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Employer Stock: Restricted Stock Units (RSUs)

This article describes how to enter RSUs in your Plan.

Nancy Gates avatar
Written by Nancy Gates
Updated over 2 weeks ago

Restricted Stock Units

RSUs are taxed at ordinary income rates, including FICA, as of the date the RSUs vest and the actual stock is transferred to you. Any gain from that date forward is taxed as a short- or long-term capital gain, depending on how long you own the stock. If you sell immediately, taxes may be minimal.

Follow these steps to account for RSUs in your plan.

Vested Shares

Navigate to to My Plan > Accounts and Assets

  • Add an Investment account.

  • Make sure to create a specific label such as "Ace Employee RSU," so you can distinguish it from your 401(k).

  • Enter the account balance

  • Select the Capital Gains tax treatment (when you sell shares, gains/losses are taxed as capital gains.)

  • Enter the Cost Basis and update manually as needed.

  • Since RSUs are invested in your company stock, you can set your rate of return on either:

    • An assumed equity return rate, or

    • Actual performance of your company’s stock (update periodically).

Future Shares

Navigate to Income

  • Add ➕ a job.

  • Give the job a descriptive name, “Ace Employee RSU,” for example.

  • Enter the gross income received as RSU compensation (generally the FMV price that day the shares vest) on the vesting date by selecting the same start and stop age.

  • Enter RSU grants as contributions that happen at vesting dates.

  • To compute the net value you will reduce the income by FICA, federal and state income taxes.

Future Sales

Navigate to to My Plan > Money Flows

If you want to account for Capital Gains tax on the sale of the stock at a later date, model transfers from the "Ace Employee RSU" account to a cash account. This transfer will incur long term capital gains taxes but further withdrawals from the savings account will not. Remember capital gains apply only if you hold after vesting; otherwise, proceeds are already taxed as ordinary income.

Immediate Sales

If you aren't waiting for the holding period, you can add the stock purchase as income and then a contribution to a savings account. This will incur FICA and income tax at your ordinary tax rate.

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