In the event your employment is terminated by reason of involuntary layoff, disability, or death, your RSU payout, including any Earnings Credit RSUs, will vest after termination of employment.
What happens to vested stock when you get laid off?
As with unvested stock options, RSUs and restricted stock awards are almost always driven entirely by vesting: if you stop working at the company before the shares vest, you don’t get them. Unfortunately, if layoffs happen before vesting, you likely won’t receive anything.
When do you get taxed on restricted stock units?
RSUs must vest before you can receive the underlying shares. Job termination usually stops vesting. With RSUs, you are taxed when you receive the shares. Your taxable income is the market value of the shares at vesting.
What makes a restricted stock unit ( RSU ) restricted?
The grant is “restricted” because it is subject to a vesting schedule, which can be based on length of employment or on performance goals, and because it is governed by other limits on transfers or sales that your company can impose. You typically receive the shares after the vesting date.
When does vesting of restricted stock units end?
Job termination almost always stops vesting. The only exception occurs in certain situations when vesting may be allowed to continue or may even be accelerated (e.g., death, disability, or retirement, depending on your plan and grant agreement). With RSUs, you are taxed when the shares are delivered, which is almost always at vesting.
How does Sec 83 treat transfer of restricted stock?
Sec. 83 treats a transfer made in connection with the performance of services as an exchange of property (e.g., restricted stock) for the performance of services and requires the recipient to recognize ordinary income equal to the amount by which the fair market value (FMV) of the property received exceeds the amount paid (Sec. 83(a)).
