Whats the right way to sell my RSUs

Submitted by riku2o t3_11cyux2 in personalfinance

Hey all,

I just crossed 4 years at a pretty big tech company which has been issuing me RSUs as part of my compensation package. Up until recently I've been bullish enough that I was willing to hold my shares. This somewhat paid off (or so I had thought) because the first few years had some pretty good growth. That being said, my company (and the broader market in general) have taken some growth hits to the point where I think I'm ready to transition most/all of my RSU to some wider index funds (which I've already got some personal and retirement accounts invested in) and start autoselling any future rsu grants. The company itself is far from the worst company to be fully invested in (FAANG with >1T market cap) so even diversifying into a total stock market fund will still have a notable amount of exposure and it shouldn't(at least in theory, exceptions exist) be substantially more volatile than the overall market.

This felt like a reasonably good time to do some tax lost harvesting on the awards that vested earlier and experienced notable growth but I recently discovered that I'm still net negative. My brokerage accounts are also currently in the red (but they're invested in index funds already so not much to change there)

Are there strategic ways to handle this loss/reallocation. Are they worth the headache or should I just pull it all out and diversify whenever I get the chance. I know I can use it at the very least to offset 3000$ in income each year but I'm curious if there are any better/more timely strategies.

Actual numbers probably go a long way here so I've got about 130K in RSUs currently with an unrealized loss of about 20K. This figure is about ~25% or so of my NW.

Maybe it's time to talk to a CPA?

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Comments

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jean-claude_vandamme t1_ja5s7xw wrote

can you sell options against shares? otherwise if you don’t have a 20 year horizon tech has more pain ahead. Dump it on the next pop

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micha8st t1_ja5u2js wrote

I've been collecting RSUs for awhile, and I sold some in late 2019, in 2020, and in 2021.

The brokerage account my employer gave me for this purpose allows me to chose lots to sell. I'm making up dates...but I could sell two lots simultaneously... one lot that was granted in 2016 and vested in 2019, and another lot that was granted in 2020 and vested in 2021.

Lets say at the price I sell, the 2016/9 lot is up 545.32, and the 2020/1 lot is down 543.16.545.32 - 543.16 means a net gain of 2.16 -- I'd have to pay taxes on $2.16.

So... I could figure out a price where I can sell those two lots simulataneously and have no net gain or net loss. I didn't bother.

Or... maybe I have a third lot...and at the price where I sell, the 2016/9 lot is up 752.38, the 2020/1 lot is down 238.38, and the third 2017/20 lot is down 520.00.752.38 + (-238.38) + (-520) = 752 - 748.38 = a gain of 3.62.

Me, I chose to just sell without worrying about tax loss harvesting (as what I described is called)

If you have a big net capital loss, that loss can be carried forward. You can only "use" $3000 of the carried-forward loss in any given calendar (tax) year.

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Mile129 t1_ja5uile wrote

Always withdraw RSUs when they vest. For now take the loss and diversify your portfolio, having 120K in one stock is probably not a great idea. Also, you can take the loss on your taxes. CPA can help you with your taxes but a financial planner can put it in something that will get a better return.

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Maece t1_ja5vnt3 wrote

I also have RSUs at my current company.

I highly recommend looking at the individual lots of stock and picking and choosing which lots to sell. Also, learn about wash sales and how they will affect you. Candor has a decent write-up about wash sales and tax implications that may prevent you from tax loss harvesting (https://candor.co/articles/money-matters/wash-sales-what-they-are-and-how-to-avoid-them). Of note, if you sell your stock to take the loss and then have RSUs vest within the window, it may prevent you from taking the loss.

My tactic is only to dispose of lots that are positive (sometimes barely positive). I've been fortunate to be able to do so while continuing to vest additional stock.

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riku2o OP t1_ja5vzqb wrote

Replying to micha8st (#2,041,972)

Thanks for the perspective! Yeah I think your perspective and the other ones I'm seeing commented so far align with my thoughts of just get out and diversify. For what its worth, the entire market has been down so Im havent lost all that much relative to what it wouldve been if I were already diversified, but nobody likes leaving money on the table. It also probably ends up saving me a trip to CPA to figure out the most optimal way to sell my RSUs

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riku2o OP t1_ja5w6wa wrote

Replying to jean-claude_vandamme (#2,041,566)

I'm pretty sure options trading is explicitly disallowed. Its also not an area where I have a ton of expertise as i prefer the slow and steady diversified approach (the other 75% of my NW is in diversified funds across personal and retirement accounts)

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riku2o OP t1_ja5wj3y wrote

Replying to Mile129 (#2,042,064)

I think I'm fine with my investment strategy outside of my RSUs. Its pretty simple slow and steady total stock market/ SP500 stuff. I'm versed enough in my options to know that this was probably the better bet (and its what the other ~75% of my NW is in) But the vibe im getting is that now is as good a time as ever to to just hurry up and move everything and switch to autosale moving forward just for simplicity sake.

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TLDR its not worth optimizing and even in a diverse fund im more than invested enough in this company (not to mention all the unvested RSUs to come)

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Thanks!

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micha8st t1_ja60t06 wrote

Replying to riku2o (#2,042,355)

in my case, the stock has been a ride.

I like having mathematical triggers -- I make up a formula, and it tells me when to sell.

Through Dec 2019 - Jan 2020, I sold... I think it was 9 lots, at an ever increasing price. The formula would give me a next price to sell at relative to the previous price.

My employer's stock went up December 2019 - March 2020...then when the bottom fell out of the market in later March 2020, it dropped to about half where I sold my first lot of vested RSUs. By October 2020, the stock was to price where I'd stopped selling in january. It kept, generally, going up, and peaked early december '21 at double where I sold my first lot. Then it's dropped. My formula tells me I should sell my next lot at 100.37, but it ended the day Friday at 78.05.

Now... why did I stop? Both times because the total value reached my goal -- the sales brought the total value of employer stock below my target.

In your case, I suggest setting a target -- say 10% of your net worth -- and slowly pare back your vested-RSU holdings down to that level. Further, I'd see if I can't come up with some pairings that make sense to roughly where stock is selling...say +/- 10%.

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Rebelgecko t1_ja635mj wrote

Be careful doing TLH depending on how frequent your grants are

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