Yes, you can sell restricted stock units, but only after they vest. Before that date, RSUs are a contractual promise from your employer, not property you own. Once vesting occurs, the shares land in your brokerage account and behave like any other stock you hold. From that point, the practical limits on when you can sell come from your employer’s trading policy and, if you work at a private company, whether a qualifying liquidity event has happened yet.
Vesting Is the Gate
Your grant agreement sets a vesting schedule that converts the promise into actual shares. The grant date starts the clock; you own nothing until a vesting date arrives. A common structure at public companies runs four years with a one-year cliff: nothing vests in the first twelve months, a chunk releases at the anniversary, and the rest vests monthly or quarterly after that.
Some grants add performance conditions on top of time, such as revenue targets or stock price thresholds. If those targets aren’t hit, the units may never vest at all.
Under federal tax law, RSU income is recognized once the shares are no longer subject to a substantial risk of forfeiture, which in practice means the vesting date.1Office of the Law Revision Counsel. 26 U.S. Code 83 – Property Transferred in Connection With Performance of Services Before that, you can’t sell, pledge, or transfer the units. They aren’t yours yet.
Leaving Before Shares Vest
Unvested RSUs almost always disappear when you leave the company, whether you quit or get laid off. Most grant agreements forfeit all unvested units on termination, with narrow exceptions for disability, death, or certain change-of-control events like an acquisition. Retirement generally does not accelerate vesting. If you’re weighing a job change, map out which tranches vest before your potential departure date, because anything unvested is likely gone.
If You Work at a Private Company
Selling gets harder at startups and other private companies. Private-company RSUs commonly use double-trigger vesting, which requires two conditions before shares actually become yours: a time-based requirement and a liquidity event such as an IPO, acquisition, or company-sponsored tender offer.2Carta. Single-Trigger vs. Double-Trigger RSU Meeting the time requirement alone doesn’t put shares in your account.
Even after both triggers are met, there is no public market for the shares. Some employees find buyers on secondary marketplaces that specialize in pre-IPO stock, but the company almost always keeps a right of first refusal, meaning it can block a third-party sale or buy the shares back itself. Many private-company RSU holders wait years for a liquidity event and cannot sell in the meantime.
Trading Windows and Blackout Periods
At public companies, vested shares still can’t be sold on demand. Most employers enforce trading windows that open shortly after quarterly or annual earnings are released, once the financial results are public. Outside those windows, blackout periods block sales entirely, and your brokerage platform will usually prevent you from placing a trade during a blackout regardless of vesting status.
The reason is insider trading. Selling stock while you know material facts the public doesn’t, such as an upcoming earnings miss or a pending merger, is a federal securities violation. Blackouts are a blunt way to keep employees from trading while they might hold inside information.
Pre-Arranged 10b5-1 Trading Plans
SEC Rule 10b5-1 offers a workaround if you want to sell on a predictable schedule without watching the blackout calendar. You set up a written plan while you don’t possess material nonpublic information, specifying in advance how many shares to sell, at what price, and on what dates. Trades executed under a properly adopted plan have an affirmative defense against insider trading claims, even if you later learn inside information.
Rules tightened starting in 2023. Officers and directors must wait a cooling-off period of at least 90 days after adopting or modifying a plan before the first trade can execute, and potentially up to 120 days depending on the next earnings release. For other employees, the cooling-off period is 30 days.3U.S. Securities and Exchange Commission. Rule 10b5-1 Insider Trading Arrangements and Related Disclosure Modifying price, amount, or timing in an existing plan resets the clock.
Taxes Are Withheld at Vesting
The vesting date is a tax event. Your employer withholds income and payroll taxes on the fair market value of the shares as if you’d received a cash bonus. The federal income tax withholding rate on supplemental wages is a flat 22% on the first $1 million in RSU income for the year, and 37% on anything above that.4Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
FICA taxes come out too: 6.2% for Social Security on earnings up to the 2026 wage base of $184,500, and 1.45% for Medicare with no cap.5Social Security Administration. Contribution and Benefit Base If your total wages for the year exceed $200,000 (single filers), an Additional Medicare Tax of 0.9% applies to the excess.6Internal Revenue Service. Questions and Answers for the Additional Medicare Tax State income tax is typically withheld as well. The combined bite can reach 35% to 45% of the vesting value.
How to Cover the Withholding
Your employer or brokerage will offer a choice about how the tax gets paid. Three common options:
- Sell to cover. The brokerage automatically sells just enough shares to pay the taxes and deposits the rest into your account. This is the most common approach and requires no cash from you.7Carta. Restricted Stock Units (RSU) – A Complete Guide to RSUs
- Same-day sale. All shares are sold at vesting; taxes and fees come out of the proceeds and you receive the remaining cash.
