RSA Stock vs RSUs: How Restricted Stock Awards Differ and When to File an 83(b)

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.

RSA stock (a restricted stock award) is real company stock issued to you on the grant date, but you can lose it if you leave before it vests. A restricted stock unit (RSU) is only a promise to deliver shares later. That one difference drives everything else: an RSA lets you file an 83(b) election and start your capital gains clock at grant, while an RSU is always taxed as wages when the shares are delivered.

Most large public employers in the Bay Area and Seattle, such as Apple and Amazon, pay equity in RSUs. RSAs show up mainly when one spouse joins an early-stage startup or a spinout, or is an executive or director at a company that still grants restricted stock. For a household already earning $750,000 or more, the 83(b) decision on an RSA grant can move six figures of tax, in either direction, so it is worth understanding before the 30-day window closes.

RSA vs RSU: the differences that change your tax bill

The RSU rule comes from Treasury regulations: an unfunded, unsecured promise to pay in the future is not “property” under Section 83 (Treas. Reg. §1.83-3(e)). Because there is no property until shares are delivered, there is nothing to make an 83(b) election on. If anyone tells you to “file an 83(b) for your RSUs”, they are mixing up the two awards. For the RSU side in detail, see how RSU income is calculated and how RSUs compare with common stock.

How RSA stock is taxed with and without an 83(b) election

Without an election. Each tranche is taxed as compensation when it vests: its fair market value minus any amount you paid is ordinary income, and your holding period for capital gains starts at vesting (IRS Publication 525, Restricted Property). For an employee this is wage income on your W-2, so it carries Medicare tax and, in California, SDI. Dividends paid on unvested shares are also treated as compensation.

With an 83(b) election. You choose to include the value at grant, minus what you paid, in income for the year of transfer. Later growth is not compensation when the shares vest. Your basis is what you paid plus what you reported, and your holding period starts at transfer (Treas. Reg. §1.83-4(a)). Dividends after the election are ordinary dividends.

Three rules from Publication 525 shape the decision:

• The written statement (or Form 15620) must be filed with the IRS no later than 30 days after the shares are transferred. Pub 525 describes no extension of that window.
• You cannot revoke the election without IRS consent, which is given only for a mistake of fact about the transaction.
• If you later forfeit the shares, your loss is only what you paid for them minus anything you got back. The tax you paid on the 83(b) income is not refunded or deductible.

One special case: if you buy the shares at full fair market value, the 83(b) income is $0. The election then costs nothing in tax and starts your holding period, which is why early-stage founders and employees who buy their shares almost always file it. The same logic applies to early-exercised stock options. Our guide to drafting the 83(b) election letter walks through the statement itself.

Worked example: a $950,000 household weighing an 83(b)

Assumptions (all illustrative): a married couple filing jointly with $950,000 of W-2 income. One spouse earns RSUs at a large public company. The other joins a Series A biotech startup and receives an RSA of 100,000 shares at no cost, vesting 25% a year over four years. Fair market value is $0.40 per share at grant ($40,000 total). We assume the share value is $2, $5, $8 and $10 at the four vest dates and that all shares are sold at $10, more than a year after the last vest. Both spouses earn above the Social Security wage base ($184,500 for 2026), so no Social Security tax is added on the margin.

Marginal rates used for 2026: 37% federal, 1.45% Medicare plus 0.9% Additional Medicare Tax on wages; 20% federal long-term capital gains plus 3.8% Net Investment Income Tax. For California we apply 13.3% (the top rate, using 2025 schedules since 2026 schedules are not yet published) to wages and gains alike, plus 1.3% SDI on wages. For Washington we add the 0.58% WA Cares premium on wages and the 7% capital gains tax above the $278,000 standard deduction (the latest published amount, for 2025).

In this scenario the 83(b) election lowers total tax by about $98,600 for the California family and about $53,400 for the Washington family. The gap is smaller in Washington for a reason most articles miss: Washington does not tax wages in 2026, but it does tax long-term capital gains, so converting wage income into capital gain moves part of the income into a state tax that would not otherwise apply. California has no lower rate for capital gains (FTB), so there the savings come from the federal rate gap, from Medicare and SDI no longer applying to the growth, and from a much smaller amount being taxed as income at all.

