, and shows your concentration against the 10% guideline plus the actual tax cost to trim or fully diversify. Check your concentration →
Frequently asked questions
- When should I sell my RSUs?
- The standard answer is at vest. RSUs are taxed as ordinary income on vest-day value regardless, so your basis equals that price and an immediate sale adds almost no tax. Holding is equivalent to buying employer stock with a cash bonus.
- How much company stock is too much?
- A common guideline is no more than 10% of your investable portfolio in any single stock — stricter for your employer, since your income already depends on the same company. Above that, diversifiable risk starts to dominate your outcomes.
- What does it cost to diversify appreciated company stock?
- Only the embedded gain is taxed, at long-term capital-gains rates if held over a year. Selling newest-vested lots first (basis near value), spreading sales across tax years, and harvesting losses elsewhere all shrink the bill — often to far less than people fear.