Daniel Logan warns RSU concentration risk
- Wealth adviser Daniel Logan told high earners to treat each restricted stock unit vest as a sell-or-hold decision, not an automatic long-term bet. - Logan said vested shares can leave employees overexposed to employer stock while payroll withholding at vest may still fall short of taxes due. - The warning tracks Internal Revenue Service rules taxing RSUs at vest and using 22% supplemental withholding below $1 million. (irs.gov)
Daniel Logan, a wealth adviser who posts as DL_Wealth, warned high earners this week that vested restricted stock units can quietly turn into concentrated bets on their employer. (x.com) Restricted stock units, or RSUs, are company shares promised in advance and delivered when they vest. In the United States, that vesting date is usually the tax event, not the later sale date. (irs.gov) (schwab.com) Logan’s point was that many employees never make a fresh decision once shares hit their account. They keep the stock because it arrived through compensation, even though their salary and future bonuses already depend on the same company. (x.com) That creates concentration risk: one stock can hit both sides of a household balance sheet at once. If the company cuts jobs and the share price drops together, income and savings can fall at the same time. (truerootfinancial.com) (candor.co) The tax mechanics add another problem. The Internal Revenue Service treats RSU value at vest as wages, and employers typically withhold federal income tax under supplemental wage rules. (irs.gov 1) (irs.gov 2) For many high earners, that withholding rate is 22% on supplemental wages below $1 million for the year, with 37% above that threshold. A worker in a higher marginal bracket can still owe more at filing time even after shares were sold to cover withholding. (irs.gov 1) (irs.gov 2) That is why Logan framed vest dates as planning dates. The question is not whether the stock came from compensation, but whether you would buy that same number of shares with cash on that day. (x.com) Other advisers in the same online discussion made the same case from a planning angle. One urged employees to decide before vesting how much employer stock to keep, while another pointed to case studies pairing RSU sales with deferred-compensation elections. (x.com 1) (x.com 2) Brokerage firms and tax guides describe a second trap after vesting: if employees later sell and report the wrong cost basis, they can overstate gains on the same shares. That turns a payroll event into a filing-season error. (fidelity.com) (schwab.com) The thread’s bottom line was simple: RSUs are compensation first and investments second. Once they vest, holding them is an active bet on one company, not a neutral default. (x.com)
