Restricted stock units (RSUs) and restricted stock awards (RSAs) both reward employees with company stock, but they are granted, vested, and taxed differently. This guide covers the key differences, including the 83(b) election available for RSAs, and what to weigh when deciding what to do with either.
Key Takeaways
- RSAs are granted upfront and make you a shareholder immediately (subject to restrictions); RSUs are not delivered until vesting is complete.
- RSAs qualify for an 83(b) election, which can reduce future taxes; RSUs do not qualify.
- RSA taxation begins at grant if no 83(b) election is made; RSU taxation begins at vesting.
- Unvested RSA shares are typically subject to company repurchase if you leave; unvested RSU shares are simply forfeited.
District Capital Management is a fee-only, fiduciary financial planning firm based in Washington, DC, founded in 2013 by Alvin Carlos, CFP®, CFA. We work with clients across the DMV area and nationwide who hold RSUs or RSAs as part of their compensation.
How Does Restricted Stock Work?
Restricted stock is “restricted” because it still has to be earned after issuance, usually through a vesting schedule that rewards you for staying with the company. It is commonly offered by younger companies that cannot yet afford high cash salaries. There are two main types: restricted stock awards (RSAs) and restricted stock units (RSUs).
What Are Restricted Stock Awards (RSAs)?
An RSA is stock granted to you, typically when you join a company, that makes you an immediate shareholder with voting rights, subject to a vesting schedule. Depending on the grant, you may need to pay for the shares at grant (at fair market value, at a discount, or at no cost), even though restrictions like vesting still apply afterward. The advantages are immediate shareholder status and voting rights at grant, plus eligibility for the 83(b) election, which can reduce future taxes. The main drawback is that an RSA may require an upfront payment to buy the shares.
What Are Restricted Stock Units (RSUs)?
An RSU is compensation granted as company stock, delivered only once vesting is complete, at no cost to you. You have no ownership or voting rights until vesting requirements, often a minimum tenure or a performance milestone, are met. The advantages are that no purchase is required and the structure is simple and low-maintenance. The drawbacks are no dividends or voting rights before vesting, and no tangible value until vesting is complete. For maximizing Amazon RSUs specifically, see our Amazon RSU strategies guide.
What Is the Difference Between RSAs and RSUs?
RSAs give you shares at grant, subject to restrictions, while RSUs are a promise of shares that is not delivered until vesting is complete. The practical differences fall into four areas, summarized below.
Verdict: RSAs put stock (and an 83(b) opportunity) in your hands at grant but may require payment and repurchase exposure; RSUs are simpler and cost nothing but arrive only at vesting.
| Feature | Restricted stock awards (RSAs) | Restricted stock units (RSUs) |
|---|---|---|
| Taxes | Taxed as ordinary income on the grant-to-vest gain (unless an 83(b) election is made), then capital gains on vest-to-sale gain | Taxed once, as ordinary income, when shares are delivered at vesting |
| Vesting and ownership | You own shares from grant, but the company can repurchase unvested shares if you leave early | You receive no shares until vesting is complete |
| 83(b) election | Eligible; must be filed with the IRS within 30 days of grant | Not eligible |
| Settlement, dividends, voting | Settled in stock; generally dividends and voting rights from grant | Settled in stock or cash; generally no dividends or voting until vesting |
| If you leave before vesting | Unvested shares typically subject to company repurchase | Unvested shares simply forfeited |
How Does an 83(b) Tax Election for RSAs Work?
An 83(b) election lets an RSA holder pay ordinary income tax upfront, based on the value of the stock at grant, rather than waiting until vesting. Any gain after that point is taxed as a long-term capital gain when sold, assuming the holding-period requirement is met. The election is irrevocable and must be filed with the IRS within 30 days of accepting the grant. The single most common RSA mistake we see is missing that 30-day window, because it cannot be undone once it passes.
Consider Chloe, a hypothetical employee who accepts an award of 100 RSA shares for $0 per share when the stock trades at $40 per share. (Chloe is a hypothetical client used for illustration.)
- Without the election: Chloe’s shares vest four years later at $60 per share, and she owes ordinary income tax on $6,000 (100 shares times $60) at vesting. If she later sells at $70 per share, she has a $1,000 capital gain (($70 minus $60) times 100).
- With the election: Chloe pays ordinary income tax within 30 days of grant on $4,000 (100 shares times $40, the value at grant). No further tax is due at vesting. If she later sells at $70 per share, she has a $3,000 capital gain (($70 minus $40) times 100), taxed at the more favorable long-term rate, assuming she meets the holding period.
The tradeoff: the election can lower total tax if the stock rises, but Chloe pays tax upfront on shares she has not yet vested, and that upfront tax is not refunded if she leaves before vesting or the stock falls.
What Should I Do With My RSU or RSA?
Start by confirming which type of grant you have, then review the vesting schedule and any additional requirements. For an RSA, decide whether to accept the grant and whether to make the 83(b) election. For an RSU, decide whether to hold or sell as shares vest. A certified financial planner can help you weigh both decisions as part of a broader plan.
Which Type of Restricted Stock Is Right for You?
The right choice depends on your situation: your ability to make an upfront tax payment via the 83(b) election, your risk tolerance for holding an early-stage company’s stock, and your broader financial plan. If your compensation includes stock options rather than restricted stock, see our full RSUs vs. stock options comparison for how that decision differs.
At District Capital Management, we work with clients who hold RSUs or RSAs. If you want a comprehensive financial plan with RSU or RSA recommendations, schedule a free discovery call with one of our financial advisors today.
Frequently Asked Questions
Neither is automatically better. It depends on your income, your vesting schedule, and whether an 83(b) election is available for your RSA grant. Because RSUs and RSAs are taxed differently, a financial planner can help determine which fits your situation.
With RSAs, you typically become a shareholder at grant, subject to restrictions. With RSUs, you do not receive shares until they vest, so ownership and voting rights come later.
Unvested RSUs are generally forfeited, while unvested RSAs may be subject to company repurchase. Always review your specific grant agreement.
It depends on your company’s policies. Some allow immediate sale; others impose blackout periods or require approval. Selling decisions should also account for taxes and your broader plan.
Both carry risk, since their value depends on the employer’s stock price. RSAs may require an upfront payment, adding risk if the stock falls, while RSUs require no purchase but can fluctuate before vesting
RSUs and RSAs are both restricted stock, delivered as actual shares; stock options are the right to buy shares at a fixed price and can expire worthless. See our full RSUs vs. stock options comparison.
Last Updated: August 2026
Alvin Carlos, CFP®, CFA is a fee-only financial planner, in Washington, D.C. He has a Master’s degree in International Relations from SAIS-Johns Hopkins. Alvin is the founder of District Capital, a financial planning firm designed to help professionals in their 30s and 40s maximize their money and retire by 55, through holistic financial planning and research-driven investing. Schedule a free discovery call today.
