What Happens When Your RSUs Vest During a Trading Blackout?

January 22, 2026 | By Jessica Goedtel, CFP®

One of the first things I look at when working with a new tech employee is when their RSUs or restricted stock vests and if/when they are subject to blackouts. In a perfect world, the stock vests within trading windows, which makes everyone’s life easier.

But occasionally there are companies that, for whatever reason, decide to have stock vests in the middle of blackout periods. I’m not going to lie; this is a big pain in the butt. But with some careful planning and strategy, you can mitigate some of the issues.

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What are blackouts and why am I subject to them?

Blackouts are periods where everyone at a company is barred from trading in the company’s stock. These are usually in the weeks leading up to earnings releases, although they can also be around big company announcements.

Blackouts are meant to stop employees from trading on non-public company information. Theoretically, that information will get released during the earnings call and the employees don’t have special information about the company that the general public doesn’t know. It’s important because that information could have an impact on the stock price.

Regardless of blackout periods, if you know non-public material information about the company, you are not allowed to trade in your company’s stock until that information is publicly available. If you do, that’s insider trading. You would need to discuss any trades with your legal or compliance team.

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The Basics of RSU/Restricted Stock Vesting

Let’s have a quick primer on how RSU and restricted stock vests work. On each vest date, you’ll receive company stock. Since you’re receiving that stock, the IRS says you’ve received compensation, and you will get taxed on the value of the stock on the vest date.

Some taxes will get withheld, but in many cases for high earners, it’s not enough. On stock vests, Federal taxes get withheld at a flat rate of 22% (and 37% for any earnings over $1 million), along with state, Medicare, and Social Security taxes. Let’s look at a quick example of how this works:

Alexa works at F Company. Her shares vest on June 15th, and the stock is valued at $100 a share on that date. She has 250 shares vesting.

Total Value of Vest: 250 shares x $100 = $25,000

Alexa will get taxed on $25,000 on that date. Her total compensation for the year so far has been $200k, so Federal withholding will be 22%.

$25,000 x 22% = $5,500 withheld for Federal taxes

But Alexa is a high-earner, and her Federal tax rate is 35%. So even though taxes will get withheld from this transaction, it’s not enough:

$25,000 x (35%-22% = 13%) = $3,250 shortfall

Multiply that by several vests throughout the year, and Alexa’s going to have a big tax bill when she goes to file. And here’s one of the biggest reasons why shares vesting in a blackout can hurt: you’ve got a tax liability, but limited options for selling stock to cover that liability.

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What happens if my stock vests during a blackout?

Regardless of whether you are in a blackout or not, those shares are going to vest. Let’s keep using Alexa as an example and assume her 250 shares vested in a blackout. She’s getting taxed on those shares, and as we saw, she’s got a $3,250 shortfall.

Let’s say she’s not able to trade until August 1st. In the meantime, F company stock has dropped to $75 a share. Now here are the value of her shares:

250 shares x $75 = $18,750

That’s a whopping $6,250 drop in value. She paid taxes on $25,000, but now her stock is worth a lot less. If she can ride it out and wait for the stock price to recover, it’s not a big deal – at least assuming it does recover. But if she needs to sell stock to cover that shortfall in taxes, she’ll need to sell stock at a loss. Which leads us to another problem: the wash sale.

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Losses & Wash Sales

When you sell stock at a loss, normally you can deduct the losses on your taxes. There are limitations, including a $3,000 cap if you don’t have any gains to offset your losses. The other big limitation is the wash sale. This is where a loss is disallowed if you purchase the stock within 30 days before or after selling the stock at a loss.

You might be thinking, well, I won’t be buying the stock, so I’m all set. Unfortunately, the IRS doesn’t agree with you. They consider a restricted stock/RSU vesting a purchase. So in Alexa’s case, she doesn’t get to write that loss off yet. She’ll get it back eventually – the loss is added to the basis of her acquired stock, but only until she can sell outside of that 30-day window in the future.

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How do I avoid issues?

The easiest way to avoid issues is to set up a 10b5-1 plan. These are plans that allow you to pre-arrange selling company shares. Not everyone has access to these plans, though. It depends on your company and your role within the company. If you don’t have access to one, your options are limited to selling shares withing your trading windows.

Some companies allow you to increase your withholding on your stock vests to an amount higher than 22%. This is a great option if your biggest concern is covering your tax liability. If it’s an option, you’ll likely get email alerts to change your withholding before a stock vest, but you can also check with your HR team to see if it’s available.

If the stock is down from when it vested, you can also set up a limit order when your trading window opens. With a limit order, you set a price target and the stock will sell if and when it hits that target. There’s no guarantee the stock will sell, but this way you aren’t checking the price every five minutes.

Overall, you will want to carefully manage your company holdings. If you have a few bad quarters in a row and can’t sell your stock, you’re quickly going to have an overconcentration. This makes it even more important to sell when the company stock is up.

Need help managing your RSUs as they vest? I help tech workers turn their stock compensation into financial independence. Book an introductory call with me today to learn more.