The restricted stock units are assigned a fair market value when they vest. Upon vesting, they are considered income, and a portion of the shares are withheld to pay income taxes. The employee receives the remaining shares and can sell them at their discretion.
Also to know is, do RSUs count as income?
With RSUs, you are taxed when the shares are delivered, which is almost always at vesting. Your taxable income is the market value of the shares at vesting. You have compensation income subject to federal and employment tax (Social Security and Medicare) and any state and local tax.
How do RSU's work?
Unlike an RSA, no company stock is issued at the time of an RSU grant. After a grant recipient satisfies the vesting requirement, the company distributes shares or the cash equivalent of the number of shares used to value the unit.
Are RSUs good?
RSUs, however, are taxed at the time they are vested, not when you sell. In and of themselves, RSUs are a good, solid equity compensation vehicle. An RSU is a grant valued in terms of company stock, but company stock is not issued at the time of the grant.