Sep 3, 2026 · 20 min · 9 segments
In this episode of Money and Taxes from BB to XYZ, Jason Speciner, CFP®, EA, and Regina Neenan, CFP®, ABFP®, break down restricted stock and restricted stock units (RSUs). These two common forms of…
Yeah, so restricted stock in its original form is already issued shares of stock in a company.
that are granted to employees upon the satisfaction of certain requirements, typically vesting like timeframe, potentially some sort of performance-based metrics.
So there's some clear thing that needs to happen before the stock is basically the, the full, you know, asset of the employee.
OK, so the company says, hey, employee or person who's doing work for the business in some way, we have these shares of stock and we will give them to you if you come through on your end of the deal.
And the key part about this, because this is where when we start to talk about restricted stock units, this will get different, is that the stock exists at the moment of the grant.
The difference here, and I'll just go right to it with restricted stock units, is that the restricted stock units are created.
So when the employee is able to now basically has cleared all the different stipulations to own the stock, that is when those shares are actually created.
So the difference between restricted stock and restricted stock units, that one letter is so important here, is that with restricted stock, the stock that somebody is going to get already exists.
With restricted stock units, it becomes or comes into existence when they receive it.
You may be asking yourself, well, what difference does it make about the existence of the stock when the grant is given? And so the important thing to understand is with a restricted stock grant, the shares already exist.
When they are granted to you, you are able to make something called an 83B or Section 83B election within 30 days of receiving that grant, right? And if you do that, what you're saying essentially is that the value of this stock is taxable to me immediately, right? And then of course, then that sets you up for not having to, because the key thing is typically the stock is taxable when it vests, right? So this allows you that opportunity to potentially lock it in at a lower rate, especially if it's very new company stock by filing that 83B election.
Yeah, so restricted stock in its original form is already issued shares of stock in a company.
that are granted to employees upon the satisfaction of certain requirements, typically vesting like timeframe, potentially some sort of performance-based metrics.
So there's some clear thing that needs to happen before the stock is basically the, the full, you know, asset of the employee.
OK, so the company says, hey, employee or person who's doing work for the business in some way, we have these shares of stock and we will give them to you if you come through on your end of the deal.
And the key part about this, because this is where when we start to talk about restricted stock units, this will get different, is that the stock exists at the moment of the grant.
The difference here, and I'll just go right to it with restricted stock units, is that the restricted stock units are created.
So when the employee is able to now basically has cleared all the different stipulations to own the stock, that is when those shares are actually created.
So the difference between restricted stock and restricted stock units, that one letter is so important here, is that with restricted stock, the stock that somebody is going to get already exists.
With restricted stock units, it becomes or comes into existence when they receive it.
You may be asking yourself, well, what difference does it make about the existence of the stock when the grant is given? And so the important thing to understand is with a restricted stock grant, the shares already exist.
When they are granted to you, you are able to make something called an 83B or Section 83B election within 30 days of receiving that grant, right? And if you do that, what you're saying essentially is that the value of this stock is taxable to me immediately, right? And then of course, then that sets you up for not having to, because the key thing is typically the stock is taxable when it vests, right? So this allows you that opportunity to potentially lock it in at a lower rate, especially if it's very new company stock by filing that 83B election.
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