Author Topic: RSUs and post tax roth ira  (Read 1411 times)

clairebonk

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RSUs and post tax roth ira
« on: October 14, 2020, 08:42:33 PM »
My company stock was high so I decided to sell most of my RSUs. Of course, it's gone up 50% since then but the trading window is closed for employees so it doesn't matter- it will probably come back down when the window opens. We were thinking of using the money to buy a rental property but that's not working out smoothly. So, what I'm doing is putting my entire paycheck into post-tax roth ira. I won't hit the $37k limit there, but I'll hit the $19k limit for pre-tax. My account allows for paperless transfer from post-tax employee account to post-tax etrade but every 2 weeks I have to call up to have it transferred. The person on the phone tells me it's not possible without 30 pages of forms, I say it is possible, we go back and forth until they understand, then it takes another 10 minutes. It's a pain but totally worth it!

Having RSUs and ESPP is like gambling and I hate it. How do you know when to sell and when to hold it?

tawyer

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Re: RSUs and post tax roth ira
« Reply #1 on: October 14, 2020, 08:51:33 PM »
Having RSUs and ESPP is like gambling and I hate it. How do you know when to sell and when to hold it?
I'm not a stock picker, so I have the same sentiment. For me, RSUs from my employers have never been part of my Investment Policy Statement, so I have always sold them immediately and invested according to my planned asset allocation. Informally, I think having stock and a job with the same company is too many eggs in one basket.

clairebonk

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Re: RSUs and post tax roth ira
« Reply #2 on: December 24, 2020, 07:49:27 PM »
Thanks for this advice @tawyer. We decided to sell all and refinance for 15yr at 1.85%.

secondcor521

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Re: RSUs and post tax roth ira
« Reply #3 on: December 24, 2020, 09:09:57 PM »
Having RSUs and ESPP is like gambling and I hate it. How do you know when to sell and when to hold it?
I'm not a stock picker, so I have the same sentiment. For me, RSUs from my employers have never been part of my Investment Policy Statement, so I have always sold them immediately and invested according to my planned asset allocation. Informally, I think having stock and a job with the same company is too many eggs in one basket.

I did the same thing.  I had a high tech employer with a high beta stock price.  I always cashless exercised the day they vested and then took the proceeds and applied them to whatever my next goal was.

seattlecyclone

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Re: RSUs and post tax roth ira
« Reply #4 on: December 25, 2020, 12:19:30 AM »
Imagine instead of RSUs your company paid you in beanie babies. Maybe the price of beanie babies goes up after your payday or maybe it goes down. Would you be worried at all about tomorrow's beanie baby price if your company paid you in cash to begin with? No? Then just sell the beanie babies and invest the cash into what you actually want.

How much company stock would you purchase if your compensation was all in cash? Hold that much. Sell the rest.

Car Jack

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Re: RSUs and post tax roth ira
« Reply #5 on: December 25, 2020, 08:59:13 AM »
Let's say that my company releases RSUs to me on Tuesday.  On Monday, I had put in a pre-emptive "sell at market all" order.  So the shares release and immediately sell.

This way, I avoid the problems like stock dropping to 25% of what it released at, which did happen to me at one company.  I do the same with ESPP shares.  Everything immediately gets turned to cash.  If I want it to go in the market, it'll go from cash to either SCHB or VTI.

Gronnie

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Re: RSUs and post tax roth ira
« Reply #6 on: December 25, 2020, 02:34:42 PM »
I have no problem deciding what to do with ESPP and RSU money -- sell it immediately and invest according to my IPS/goals!

clairebonk

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Re: RSUs and post tax roth ira
« Reply #7 on: August 19, 2021, 11:29:09 AM »
I ended up selling all RSUs after the stock doubled and refinancing for 15yr mortgage. Stock is back down again.

More RSUs being accrued and will keep them now and sell them when I take a travel work break, to avoid high tax bracket.

Most of focus on the blog is FIRE obviously, but I have chosen a path to fund longer work breaks over the years rather than focusing on the final end.

SweatingInAR

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Re: RSUs and post tax roth ira
« Reply #8 on: August 24, 2021, 11:34:58 AM »
Thanks for the followup, clairebonk!

My treatment of RSUs is similar to the previous posters. All new vestings get sold ASAP. When I receive them, I am taxed at their current market value as if they are salary. The reality is: "My company just gave me a pile of cash, forced me to buy their stock with it, but does not require that I hold onto it." Selling ASAP with no gains or losses has zero impact on my taxes. My tax bracket only matters if I hold them and they have gains or losses when I sell them.

I do give in to the emotional aspect and keep a small chunk (less than 1% of net worth) in company stock. This chunk gets held long-term, and roughly tracks the growth of my stash because the company value has grown slightly faster than the total market. The purpose of this chunk is that if the stock price doubles, I can be happy with every other employee in the office. If the stock price halves, I am not crying with the other employees.

ixtap

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Re: RSUs and post tax roth ira
« Reply #9 on: August 24, 2021, 11:50:09 AM »
We also sell RSU and ESPP at the first opportunity. If necessary, we live off that while maxing out deductions to 401k, but if we have already accumulated a cash reserve, it just goes straight to an index fund in taxable brokerage.

 

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