To cash out RSUs, you wait for the shares to vest, let your employer’s brokerage handle tax withholding, sell the shares through that brokerage platform, and then transfer the cash to your bank by ACH or wire. Start to finish, that can take as little as three to four business days after vesting. What determines how much money actually reaches you is not the mechanics but the tax choices along the way, especially the withholding method you pick and the way you report the sale at filing time.
Get Your Brokerage Account Ready Before Vesting
Your employer picks the brokerage firm that holds your equity awards. Log in before your vesting date and confirm the account is fully active. A locked profile or missing tax form can freeze your ability to sell during a good price window.
Pull up your RSU Grant Agreement while you are in there. It lists the number of units awarded, the vesting schedule, and any conditions. Most plans vest in annual or quarterly installments over three to four years, but your agreement is what controls. Make sure current tax documentation is on file: Form W-9 for U.S. residents, Form W-8BEN for non-residents. Without it, most platforms freeze sales and transfers.
What Happens Tax-Wise the Day Shares Vest
The moment RSUs vest, the IRS treats them as compensation. The fair market value of the shares on the vesting date, minus anything you paid (usually nothing), is ordinary income on your W-2.1Office of the Law Revision Counsel. 26 USC 83 – Property Transferred in Connection With Performance of Services That income stacks on top of your salary and can push you into a higher bracket.
Vesting also triggers Social Security tax at 6.2% on earnings up to the $184,500 wage base for 2026, plus Medicare tax at 1.45% with no cap. If total wages for the year exceed $200,000, an additional 0.9% Medicare surtax applies on the excess.2Internal Revenue Service. 2026 Publication 926 State income taxes add another layer, from zero in no-tax states up to supplemental withholding rates of roughly 10% to 13% in states like California and New York.
The important part: this tax event happens whether or not you sell. You owe income tax on the vesting-date value even if you hold every share.
Pick a Withholding Method
Because taxes come due at vesting, the brokerage platform asks how you want to pay them. Set your preference in account settings before the vesting date. If you don’t, most platforms default to Sell to Cover.
- Sell to Cover: the broker sells just enough shares to fund estimated tax withholding and leaves the rest as stock. This is the most common choice for employees who want to keep some equity.
- Same-Day Sale (Sell All): the broker sells every vesting share immediately. After withholding, the cash sits in your brokerage account ready to withdraw.
- Cash Transfer: you pay withholding out of pocket and keep all the shares. Few employees pick this because the bill can be substantial.
Why 22% Withholding Usually Isn’t Enough
Here is where most people get burned. The IRS classifies RSU income as supplemental wages, so employers withhold federal income tax at a flat 22%. Above $1 million of supplemental wages in a year, the rate jumps to 37% on the excess.3Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide That 22% is a withholding estimate, not your real tax rate.
Say you earn $180,000 in salary and a $70,000 RSU vest pushes total income to $250,000. Your marginal federal rate on that RSU income is 32%. Withholding at 22% leaves roughly a 10-point gap on $70,000, or about $7,000 owed at tax time. State under-withholding can widen that gap further.
To avoid an underpayment penalty, you generally need to have paid at least 90% of the current-year tax liability or 100% of last year’s through withholding and estimated payments. If your prior-year adjusted gross income exceeded $150,000, that safe harbor rises to 110% of last year’s tax.4Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty After a large vest, a quarterly estimated payment shortly afterward is often the right move.
Selling the Shares
Once shares vest and initial withholding is done, any remaining shares sit in your brokerage account as ordinary company stock. If you chose Same-Day Sale, there is nothing left to sell. Otherwise, go to the trading section of the platform, enter your company’s ticker, and enter the number of shares.
You pick an order type. A market order sells immediately at whatever price buyers are offering right now: fast, reliable, no price control.5U.S. Securities and Exchange Commission. Executing an Order A limit order sells only if the stock hits a minimum price you set, which gives you control but may never execute. For most employees cashing out RSUs, a market order during regular trading hours is fine. Review the order details before confirming.
Blackout Periods and Insider Trading Rules
If you are an officer, director, or someone with access to nonpublic company information, you cannot sell whenever you want. Most public companies impose blackout periods, commonly starting a few weeks before the end of each fiscal quarter and lifting a day or two after the earnings release. During a blackout, even limit orders on file cannot fill.
