RSUs Aren't Just Income. They're a Forced Investment Decision.

Most Google employees think RSUs are a compensation event.

The IRS agrees.

The problem is that the IRS is only describing the tax treatment. It isn't describing what actually happens.

One of the interesting things about Google is that it has probably created more accidental investors than almost any company in history.

Most employees don't join Google because they want to become investors. They join because they're engineers, product managers, designers, operators, or executives.

Then RSUs start vesting.

 

A decade later, they have a multi-million-dollar portfolio and a series of investment decisions they never consciously set out to make.

That's the part worth slowing down on. The question isn't whether RSUs are income. Mechanically, they are. The more important question is what happens after the income arrives.

 

Google Stock Has Been a Remarkably Effective Wealth-Building Tool

For the past two decades, Google stock has rewarded employees extraordinarily well. In many cases, employees who simply held vested shares accumulated substantial wealth without ever setting out to become stock pickers.

I don't say that critically. In fact, I think RSUs have unintentionally helped many Googlers become better investors.

The challenge is that success can sometimes obscure the underlying decision.

When shares vest, taxes are due regardless of whether you sell. Once that tax is paid, you're left with a choice. Do you continue holding Google stock, or do you use those proceeds to build wealth elsewhere?

Neither answer is automatically right. The mistake is believing no decision is being made.

Holding is a decision.

Selling is a decision.

Automating the sale is a decision.

Accumulating additional shares is a decision.

The decision isn't really about Google stock. It's about what creates the most future options.

 

How a Concentrated Position Actually Happens

Most people don't wake up one day and decide to concentrate half their net worth in Google stock.

It happens one vesting cycle at a time.

A grant vests. The shares stay.

Another grant vests. Those shares stay too.

The stock performs well.

Eventually what started as compensation becomes a significant portion of their wealth.

Nobody chose that in a single moment. It accumulated while attention was elsewhere. And the employees who feel most in control aren't the ones who avoided concentration entirely. They're the ones who understood how equity fit into the larger picture, and kept asking what each vesting event was doing to their situation.

 

Why Tax Planning Matters More Than Most Employees Realize

One of the first questions I ask is simple:

"What usually happens at tax time?"

The answer tells me a lot.

Some people know they're going to owe. They know why. They know approximately how much. They've already adjusted for it.

Other people are surprised every April.

Here's where that surprise usually comes from. RSU vesting is typically withheld at a flat 22%. But a senior engineer with a large vesting year is often taxed well above that. On $200,000 of vesting income, that gap can leave more than $20,000 that nobody set aside.

The employee didn't do anything wrong. The withholding simply wasn't built for their income. And because the shortfall doesn't announce itself until April, it tends to arrive as a surprise.

This is why I'd rather look forward than backward. Checking your income before year-end, while there's still time to act, is the difference between a plan and a surprise. A surprise tax bill is usually evidence that nobody was looking ahead.

 

The Risk Most Successful Employees Haven't Experienced

One thing I think about often is that many Google employees have spent most of their careers participating in one of the most successful corporate stories in modern history.

That's a wonderful thing. It's also something worth acknowledging.

Many employees have never experienced what it feels like to watch a concentrated position decline dramatically.

That's not a criticism. It's simply an experience many people haven't had yet.

Not intellectually. Emotionally. The kind of decline that makes you question your decisions. The kind that reveals your actual risk tolerance instead of the one written on a questionnaire.

Risk tolerance isn't tested when everything is working. It's tested when something you've relied on stops working.

And that's why concentration risk isn't just a portfolio issue. It's a behavioral issue.

 

The Goal Isn't to Stop Owning Google

This is where I think many conversations go sideways.

The objective isn't to eliminate Google stock. The objective is to avoid depending on it. There's a difference.

If you love the company and want to own shares, that's perfectly reasonable.

The most financially resilient employees I've met have something in common. Their plans work even if Google stock has an average decade.

Their retirement doesn't depend on extraordinary returns.

Their spending doesn't depend on extraordinary returns.

Their future doesn't depend on extraordinary returns.

Because wealth, at least from my perspective, isn't defined by portfolio size. It's defined by optionality. The more options your financial life creates, the more resilient it becomes. The less dependent you are on any single outcome, the more freedom you have.

The people who seem to have the healthiest relationship with Google stock are often the ones who don't need it.

Their retirement works without it.

Their spending works without it.

Their future works without it.

The goal isn't to stop owning Google stock. The goal is to stop needing Google stock.

Be wealthy without Google stock.

Then own it because you want to, not because you need to.

 

Continue Learning

If you're new here, start with the foundation and work outward:

Understanding RSU Compensation at Technology Companies 

RSU Guide for Tech Employees: Start Here 

 

For the tax side of what I covered above:

How Are RSUs Taxed? A Guide for Technology Employees

 

And for the concentration and behavioral risk:

Managing Concentrated Stock Positions for Technology Employees 

 

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