Two simplifications to note. Using 13.3% on every California dollar overstates the rate: on the 2025 joint schedule, income from $891,542 to $1,485,906 is taxed at 11.3%, plus the 1% Behavioral Health Services Tax only on taxable income over $1,000,000. With actual brackets, selling all the shares in one year pushes more of the 83(b) gain into the top rates, so the California saving would be somewhat smaller than shown, though the direction does not change. We also ignore AMT and the timing value of paying $21,580 now rather than larger amounts later. Washington families should also watch the new 9.9% income tax on AGI over $1,000,000 starting January 1, 2028 (WA DOR); how it will interact with the capital gains tax is still pending guidance.

When the 83(b) election backfires

The example assumes the stock goes up and the spouse stays. Suppose instead the spouse leaves the startup ten months after the grant, before the first tranche vests, and all 100,000 shares are forfeited. With the 83(b), the California family reported $40,000 of income at grant and paid about $21,580 of tax on it (at the rates above). None of that comes back: Publication 525 limits the loss on forfeited shares to what you paid for them minus anything you received on the forfeiture, and they paid nothing. Without the election, they would have owed nothing, because no shares ever vested. The election also backfires if the share value falls below the $0.40 grant value: the family prepaid tax at wage rates on value that never materialized, and any later loss on shares they still hold is a capital loss, not a refund of that tax.

So the real decision is a bet with known downside:

1. What does the election cost today? Grant value minus what you paid, times your marginal rate. If you bought at full value, the cost is $0 and the election is usually straightforward.
2. How likely is meaningful growth before vesting? A low 409A value at a seed or Series A company with a clear plan makes the trade more attractive than a grant at a late-stage valuation.
3. How likely are you to stay through vesting? Leaving early forfeits unvested shares, and the 83(b) tax on them is lost.
4. Can you pay the tax in cash? There are no shares to sell to cover it. The money comes from savings, not from the grant.
5. Which state will you live in when you sell? A move between California and Washington changes which column of the table above applies.

Common mistakes with RSAs and RSUs

• Missing the 30-day window. The clock runs from the transfer date, not from when the paperwork reaches you. Mail the statement by certified mail and keep proof of the date.
• Trusting withholding at vest. Whether it is an RSA tranche without 83(b) or an RSU vest, employers often withhold federal tax at the 22% optional flat rate (37% only on supplemental wages over $1,000,000 in the year). At a 35% or 37% bracket that usually leaves a balance due. See withhold to cover vs sell to cover.
• Assuming RSAs are always better. At a public company with a high share price, a large RSA grant plus an 83(b) means a large tax bill today on stock you may forfeit. The election is most useful when value at grant is low.
• Letting startup stock become the family’s biggest asset by default. A successful RSA can quickly outgrow the rest of the balance sheet. Plan the sale and diversification path, ideally while the household still has two incomes. Our investment risk management work starts there.

What to write down for your kids

An 83(b) election is one of the few money decisions where the reasoning matters as much as the result. Write a one-page Decision Memo: the grant terms, the value at grant, why you did or did not file, what you were betting on, and what you would do differently. Store it with the copy of the election you mailed. Years later, whether the stock soared or went to zero, your children can see how you weighed a real risk, not only the outcome. As Kevin Luu puts it: “Your kids don’t need to inherit your portfolio. They need to inherit your decision-making process.”

Frequently asked questions

Is RSA stock the same as restricted stock?

Yes. “Restricted stock award” and “restricted stock” describe the same thing: shares issued to you now that you must give back, or sell back at a fixed price, if you leave before vesting. Because they are actual shares from day one, Section 83 applies at transfer, which is why the 83(b) election is available. RSUs are different because no shares exist for you until delivery.

Can I make an 83(b) election on RSUs at a private company?

No. RSUs at private companies are usually “double-trigger”: they need both time vesting and a liquidity event before shares are delivered. Until delivery, there is no property for Section 83 to apply to, so an 83(b) election has nothing to attach to. Our guide to RSUs at private companies covers how those grants are taxed.

Do I owe tax on RSA dividends before vesting?

Yes. Without an 83(b) election, dividends on unvested restricted stock are treated as compensation and should appear on your W-2, according to IRS Publication 525. If you filed an 83(b), those dividends are ordinary dividends reported on Form 1099-DIV, which can qualify for lower federal rates if the usual holding rules are met.

Your next step

If you or your spouse has an RSA grant with a transfer date in the last 30 days, check the grant value, what you paid and the date now, then decide on the 83(b) before the deadline. If you would like a second set of eyes on the numbers alongside your RSUs and the rest of your tax picture, our Tax & Wealth Assessment covers equity decisions like this one. This article is general education, and the right move depends on your family’s full picture.

Written by

Kevin Luu

Co-Founder and Chief Learning Officer, Bright Advisers

Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.

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