When you leave a company, your vested RSUs stay yours and your unvested RSUs are almost always forfeited. That’s what happens to RSUs when you leave a company in the standard case: the vesting date is the dividing line, and it doesn’t matter whether you quit, were laid off, or were fired. Any units that hadn’t vested by your last day return to the company. Any shares that had already vested are sitting in your brokerage account and belong to you.
The financial stakes can be significant, especially if a large tranche was scheduled to vest in the weeks or months after your departure.
Unvested RSUs Are Forfeited by Default
For most employees, every unvested RSU disappears on the last day of employment. The grant agreement and the company’s equity incentive plan almost universally state that unvested units are forfeited upon termination, and the underlying shares return to the company’s equity pool for future grants.
This is intentional. Companies use unvested equity as a retention tool, sometimes called golden handcuffs, because walking away means leaving real money behind. The pain is sharpest right before a vesting cliff. Leaving two weeks before a 25% cliff means losing that entire tranche. Some departing employees try to negotiate an end date that captures an upcoming vest, and it’s worth asking, but employers aren’t obligated to accommodate.
The legal reason you have no claim to unvested units is that RSUs are a contingent promise until vesting conditions are satisfied. Under federal tax law, property transferred in connection with services is included in your income only when it’s no longer subject to a substantial risk of forfeiture.1Office of the Law Revision Counsel. 26 U.S. Code 83 – Property Transferred in Connection With Performance of Services Until that point, you don’t own the shares.
How Vesting Schedules Set the Line
Two structures are common. Cliff vesting delivers a whole batch at once after a set period, usually one year. Graded vesting releases portions at regular intervals over several years. A standard arrangement is a four-year schedule with a one-year cliff: 25% vests after twelve months, then the rest vests monthly or quarterly over the remaining three years.2Carta. Vesting Explained: Schedules, Cliffs, Acceleration, and Types
Some grants add a performance condition on top of the time requirement, such as a revenue target, earnings milestone, or stock price threshold. If either the time or performance condition is unmet on your departure date, those units haven’t vested and you have no claim to them.
Vested Shares Belong to You
Once RSUs vest, the units convert into actual shares delivered to your brokerage account. At that point they’re your property, identical to shares bought on the open market. Leaving the company doesn’t change ownership. You can hold, sell, or transfer them whenever you choose.3Carta. What Happens to Vested Stock and Equity When You Leave
If your shares sit in a company-sponsored brokerage account (Fidelity, Schwab, or Morgan Stanley through your employer’s stock plan), the account typically stays open after you leave but may transition to a standard individual account. Some companies stop subsidizing account fees when the employment relationship ends. Ask the brokerage what changes on your end date.
When Unvested RSUs Are Not Forfeited
Several situations override the standard forfeiture rule.
Change of Control
Many equity plans include a double-trigger acceleration clause. If the company is acquired and you’re terminated or your role is substantially diminished within a set period after the deal closes, your remaining unvested RSUs vest immediately. The logic is that you shouldn’t lose equity because a merger eliminated your position.
Death, Disability, and Retirement
Grant agreements frequently provide accelerated vesting on death or permanent disability while employed. Some plans offer pro-rata vesting for employees who reach a designated retirement age (often 55 or 60) with a minimum number of years of service. The plan document defines what counts as disability or retirement, and those definitions often differ from what you’d expect, so read the specific language.
Severance Negotiation
If you’re being laid off or pushed out, unvested RSUs are negotiable. Companies aren’t required to accelerate vesting as part of severance, but many will offer partial acceleration, especially for senior employees or when termination lands close to a vesting cliff. Common outcomes include accelerating the next upcoming tranche, extending your termination date on paper to capture a vest, or converting unvested RSUs into a cash payment. Your leverage depends on seniority, the circumstances of departure, and whether the company wants you to sign a release of claims. This is one of the clearer cases for having an employment attorney review the severance offer before you sign.
