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Here's an example. Say you've been granted 1,500 RSUs and the vesting schedule is 20% after one year of service, and then equal quarterly installments thereafter for the next three years. This would mean that after staying with your company for a year, 300 shares would vest and become yours.
Stock Options are usually better for both employee and employer at an early stage company. For a later stage company, RSUs are usually better for both.
In almost all situations, it will be in your best interest to sell RSUs immediately upon vesting. As mentioned above, there is no tax benefit to holding on to RSU shares. Yes, hanging on to them for a year before selling allows you to pay long term capital gains rates.
RSUs are an alternative to stock options (like ISOs or NSOs), which give employees the chance to buy company stock at a set price. With RSUs, you don't have to pay anything to get the stock. Instead, you are usually only responsible for paying the applicable taxes when you receive the shares.
RSUs are taxed as ordinary income, meaning the rate you'll pay can range from 10% to 37%, depending on your household income. They are also subject to withholding for Social Security taxes and Medicare taxes, which will result in another 7.65% in tax liability.