- Cash payment. You pay the tax bill from personal funds and keep every vested share. This maximizes share count but requires enough cash on hand.
Most companies set a default election, often sell-to-cover, that kicks in if you don’t choose. Check your plan documents ahead of the next vesting date, because last-minute changes aren’t always allowed.
Placing the Sale
Once shares are vested and you’re inside an open trading window, the mechanics are straightforward. Log in to the brokerage that administers your equity plan and find the shares available for sale. Multiple vesting dates show up as separate lots, each with its own cost basis and vesting date, and the lot you pick matters for tax purposes.
You choose between two order types. A market order sells immediately at whatever price is available, prioritizing speed. A limit order sets a minimum price you’ll accept and gives you more control, but the order may not fill if the stock doesn’t reach your target. For large blocks in a thinly traded stock, market orders carry a real risk of price slippage between click and execution.
Settlement now happens on T+1, one business day after the trade date.8U.S. Securities and Exchange Commission. SEC Chair Gensler Statement on Upcoming Implementation of T+1 Settlement Cycle Once settlement is complete, cash proceeds are available to withdraw by ACH, wire, or check.
Reporting the Sale on Your Tax Return
RSU income hits your return in two places, and keeping them straight is the difference between paying tax once and paying it twice.
First, the ordinary income at vesting. The fair market value of the shares on the vesting date is treated as wages and appears on your W-2.1Office of the Law Revision Counsel. 26 U.S. Code 83 – Property Transferred in Connection With Performance of Services You’ve already paid tax on this amount through withholding.
Second, a capital gain or loss when you sell. Your brokerage issues Form 1099-B after year-end reporting the sale proceeds and cost basis.9Internal Revenue Service. 2026 Instructions for Form 1099-B The cost basis should equal the fair market value on the vesting date, which is the price the shares were worth when they became yours. You report the gain or loss on Schedule D.10Internal Revenue Service. About Schedule D (Form 1040), Capital Gains and Losses Sold within a year of vesting, any gain is short-term and taxed as ordinary income. Held longer than a year, the gain qualifies for lower long-term capital gains rates.11Office of the Law Revision Counsel. 26 U.S. Code 1222 – Other Terms Relating to Capital Gains and Losses
The Cost Basis Mistake to Watch For
Some brokerages report a cost basis of $0 on the 1099-B, or report only the original grant-date value rather than the vesting-date value. If you file using that incorrect basis, the IRS treats the full sale price as profit, even though you already paid ordinary income tax on the vesting-day value through your W-2. The same dollars get taxed twice.
Verify that the cost basis on your 1099-B matches the per-share fair market value on your vesting date, multiplied by the shares you sold. If it doesn’t, adjust the basis when filing Schedule D. Your brokerage’s supplemental tax statement or the vesting confirmation in your equity plan portal usually has the correct figure. This is the most common RSU tax mistake and a five-minute check catches it.
When 22% Withholding Isn’t Enough
The flat 22% federal withholding rate is an estimate, not your actual tax rate. If your total income puts you in the 32% or 35% bracket, the amount withheld at vesting won’t cover your real liability. A large vest can create a five-figure shortfall that surfaces at filing time.
The IRS charges interest on underpayments at 7% per year as of the first quarter of 2026, compounded daily.12Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 You can avoid the underpayment penalty if your balance due at filing is under $1,000, or if you’ve paid at least 90% of the current year’s tax or 100% of the prior year’s tax, whichever is less. That safe harbor rises to 110% of the prior year’s tax if your adjusted gross income exceeded $150,000.13Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
The practical fix is a quarterly estimated tax payment in the quarter the vest occurs. For 2026, the deadlines are April 15, June 15, September 15, and January 15, 2027.14Taxpayer Advocate Service. Making Estimated Payments Waiting until January to deal with a gap from a March vest means months of unnecessary interest.
The Wash Sale Trap With Future Vests
Federal tax law disallows a capital loss deduction if you acquire substantially identical stock within 30 days before or after selling at a loss.15Office of the Law Revision Counsel. 26 U.S. Code 1091 – Loss From Wash Sales of Stock or Securities RSU vesting counts as an acquisition. If you sell company shares at a loss and a new tranche vests within the 61-day window (30 days before through 30 days after the sale), the IRS treats the vest as a wash sale trigger and disallows the loss.
The disallowed loss isn’t gone forever. It gets added to the cost basis of the newly vested shares, so you recover it when you eventually sell those. But if you were counting on the loss to offset gains in the current year, that plan breaks. The same logic can apply to sell-to-cover transactions when those shares are sold at a loss and another tranche vests inside the window.
Employees with monthly or quarterly vesting are most exposed, because the 61-day windows overlap constantly. If loss harvesting on company stock matters to your tax planning, chart your vesting dates and place any loss sale outside the 30-day buffer on both sides.