What to Do With the Cash After You Sell Your Vested RSUs

This article is for educational purposes only and does not constitute personalized financial, tax, or investment advice. Willcox Wealth Management is a registered investment adviser. Please consult with a qualified professional before making financial decisions based on the information presented here.

Most of the advice on RSUs stops once you sell. You sold the shares as they vested, which kept you from building a big position in one company, and now a chunk of cash is sitting in your brokerage account.

Left alone, that cash tends to sit idle for months, and a slice of it often drifts back into the company's stock because that's the investment people know best. The tax bill comes first, though, since for most high earners the withholding at vest comes up short.

Set aside what your employer didn't withhold

When RSUs vest, the IRS treats the value of the shares as wages. Your employer holds back federal tax at that point, usually by selling some of the shares for you, and for 2026 most employers use the flat 22% rate the IRS allows on bonuses and other supplemental pay. The rate jumps to 37% only on supplemental pay above $1 million in a year, so anyone in the 24% bracket or higher ends up short.

Take a hypothetical single filer with a $230,000 salary and $60,000 of RSUs vesting this year. After the standard deduction her salary already puts her in the 32% bracket, and the RSU income pushes about $17,700 of it past $256,225, where the 35% bracket starts for single filers in 2026. Federal tax on the $60,000 comes to roughly $19,700. Her employer withheld $13,200 at 22%, so she's about $6,500 short before state tax, which adds to the gap in places like New York and California.

Before you invest any of the proceeds, move enough into savings to cover that shortfall. You can send the IRS an estimated payment now or raise the withholding on your paychecks for the rest of the year, and the IRS treats paycheck withholding as if you'd paid it evenly across all twelve months.

If your adjusted gross income last year topped $150,000, you avoid the underpayment penalty as long as your 2026 withholding and estimated payments add up to at least 110% of last year's total tax. In a year when a big vest pushes your income well above last year's, that rule keeps you penalty-free and you settle the rest of the bill when you file in April.

Keep the proceeds out of your employer's stock

It's common for someone to sell at vest, watch the stock climb 15% over the next quarter, and buy back in out of fear of missing the run. That undoes the reason they sold. Your paycheck and your unvested grants both depend on how the company does, so a bad year for the business hits your income and your future shares at the same time.

A test I like is to imagine the same amount had arrived as a cash bonus and ask how much of it you'd use to buy your employer's stock. For most people the answer is little or none, and the RSU cash deserves the same answer.

Invest it inside the plan you already have

Put the cash to work under the allocation you've set for the rest of your money. Add up every account you have, your 401(k) and IRAs along with your taxable brokerage account and your spouse's accounts if you're married, and find the parts of the portfolio that sit below your target. New cash goes there first. Rebalancing with fresh money brings the portfolio back in line without selling anything, so you don't realize any gains along the way.

If you work at a big tech company, look at what your index funds hold before you add to them. A broad US stock index fund already carries a heavy weight in tech, and once you add your salary and unvested shares on top, your exposure to one industry can run higher than you'd guess. Some people respond by tilting the rest of their investments away from their own industry, which is worth talking through with whoever manages your money.

Money you plan to spend in the next few years, on a down payment or a cushion for a job change, belongs in cash or short-term bonds.

Use it to fill your retirement accounts

Plenty of high earners leave room in their 401(k) because a bigger deferral would squeeze their take-home pay. RSU cash can cover that squeeze. Raise your 401(k) deferral and spend from the RSU proceeds to make up for the smaller paychecks. For 2026 you can defer up to $24,500, or $32,500 if you're 50 or older.

Past the 401(k), a backdoor Roth IRA lets you put in up to $7,500 for 2026 when your income is too high to contribute to a Roth directly (for single filers, the phase-out starts at $153,000). If your plan allows after-tax 401(k) dollars with an in-plan Roth conversion, the setup people call a mega backdoor Roth, your RSU cash can fund that too. Your plan documents or HR will tell you whether yours does.

Check the cost basis on your 1099-B next spring

Your broker reports the sale on Form 1099-B, and the cost basis box often shows $0 or sits blank. You paid tax on the full value of the shares when they vested, so your basis is what they were worth on the vest date. File with the $0 and you pay tax twice on the same income.

You fix it on Form 8949 by reporting the vest-date value as your basis, and your broker's supplemental tax statement lists that number for each lot. Get that statement to your tax preparer before they file.

Decide on the split before the next vest

Most companies vest RSUs on a set calendar, quarterly or monthly, so you know when the next batch of cash is coming. Write down ahead of time how much of each vest goes to the tax reserve and where the rest gets invested, then run the same steps every time shares vest.

All examples are hypothetical and for illustration only. Tax figures use 2026 federal rules and are simplified; your results depend on your full tax situation, including state taxes, deductions, and other income.

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