Your RSUs Are the Biggest Bet You Didn't Choose
She's a senior director of product at a company you've heard of. Six years in, and the RSUs that felt like a bonus early on have quietly stacked into $2.8 million of one stock. Her salary covers the lifestyle. The 401(k) is maxed. The position just sat there, vesting and growing, because nobody ever asked what the plan was for it.
She's not reckless. She's just busy. And until a few weeks ago, she assumed the CPA who files her return had it handled.
The scenario that's more common than you think
A director, a senior director, or a VP at a large public tech company. Late 40s to mid 50s. Seven-figure base comp plus annual RSU grants that started stacking six or seven years ago. Each grant vests over four years, and with a stock that went up during that stretch, the position got bigger every year.
Nobody planned the concentration. It happened by default. And the firms those executives pay to file their returns — good preparers who handle withholding, cost basis, and the Schedule D — never once ask: do you want to change this?
Because that's not their job. Their job is compliance, not design. We covered this dynamic in a post on why your CPA files your return and disappears, and it's worth revisiting here because the difference between a preparer and a strategist is the whole story.
Why a once-a-year preparer cant touch this
Here's the distinction that matters: a preparer takes what happened in the prior year and puts it on the right forms. A strategist looks at what the next three to five years could look like and designs a path that works inside the tax code.
If your RSUs have you sitting on a seven-figure concentrated position, the preparer path means you'll sell when you need to, pay whatever the code demands, and move on. The strategist path means you decide the timeline, the rate at which you diversify, the tax treatment of each sale, and how it coordinates with the rest of your life.
The difference is a plan. Not a reaction.
A multi-year plan, built in phases
A multi-year diversification plan works best when it respects both the tax code and the reality that you don't want to trigger a single monster tax year. Here's how the mechanics work in a representative situation.
Phase one: understand the position. Gather every grant date, vesting schedule, and cost basis. Know what's vested, what's vesting, and what the tax withholding was at each vest. This is the baseline — and most executives don't have it assembled in one place.
Phase two: set up the structure. For insiders subject to trading windows and blackout periods, a 10b5-1 trading plan is the standard tool. It lets you pre-schedule sales on a fixed cadence — so many shares per month or quarter — regardless of what the stock does or what news the company releases.
Phase three: execute with tax awareness. Sell in a pattern that keeps you out of the top brackets on each tranche. Pair sales with tax-loss harvesting from your other accounts. Time your sales to the calendar year so you're not cramming multiple years of gains into one April.
Phase four: reassess. Markets change. Your situation changes. The plan should flex.
The point is not to sell everything tomorrow. The point is to move from one ticker to a diversified position over a deliberate timeline, with the tax consequences known in advance.
What a 10b5-1 plan actually does
A 10b5-1 plan is a written agreement between you and your broker that specifies how and when you'll sell shares. You set the parameters upfront: number of shares, price targets, frequency. Once it's in place, the broker executes the trades automatically.
For senior executives, this solves two problems. One, it prevents the appearance of trading on material non-public information — the SEC views pre-scheduled plans as a good-faith defense. Two, it removes emotion from the decision. No second-guessing. No waiting for the stock to hit a number. Just a schedule that runs until you change it.
And it's not an all-or-nothing tool. You can sell a portion of your position through a plan while holding the rest. The goal is progress, not perfection.
California and the state question
If you live in California and your RSUs come from a California-based employer, the state has a claim. California taxes the portion of your RSU income that was earned while you lived there. Even if you move to Texas or Florida after a grant vests, the state can still source a slice of the sale.
This is where timing a diversification plan with a residency change matters. If you're planning to leave California, the question isn't just when to sell — it's which grants were sourced to California and which ones your new state has a claim on. A plan that sequences sales around a move can avoid double-taxation or a surprise FTB notice years later. We went deeper on the mechanics of moving from California to Texas with equity in a previous post.
Most preparers don't touch this. A strategist maps it out before the move happens.
What happens after is the real win
Diversifying a concentrated RSU position is not about avoiding taxes. It's about owning your outcome. The executive who worked six or eight or ten years for a company earned that equity. The question is whether that equity stays tied to one ticker or gets converted into the kind of flexibility that lets her make her next move — a career change, a sabbatical, an exit on her terms — without the stock price being the deciding factor.
That's the real work. The tax strategy is the vehicle.
If you're sitting on a concentrated position and wondering what a plan looks like, that's exactly the conversation a free discovery call is for. No deliverable on day one, just a conversation about where you are and what questions matter for you. Call (619) 280-2700 or email info@RoadmapTax.com.
FAQ
What is a 10b5-1 plan for RSUs?
A 10b5-1 plan is a pre-scheduled trading agreement with your broker that lets you sell shares on a fixed schedule, regardless of market conditions or company news. It's the standard tool for insiders who want to diversify without triggering insider trading concerns.
How do I sell RSUs without a large tax bill?
You don't avoid the tax entirely, but you can manage the rate you pay by selling across multiple tax years rather than all at once. A multi-year plan can keep each year's gains in lower brackets and pair sales with offsetting strategies like tax-loss harvesting.
Does California tax RSUs after you move?
California can still tax the portion of your RSU income that was earned while you were a resident, even if you sell the shares after you've moved. The sourcing rules depend on grant dates, vesting schedules, and the timing of your residency change.
What is the difference between a tax preparer and a tax strategist?
A preparer takes what happened last year and puts it on the correct tax forms. A strategist looks at the next three to five years, designs a plan, and coordinates your equity, entity structure, retirement, and cash flow to produce a known outcome.
How long does it take to diversify a concentrated RSU position?
Most plans run three to five years. The timeline depends on the size of the position, your income from other sources, the stock price, and how much tax you're willing to pay each year. The goal is steady progress, not a fire sale.