Trading during a blackout or while holding material nonpublic information exposes you to insider trading liability under federal securities law, including civil fines, disgorgement, and criminal penalties. Read your employer’s insider trading policy for the exact windows and pre-clearance rules.
If you want to sell on a schedule regardless of blackout timing, you can adopt a Rule 10b5-1 trading plan during an open window when you have no inside information. After the required cooling-off period, trades execute automatically according to the pre-set instructions, even during later blackouts.6U.S. Securities and Exchange Commission. Rule 10b5-1 Insider Trading Arrangements and Related Disclosure
Holding vs. Selling Right Away
If you keep shares after vesting, any price change between the vesting date and the sale date becomes a capital gain or loss. The vesting-date fair market value is your cost basis, and the holding period starts the day the shares land in your account.
Sell more than a year after vesting and the gain is long-term, taxed at 0%, 15%, or 20% depending on total taxable income. Sell within a year and it is short-term, taxed at ordinary rates from 10% to 37% for 2026.7Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Long-term treatment can save real money, but holding also means carrying concentrated stock risk. A 30% drop while you wait out the year erases the tax savings and more. Employees whose RSU income already makes up a large share of their net worth often sell sooner rather than gamble on a lower rate.
The Wash Sale Trap
Sell company shares at a loss within 30 days before or after a new batch of RSUs vests, and the IRS treats the vesting as an acquisition of substantially identical stock. That triggers the wash sale rule and disallows the loss.8Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities The disallowed loss is added to the cost basis of the new shares, so it isn’t gone forever, but you cannot claim it that year.
This catches people off guard because the vesting was automatic, not a choice. Quarterly vesting creates a 30-day restricted zone around every vesting date for loss selling. Match any tax-loss plan to your vesting calendar.
Don’t Get Taxed Twice at Filing Time
This is the single most expensive RSU mistake. When you sell shares from vested RSUs, the broker reports the sale on Form 1099-B. For many RSU holders, the cost basis on that form shows $0 or is blank. Enter that $0 on your return and you pay tax on the full sale price, even though you already paid income tax on the vesting-date value through payroll. You get taxed twice on the same money.9Internal Revenue Service. Instructions for Form 8949
The fix is in the Supplemental Information form your brokerage provides alongside the 1099-B. That supplement shows the adjusted cost basis, equal to the vesting-date value already taxed as income. Use that adjusted figure, not the 1099-B figure, on Form 8949 and Schedule D.
If the 1099-B reports a cost basis that was reported to the IRS but is wrong, enter the reported basis in column (e) of Form 8949, then enter an adjustment in column (g) with code “B” to correct it.9Internal Revenue Service. Instructions for Form 8949 If basis was not reported to the IRS, check Box B (short-term) or Box E (long-term) on Form 8949 and enter the correct adjusted basis yourself. Either way, your taxable gain should reflect only the price change after vesting, not the full sale price.
Moving the Cash to Your Bank
The cash doesn’t become available instantly. SEC rules require a one-business-day settlement, known as T+1, so proceeds from a Monday sale settle Tuesday.10U.S. Securities and Exchange Commission. Shortening the Securities Transaction Settlement Cycle Until then, the cash shows in the account but can’t be withdrawn.
Once funds settle, link an external checking or savings account in the transfers section of the brokerage portal by entering your bank’s routing number and account number. Most platforms verify the link with small test deposits or instant verification through your bank’s login.
ACH Transfers
The standard method is an ACH transfer, free at most brokerages, with money arriving in one to three business days. Major platforms cap outgoing ACH transfers, commonly at $100,000 per transaction.11Fidelity. EFT or a Bank Wire12E*TRADE from Morgan Stanley. Transfer Money Disclosure If your proceeds exceed the cap, split the withdrawal across multiple days or use a wire.
Wire Transfers
Wires deliver funds the same day or next business day and carry a fee. At Charles Schwab, an outgoing wire costs $25 by phone or $15 online, with waivers for larger account balances.13Charles Schwab. Charles Schwab Pricing Guide for Individual Investors Other brokerages typically charge $15 to $50. For a six-figure cashout you need quickly, the fee is negligible. Double-check the destination account number before sending; a misrouted wire is much harder to recover than a misrouted ACH.