The Private-Company Wrinkle
If you work for a private company, your RSUs likely carry a double-trigger vesting requirement. The first trigger is the standard time-based schedule. The second is a liquidity event, typically an IPO or acquisition. Both must occur before shares are delivered. You could satisfy the full four-year time requirement and still hold zero shares if the company hasn’t gone public or been acquired.
What happens when you leave before a liquidity event depends entirely on the plan. Under some plans, if you’ve met the service condition, you remain eligible to receive shares if a liquidity event occurs within the RSU’s specified term, even after you’re gone. Under others, departure before the liquidity event forfeits everything. If no liquidity event happens within the award term at all, the RSUs expire worthless. Read the grant agreement carefully before assuming you’ll eventually get paid.
Trading Restrictions That Follow You Out
Vested shares are yours, but leaving doesn’t always mean you can sell right away.
If your last day falls during a corporate blackout period (the weeks before an earnings announcement when insiders can’t trade), you may be subject to the remainder of that blackout as a former employee. More importantly, if you possess material nonpublic information when you leave, you cannot trade until that information has been publicly released or is no longer material. This restriction lasts as long as the information is both material and nonpublic, not for a set number of days.4SEC.gov. Insider Trading Policy
If you leave when the trading window is open and you don’t hold inside information, you’re generally free to trade. Err on the side of caution. Insider trading violations carry severe civil and criminal penalties, and “I didn’t think it was material” is not a defense that works well in practice.
Clawbacks Can Reach Shares You Already Vested
In some situations, a company can reclaim shares or profits from shares you already vested and sold. Clawback provisions are less common than standard forfeiture but can be financially devastating when triggered.
The typical triggers include violating a non-compete or non-solicitation agreement within a restricted period after departure, disclosing confidential information, soliciting the company’s employees or clients, or working for a competitor without approval. Some plans define the restricted period as one year; for senior executives reporting directly to the CEO, it can extend to two years.5SEC.gov. RSU Schedule of Terms If triggered, you may be required to repay the full value of shares that vested, including any profit from selling them.
The Restrictive Covenants and Forfeiture sections of your grant agreement spell out exactly what conduct puts your vested shares at risk. Reviewing them before you leave is one of the smarter uses of your time, particularly if your next role is anywhere near your current employer’s industry.
Taxes Around Your Departure
Leaving doesn’t create a new tax event by itself, but the vesting and sale events tied to your departure do.
When RSUs vest and shares are delivered, the fair market value of those shares on the vesting date is treated as ordinary income, like salary.1Office of the Law Revision Counsel. 26 U.S. Code 83 – Property Transferred in Connection With Performance of Services It appears on your W-2 for the year and is subject to federal and state income tax, Social Security tax (6.2% on earnings up to $184,500 in 2026), and Medicare tax (1.45% with no cap).6Social Security Administration. Contribution and Benefit Base If total Medicare wages exceed $200,000 for single filers ($250,000 for married filing jointly), an additional 0.9% Medicare surtax applies to the excess.7Internal Revenue Service. a href=”https://www.irs.gov/taxtopics/tc560″ target=”_blank” rel=”noopener”>Topic No. 560, Additional Medicare Tax
RSU income is classified as supplemental wages. If total supplemental wages for the calendar year are $1 million or less, employers withhold federal income tax at a flat 22%. Amounts over $1 million are withheld at 37%.8Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide The 22% flat rate often falls short of what you actually owe if your combined income lands in the 32% or 35% bracket, so plan for a top-up at filing time.
Withholding usually happens through sell-to-cover, where the brokerage sells enough of your newly vested shares to cover taxes, or through net share withholding, where the company holds back shares before delivering them. Either way, the count that lands in your account is smaller than the count that vested.
Selling vested shares later is a separate event. Your cost basis is the fair market value on the vesting date. Shares sold within one year of vesting produce short-term capital gains taxed at ordinary rates. Shares held longer than one year qualify for long-term capital gains rates, which top out at 20% for most high earners, plus a 3.8% net investment income tax if applicable. The broker reports the sale on Form 1099-B, and you report the gain or loss on Schedule D.9Internal Revenue Service. About Form 1099-B, Proceeds From Broker and Barter Exchange Transactions