Tax Withholding Method for Restricted Stock Grant

[Emanonrog]

Anyone with any experience with restricted stock grants?  This is my first year receiving it and I have to select a tax withholding method.  Here are the two choices:

Net Shares*
Instruct your employer to withhold enough shares/units to pay the tax withholding** due at vesting or distribution, or "net shares". You will receive fewer shares in your Fidelity Account when your grant vests/distributes.

Deposit funds from my account***
You can choose to deposit cash into your Fidelity account to pay your estimated tax obligation. You will receive all of the vested/distributed shares in your Fidelity Account when your grant vests or distributes. If you select this option, you must ensure that funds are available on vesting or distribution date to cover the tax withholding obligation on the restricted stock vesting/distribution.   

* If you choose to "net shares" your company will withhold whole shares/units and you will receive fewer shares/units. The entire amount withheld will be applied to your federal tax withholding. (As always, amounts withheld are treated as payments of your tax, and you may be entitled to a refund if your actual taxes are less than the amount withheld.)
** Tax withholding is calculated based on the total fair market value of your awards/units on the vest or distribution date (less the amount you paid for the shares/units, if any) multiplied by the tax withholding rate supplied by your company. You must have funds available in your Fidelity account to satisfy the withholding obligation. The withholding will be sent to your employer for tax payment.
*** If you choose to pay your withholding obligation with cash from your Fidelity account, please note that you must have cash in that account on the vesting or distribution date to avoid having your account restricted. Electing to pay for the estimated tax withholding with cash does not fund your account.

Any advice on which is more advantageous?  I'm usually in the 28% marginal bracket. 

[MDM]

No inherent advantage either way.

If you plan to sell the shares ~immediately, you might as well have some held back to pay withholding. 

If you think the stock is a great investment (and are comfortable concentrating your investment in your employer's stock...), then it would be better to keep the shares and fund the withholding with cash into the account.

[redcedar]

It's almost a zero sum question.

Option 1 - sell stock to cover gain, may generate some grain, likely generates some brokerage fee.
Option 2 - use after tax money to cover gain

So I thought believe that the decision comes down to
Do you have the cash
Do you feel that your company stock is a better investment of your cash than other options
Do you feel that you current diversification supports more money in company stock

[seattlecyclone]

If you're selling all of the shares right away (which you really should), the withholding election doesn't matter one bit.

[Emanonrog]

Thanks for the advice.  I went with option 1, withhold shares.

[flyfig]

Also, look into how much is with held as tax. My company assumed a flat % to be with-held and that was NEVER enough to cover the actual federal and state tax bill. At filing time, I made sure to have enough liquid to pay the tax bill. A double check will make sure that you are not unpleasantly surprised at tax time.

[seattlecyclone]

Yes, do be aware of this. My employer uses "supplemental withholding" rates on bonuses and stock grants, which is a flat 25% federally. If you're in the 25% bracket this works out nicely, but if your tax bracket is higher you might need to increase your withholding from your regular paychecks to make up the difference.