There's no such thing as a compound interest for RSUs. If the prices go up, you're profit goes up, so you'll have to pay long term or short term (depending on how soon you sell it) tax on the profit.
Most commonly, the stock plan provider will do a "sell to cover", meaning they'll automatically sell enough shares to raise the cash and the remaining shares will go to you. So if 1,000 RSUs vest, the number that will hit your brokerage account will look closer to 600-700 shares after all the different taxes are withheld. NQSOs are usually handled the same way.
Great video, I've got a new client at a tech firm so was looking to upskill on this topic.
Let's say I have RSUs; they vest and I don't sell right away, then the stock price goes up, does compound interest kick in or no?
There's no such thing as a compound interest for RSUs. If the prices go up, you're profit goes up, so you'll have to pay long term or short term (depending on how soon you sell it) tax on the profit.
In your RSU and NQSO examples, where exactly does the $11k of tax liability get 'withheld' from??
Most commonly, the stock plan provider will do a "sell to cover", meaning they'll automatically sell enough shares to raise the cash and the remaining shares will go to you. So if 1,000 RSUs vest, the number that will hit your brokerage account will look closer to 600-700 shares after all the different taxes are withheld. NQSOs are usually handled the same way.
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