A few years back, I sat across the table from an engineer at a major Houston energy company. Smart guy. Disciplined saver. He had watched his RSUs vest quietly over four years and had held almost every single share, convinced he was building something. When we finally spread everything out on the table, nearly 60% of his entire net worth was in one stock. One company. The same company that cut his bonus the year before when oil prices dipped.
He asked me, "Bryon, am I doing this right?"
The honest answer was no. But the good news was, we could fix it.
If you have vested RSUs sitting in your account right now, and you are wondering whether to sell immediately or hold for long-term capital gains treatment, here is my direct answer: for most Houston professionals, selling the majority of vested RSUs immediately and reinvesting thoughtfully is the right move. The tax savings from waiting rarely justify the concentration risk you are absorbing. Let me walk you through exactly why.
"Wait, I thought I already paid taxes on these. Why does selling matter?"
Great question, and this trips people up constantly. RSUs (Restricted Stock Units) are taxed as ordinary income the moment they vest. The IRS treats the fair market value of your shares on vesting day as wages, full stop. You already paid ordinary income taxes on that value, regardless of whether you sold a single share.
So here is what that actually means: your cost basis in those shares is the stock price on the day they vested. Any growth above that price, if you hold the shares longer, becomes a capital gain. Hold for at least 12 months after vesting and you qualify for long-term capital gains (LTCG) rates, which are 15% or 20% depending on your income, rather than the ordinary income rate that could be as high as 37%.
On paper, that sounds like a reason to hold. In practice, there is a lot more to the story.
"What are the actual tax rates I'm dealing with in 2026?"
Here is where planning got a lot easier recently. The One Big Beautiful Bill Act (OBBBA), signed in 2025, permanently extended the Tax Cuts and Jobs Act (TCJA) tax rates into law. These are no longer provisions with an expiration date. They are permanent.
For ordinary income, the top federal rate remains 37%, which kicks in above $768,700 for married couples filing jointly. For long-term capital gains, most high-income professionals are looking at 15% or 20% depending on their total income picture.
But here is the wrinkle most people miss: the Net Investment Income Tax, or NIIT. This is an additional 3.8% tax on investment gains that applies once your Modified Adjusted Gross Income (MAGI, which is essentially your total adjusted gross income before certain deductions) crosses $250,000 for married couples filing jointly. So if you are a dual-income Houston household with W-2 income already above that threshold, your effective long-term capital gains rate is not 15% or 20%. It is 18.8% or 23.8%.
The gap between ordinary income and capital gains rates is real, but it is narrower than most people assume, especially once the NIIT is factored in.
"So the tax savings could still be meaningful. Why not just hold?"
Because tax efficiency is only one variable. Concentration risk is the one that keeps me up at night for my clients.
Here is a number I want you to sit with: according to J.P. Morgan Research (June 2026), 40% of stocks in the Russell 3000 have historically suffered a catastrophic loss, defined as a drop of 70% or more from their peak value. Not a correction. Not a rough quarter. A catastrophic loss.
And Fidelity Research (June 2026) is clear that holding more than 10 to 15% of your total net worth in a single company's stock puts you in what they call a concentration "danger zone."
Now think about the client I mentioned at the beginning. Sixty percent of his net worth in one energy stock. His paycheck came from the same company. His bonus came from the same company. If that stock dropped 70%, he would not just lose portfolio value. He would likely be facing layoffs in the same environment that caused the collapse.
That is the dual-risk scenario I warn every Houston energy professional about: when your salary and your retirement savings are both tethered to the same commodities-driven market, you are not diversified. You are concentrated twice.
"But I feel like I'd be leaving money on the table if I sell right away."
Try this reframe, and I use it with clients all the time.
Imagine your company handed you a cash bonus today equal to the current value of your vested RSUs. Would you take 100% of that cash and immediately use it to buy your company's stock? Probably not. You would pay your taxes, maybe pay down debt, invest in your 401(k), diversify.
So why would you hold RSUs that function identically to that cash bonus, just because they arrived in the form of shares instead of dollars?
Holding your vested RSUs is a decision to buy more of your company's stock. Every day you hold is a day you are choosing concentration over diversification. It helps to see it that clearly.
I had another client, a mid-level executive at an energy services firm, who made exactly this mistake. She held four years of vested grants because she loved the company and believed in its long-term future. When an industry downturn hit, the stock dropped over 50% before she finally sold. She had turned what could have been a well-diversified retirement stake into a single losing bet. A painful lesson, and one I wish she had called me before making.
"Is there a smarter strategy for selling in phases rather than all at once?"
Absolutely. And with the OBBBA permanently locking in the TCJA brackets, we can now build multi-year liquidation strategies with real predictability.
For clients whose income is near the NIIT threshold of $250,000 MAGI (married filing jointly), we look carefully at timing sales across different tax years to prevent gains from stacking on top of ordinary income and triggering that extra 3.8%. Sometimes selling a portion in December and the remainder in January accomplishes a lot with one simple calendar decision.
For higher-income clients well above that threshold, we focus on the long game: maximizing contributions to tax-advantaged accounts with the proceeds from RSU sales, harvesting losses elsewhere in the portfolio to offset gains, and using the predictability of permanent tax law to map out a 3 to 5 year strategy rather than making reactive year-end decisions.
"What should I do with the money after I sell?"
This is where it gets genuinely exciting. Selling your RSUs is not the end of the plan. It is the beginning.
One of the most underused vehicles I recommend for RSU proceeds is the Roth 401(k). Here is why it stands out. Unlike a Roth IRA, the Roth 401(k) has no income limits. It does not matter if you earn $300,000 or $500,000. You can still contribute. And under SECURE 2.0, Roth 401(k)s no longer require minimum distributions (RMDs), meaning your money can grow tax-free as long as you want without the government forcing withdrawals.
For 2026, the base 401(k) contribution limit is $24,500. If you are 50 or older, you can contribute up to $32,500 and $35,750 if you are 60-63. Using RSU sale proceeds to max out these accounts transforms a concentrated stock position into a broadly diversified, tax-advantaged foundation.
There are also taxable brokerage accounts, donor-advised funds for charitable giving, and strategic use of index funds for those who want long-term equity exposure without single-stock risk. The playbook is rich. The key is having a plan before you sell, not after.
One More Number Worth Knowing
A survey by Resilient Planning (April 2025) found that employees plan to hold 54% of their vested RSUs and sell only 46%. The majority of workers are staying concentrated by default, not by design.
The same research found that 65% of employees say receiving new RSU grants made them more likely to stay with their employer. That is the golden handcuffs effect at work: RSUs are designed to keep you invested emotionally and financially in your employer's outcome. That is great for retention. It is not always great for your retirement.
Worth noting: a typical RSU grant has a 4-year vest with a 1-year cliff, according to Flip Flops and Pearls (April 2026). That means across a standard grant's lifecycle, you face 13 separate hold-or-sell decisions. Thirteen. Most people make those decisions passively, by doing nothing. The most effective thing I do as a Financial Planner is help clients make those decisions actively, with a strategy.
If you are sitting on vested RSUs right now and you have not thought carefully about concentration risk, tax timing, or where the proceeds go after you sell, I would love to have that conversation. There is no pressure and no pitch. Just a conversation about what you have built and how to protect it.
Reach out through the contact page, email me at BryonT@WRAnderson.com or call 281-974-1965 and let's take a look at your full picture together.
After all, the engineer I mentioned at the start of this post? He called me. We restructured, diversified, and within two years he had a plan he could sleep with. That is what this work is really about.