How much of my net worth should be in my employer's stock?

A common guardrail is no more than 10–20% of investable net worth in any single stock, including unvested equity you are counting on. Above that, one company controls both your paycheck and your portfolio. Selling RSUs at vest and diversifying is the default, not the exception.

Are RSUs taxed twice?

No, though it feels that way. RSUs are taxed as ordinary income at vest on the full market value, and your employer usually withholds shares to cover it. If you hold the shares afterward, only the gain above that vest-date value is taxed again, as a capital gain.

Why is default RSU withholding often not enough?

Employers typically withhold at the 22% supplemental federal rate. If your marginal rate is 32% or higher — common for a dual-income LGBTQ+ household in a high-cost metro — you owe the difference at filing. Estimate the shortfall in the vest quarter and set it aside or make an estimated payment.

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Career & IncomeInvesting

Equity Compensation for LGBTQ+ Professionals

August 24, 2026·7 min read

You open your equity dashboard and see a number that looks like it could change your life. Then you close it, because you are not sure what to do next. That is a very common experience for professionals at startups and public tech companies, especially when compensation is heavy on stock.

For LGBTQ+ professionals, equity compensation often arrives alongside other big decisions: moving to a higher-cost city, planning a family, or catching up on retirement savings. The goal is not to become a day trader. It is to turn the equity into durable wealth without a tax surprise.

RSUs vs. ISOs vs. NSOs

Restricted stock units, or RSUs, are the simplest form of equity. They vest on a schedule and are taxed as ordinary income at vest. You can sell them immediately and diversify, or hold them and accept the market risk of a single company.

Incentive stock options, or ISOs, give you the right to buy shares at a fixed price. The tax treatment can be favorable if you meet certain holding periods, but exercising can trigger the alternative minimum tax. Non-qualified stock options, or NSOs, are taxed at exercise on the bargain element and again at sale as capital gains.

The 83(b) election

An 83(b) election lets you pay tax on the current value of restricted stock early, so future appreciation is taxed at capital gains rates instead of ordinary income. It is usually only worth considering when the current value is low and you expect the company to grow significantly. The deadline is tight, typically 30 days from the grant or exercise.

Diversification rules of thumb

A useful starting point is to keep employer stock under ten to fifteen percent of your total net worth. If it is more than that, a systematic selling plan, a 10b5-1 plan, or an exchange fund can reduce risk without requiring you to time the market. The right approach depends on your tax bracket, whether the company is public or private, and your other goals.

The withholding gap nobody warns you about

Employers withhold on RSU vests at the 22% federal supplemental rate up to $1 million of supplemental wages. If your marginal rate is 32%, 35%, or 37% — routine for two high earners in San Francisco, Seattle, New York, or Los Angeles — the shortfall on a $200,000 vest is $20,000 to $30,000 of tax you have not paid yet. It does not show up until you file, by which point the shares may be worth less than the tax owed. Check the withholding rate on the vest confirmation, and either elect a higher rate where your plan allows it or set the difference aside in the same quarter.

Coordinating two equity packages

When both partners hold equity, the household question is different from the individual one. Two people at the same employer, or at two companies in the same sector, are running one bet twice. Look at combined exposure by industry, not just by ticker, and stagger vest-driven sales across tax years so you are not stacking two large realization events into one return. If one partner's grant is illiquid private stock, treat the liquid partner's shares as the diversification budget for the household.

Equity and family-building timelines

Family building is the most common reason our clients need a specific amount of cash on a specific date. A reciprocal IVF cycle, an adoption placement fee, or a surrogacy escrow deposit does not move because the stock is down that quarter. If a known cost lands in the next 24 months, fund it from vests as they occur and move the proceeds to cash or short-term treasuries rather than holding shares and hoping. The goal for near-term money is certainty, not return.

What to do in the first week of a new grant

Read the grant agreement for the vesting schedule, the post-termination exercise window, and any acceleration on change of control. Record the grant date and strike price. Set a sell-at-vest instruction if your platform supports it. Update the beneficiary designation on the brokerage account — equity accounts are a frequent gap in LGBTQ+ estate plans because they are opened through HR and never revisited.

Equity compensation is one of the fastest ways to build wealth, but it is also one of the fastest ways to end up with a lopsided portfolio. Planning the tax and timing in advance makes the difference.