The short answer. Vested RSUs are close to cash, and you should usually treat them that way. But unvested RSUs are not cash, they are a bet on your company, and confusing the two is how high earners end up dangerously concentrated in a single stock.
The myth
Restricted stock units are just another form of cash compensation, so there is nothing special to manage.
Why people believe it
Once RSUs vest, they really do behave a lot like a cash bonus. They are taxed as ordinary income at vesting, they show up on your W-2, and you can sell them immediately. So people reasonably conclude that RSUs are cash. The trouble is that this is only half the picture, and the other half is where the risk lives.
What is actually true
There are two very different states. Unvested RSUs are a promise tied to your continued employment and your company’s stock price. They can lose value or disappear if you leave. Vested RSUs are shares you now own outright, taxed already, and free to sell.
The key insight for a high earner is what happens at vesting. When RSUs vest, the value is taxed as ordinary income. Most companies withhold shares to cover taxes, but the default withholding rate on supplemental income is often 22 percent, and a high earner is usually in a much higher bracket. That gap means you can owe more at tax time than was withheld. And if you simply hold every share that vests, you are making an active choice to keep a large, concentrated, undiversified bet on one company.
When the advice may apply
For vested shares, treating them like cash is exactly right. The healthy default is to sell vested RSUs as they vest and redeploy the proceeds into a diversified portfolio, unless you have a specific, considered reason to hold. In that narrow sense, RSUs equal cash is good behavior.
When it can hurt you
Two ways. First, the withholding gap can leave you with a surprise tax bill. Second, and bigger, treating unvested RSUs as guaranteed cash leads people to spend against money that is not certain, and to let vested shares pile up until a huge share of their net worth rides on one employer. If that stock drops, both your job and your savings take the hit at once.
