How to Maximize Your Google RSUs and Coordinate Them With Your Other Benefits

By Cecil Staton, CFP® | Arch Financial Planning

Google’s compensation package is legendary—generous salaries, cash bonuses, and, importantly, Google Stock Units (GSUs), the company’s form of restricted stock units (RSUs). For software engineers and other high-income employees, these GSUs represent a substantial part of your total compensation. But many Google employees aren’t fully maximizing the incredible potential of their equity awards. At Arch Financial Planning, we’ve seen firsthand how coordinating GSUs with other benefits, like the Employee Stock Purchase Plan (ESPP) and Mega Backdoor Roth 401(k), can significantly amplify your wealth-building strategy.

Let’s dive into the details, explore actionable strategies, and share a real-world example of how we’ve helped clients maximize their Google benefits.

---

What Are Google RSUs (GSUs)?

A Key Form of Equity Compensation Package

GSUs are Google’s version of restricted stock units—a type of equity compensation that turns into actual Google stock over a specific vesting schedule, typically four years. They are a major component of your total compensation.

Unlike stock options, RSUs always have value as long as the stock has a positive price. You don’t need to purchase them—they are granted to you and delivered (vested) over time.

The Standard GSU Vesting Schedule

• First year: 33%
• Second year: 33%
• Third year: 22%
• Fourth year: 12%

This asymmetrical schedule front-loads your compensation—giving you more value early on, in case you don’t stay for the full four years. If you stay beyond the four-year period, you may also earn refresher grants each calendar year.

Actionable Tip: Understand your grant agreement and set calendar reminders for each vesting date. Use a spreadsheet or financial dashboard to track your GSUs by grant date, number of shares, and vesting date.

---

How Are RSUs Taxed?

Two Taxable Events

There are two key times when taxes come into play with RSUs: when they vest and when you sell them.

1. Taxation at Vesting

When your RSUs vest, the fair market value of the shares on that day is treated as ordinary income. This amount will show up on your Form W-2 and is subject to federal income tax, state income tax (depending on your location), Social Security, and Medicare.

Google typically withholds taxes by selling a portion of your shares or through payroll withholding, but this may not be enough to cover your total tax bill if you’re in a higher tax bracket.

2. Taxation at Sale

Once your RSUs vest, you own the shares and can sell them whenever you choose. When you do, the gain or loss compared to your vesting price (cost basis) is treated as a capital gain or loss:

• If held for more than one year, it’s a long-term capital gain (typically taxed at 15% or 20%).
• If held less than one year, it’s a short-term capital gain (taxed as ordinary income).

Actionable Tips:

• Use a tax projection tool to estimate your total income and effective tax rate.
• Consider selling RSUs as soon as they vest to simplify taxes and reduce concentration risk.
• Track cost basis and holding periods for all vested shares.
• Use tax-advantaged accounts or charitable donations to offset taxable gains when appropriate.

Tax Implications of Google RSUs

What Happens When Your GSUs Vest?

When your GSUs vest, they become taxable income. The fair market value of the shares at the time of vesting is treated as W-2 income. Google will withhold a portion to cover taxes—typically at a flat rate of 22% (or 37% for higher income levels).

Tax Planning Considerations

Your actual tax liability may be higher than what’s withheld—especially if your total income bumps you into a higher marginal tax bracket.

 

You’ll also need to think ahead to when you eventually sell the shares. The difference between the sale price and the vesting price (your cost basis) will be treated as a capital gain or loss.

 

Actionable Tips:

• Review your Form W-2 at year-end to see how much tax was withheld from vested RSUs.
• Consider making estimated quarterly tax payments if you expect a tax shortfall.
• Use a tax projection tool or work with a planner to model your expected total tax liability.
• Keep detailed records of cost basis and vesting dates to accurately report gains and losses at sale.

---

Use RSUs as a Bonus to Fund Other Goals

Think of your RSUs as a recurring bonus in addition to your base salary—one that you can use to fund other high-priority financial goals.

RSUs as Cash Flow

Instead of letting stock grants accumulate and hoping the stock price continues to rise, many Google employees benefit from systematically selling shares as they vest and using the cash strategically.

Common Goals to Fund With RSUs

• Emergency fund replenishment
• Maximizing ESPP contributions
• Maxing out Mega Backdoor Roth contributions
• Funding IRAs or 529 plans
• Paying off high-interest debt
• Saving for a down payment

Actionable Tip: Set up a rules-based selling strategy where a percentage of your RSUs are sold immediately upon vesting and directed toward one or more savings goals.

---

How to Coordinate RSUs With Other Google Benefits

GSUs are just one part of the larger puzzle. To fully maximize your Google compensation, you need to coordinate your equity with other benefits.

1. Employee Stock Purchase Plan (ESPP)

Google offers a generous ESPP that lets you buy company stock at a 15% discount every six months.

How to Make the Most of ESPP

Actionable Tips:

• Sell immediately after the purchase to lock in the guaranteed 15% discount.
• Use proceeds to boost savings, pay down debt, or fund tax-advantaged accounts.
• Avoid overconcentration in Google stock by not holding ESPP shares long-term.

2. Mega Backdoor Roth 401(k)

Google’s 401(k) plan allows for after-tax contributions that can be converted to a Roth IRA or Roth 401(k)—known as the Mega Backdoor Roth strategy.

Why It’s a Game-Changer

You can potentially contribute up to $69,000 in 2024 (combined total across all 401(k) buckets), and convert a portion of it to Roth.

Actionable Tips:

• Use RSU or ESPP proceeds to fund after-tax contributions.
• Work with your advisor to ensure timely in-plan Roth conversions.
• Max out pre-tax and Roth employee deferrals before pursuing the Mega Backdoor.

---

A Real-World Success Story: Maximizing Google’s Equity Ecosystem

Meet Sara and Raj

Sara is a senior software engineer and Raj is a product lead at Google. When they came to us, they had:

• Multiple RSU grants
• ESPP shares held from prior purchases
• Confusion around their 401(k) options
• A looming large tax bill due to under-withholding on their equity compensation

Our Planning Strategy

1. Built a tax forecast using last year’s W-2 and RSU vesting schedule
2. Automated RSU sales at vesting to diversify their holdings
3. Implemented a tax withholding buffer to avoid future shortfalls
4. Sold ESPP shares immediately for consistent cash flow
5. Maxed out Mega Backdoor Roth contributions using their equity sale proceeds
6. Created a charitable giving plan using appreciated stock to lower their taxable income

The Outcome

Sara and Raj avoided a large surprise tax bill, saved $100,000 into Roth accounts, and now have a diversified investment portfolio instead of being overexposed to Alphabet stock. They also feel more confident about buying a home next year.

---

Key Takeaways for Google Employees

What You Should Do Now

1. Track every grant: Know your vesting schedule and plan accordingly
2. Avoid tax surprises: Work with a financial planner to model tax impacts
3. Sell vested GSUs strategically: Don’t let company stock dominate your portfolio
4. Leverage ESPP smartly: Lock in the discount, don’t gamble
5. Use Mega Backdoor Roth: Supercharge your retirement savings
6. Integrate everything: View your compensation holistically, not in silos
7. Treat RSUs like cash flow: Direct the proceeds to long-term savings goals

---

Let’s Build a Strategy That Works for You

At Arch Financial Planning, we specialize in helping Google employees optimize their complex compensation packages. From GSUs to ESPP, Mega Backdoor Roth to charitable giving, we help high-income professionals make the most of every opportunity.

If you’re ready to maximize your Google benefits and take control of your financial future, schedule your introductory call today.

Let’s turn your Google equity into long-term financial freedom.