Yes, Ruda Financial is a fiduciary, which means I am legally and ethically obligated to act in your best interest at all times. I do not sell financial products or accept commissions or referral fees.

What makes you different from other financial advisors?

Unlike many advisors who focus primarily on investments, I take an integrated approach that starts with tax planning. Drawing on my experience as an IRS economist, I help clients make decisions that minimize lifetime taxes while aligning their investments, retirement planning, and financial strategy. I'm also fee-only, meaning I don't earn commissions or sell products.

What services do you offer?

I offer two main services: ongoing financial planning and investment management starting at $6,500 per year, or project-based planning for $2,500. Both focus on tax-efficient strategies for professionals and business owners in the DC area.

What types of clients do you serve?

I work with professionals and business owners in Silver Spring, Bethesda, and throughout the Washington DC metro area. Typical clients include high-income professionals navigating complex tax situations, business owners planning for retirement, and pre-retirees optimizing their strategies before RMDs begin. There are no asset minimums - what matters most is that we're a good fit in terms of goals, values, and approach.

Do you work with clients outside Maryland?

Yes. While I'm based in Silver Spring, MD, and many of my clients are in the Washington, DC area, I work virtually with clients across the country.

What is your investment philosophy?

I focus on what you can control: costs, taxes, diversification, and discipline. I build portfolios using low-cost index funds and ETFs from Vanguard, Schwab, and Fidelity. Tax efficiency is central to my approach - minimizing the tax drag on your returns over time.

Who will hold custody of my assets?

Your assets are always held in your name at a third-party custodian. I recommend that my investment management clients custody at Charles Schwab & Co., an independent, SEC-registered broker-dealer with whom Ruda Financial is unaffiliated.

For ongoing financial planning and investment management, there is a flat quarterly fee that starts at $1,650, which equals $6,500 per year. For project-based financial planning, there is a one-time fee of $2,500.

What are the ongoing costs beyond your fees?

All mutual funds, even low-cost index funds, have a small yearly fee called an expense ratio. In the portfolios I typically recommend, these expenses are very low, usually under 0.05% per year, or $500 per $1 million invested.

Can I cancel or pause services if needed?

For project-based planning, there's no ongoing commitment. For ongoing clients, services are billed quarterly with 30 days' notice required for termination. There are no long-term contracts or penalties for ending the relationship.

Do you offer a free initial consultation?

Yes. I offer a complimentary introductory call to learn more about your goals and see if we're a good fit.

How often, and how, will we meet?

We'll meet regularly throughout the year, especially during the first year when we'll develop your financial plan over a series of structured meetings. In subsequent years, we typically have quarterly in-depth check-ins, plus additional meetings as needed. Most clients prefer virtual meetings for convenience and flexibility, but I'm also happy to meet in person in Maryland, Washington, DC, or Northern Virginia.

What if I already have a financial advisor?

Some clients come to me for a second opinion or project-based planning on a specific decision. Others transition to working with me ongoing after comparing our approaches. I'm happy to discuss your current advisory relationship and help you determine whether a change makes sense for you.

When to Sell RSUs, ISOs, and ESPPs: A Tax Guide

Tax PlanningInvestment Management

Jan 28

Written By Alex Ruda

You just received $80,000 in RSUs from your employer. Should you sell immediately or hold? The tax answer isn't what most people think.

The DC metro area has grown significantly as a hub for stock compensation over the past decade. Amazon's presence, the concentration of defense contractors in Northern Virginia, and the expansion of companies like Compass into the residential real estate space mean that stock compensation is no longer a nice perk. It's a core part of how talented professionals in this region get paid.

For professionals in this landscape, whether you work at Amazon, Lockheed Martin, General Dynamics, SAIC, Compass, or elsewhere, the problem is real: most people treat RSUs (restricted stock units), ISOs (incentive stock options), and ESPPs (employee stock purchase plans) as interchangeable. They're not. The tax treatment differs enough to create a 10 to 20 percent difference in your after-tax proceeds. For someone working with $80,000 to $500,000 in annual stock comp, that's real money.

Add the complexity of earning over $200,000 in the DC area, and you're managing multiple income sources, state and local tax exposure, and coordination challenges with your spouse's income. It's easy to make costly mistakes or over-optimize for taxes at the expense of actual diversification.

This guide breaks down the tax treatment of RSUs, ISOs, and ESPPs, when to actually make moves, and how to think about stock compensation within your broader financial plan.

Restricted Stock Units (RSUs): Taxed as Ordinary Income

An RSU works like this: your employer grants you units that vest over time (typically three to four years). When they vest, they convert to actual shares and you have immediate tax liability on the full value.

This is critical: you owe income tax on the vesting date, regardless of whether you sell. The IRS treats vested RSUs as W-2 wages. Your employer typically withholds taxes at vesting (usually 37-40 percent), but you're responsible for any shortfall at tax time.

For a professional at General Dynamics or Amazon receiving $80,000 in RSUs vesting over four years, you'd have roughly $20,000 vesting annually. At a 35 percent combined rate, that's $7,000 in taxes per vesting event.

The sell-at-vest versus hold decision

Many people hold vested RSUs hoping for appreciation, thinking they'll save on taxes. That's a mistake. You already owe the taxes. Holding just exposes you to concentration risk.

The right question is: would you buy this stock with your own after-tax money? For most professionals earning over $200,000, the answer is no. Sell at or shortly after vesting, let your employer withhold, and redeploy into a diversified portfolio. Rare exceptions exist (private company pre-IPO situations), but for most, this is straightforward.

Incentive Stock Options (ISOs): Complex but Powerful

An ISO grant has no immediate tax. It's just the right to buy company stock at a fixed strike price. The complexity starts at exercise.

When you exercise an ISO, the tax treatment depends on holding periods: two years from grant, one year from exercise. If you meet both, it's a qualifying disposition and gains are taxed as long-term capital gains (15-20 percent). If you sell before meeting those periods, the spread between strike price and sale price is ordinary income.

The AMT trap

The dangerous part: when you exercise, the IRS treats the spread between strike and fair market value as income for alternative minimum tax (AMT) purposes. This is phantom income. You could owe significant AMT without any cash in hand. If you exercise $500,000 in ISOs with a $100 strike when stock trades at $200, that $100,000 spread is AMT income. You might owe $30,000 or more in AMT while still owning the stock.

Strategic exercise timing

Time exercises when you can absorb the AMT impact, or before a liquidity event (IPO, acquisition) when you know you'll have cash. More commonly, coordinate with other tax planning to manage your overall income and tax bracket.

For someone at Lockheed Martin or SAIC with meaningful ISO grants, the approach is: exercise strategically, hold for qualifying periods if possible, and get professional guidance if the grant is substantial ($100,000+).

Employee Stock Purchase Plans (ESPPs): The Underrated Benefit

An ESPP lets you contribute paycheck deductions over a period (typically six months) and buy company stock at a 15 percent discount. Sometimes it includes a lookback provision allowing you to buy at a discount to the price from six months ago.

Contributing $10,000 with a 15 percent discount means you're buying $11,765 worth of stock for $10,000. That's $1,765 in immediate gain before the stock moves.

The tax treatment depends on holding periods. If you hold at least two years from offering start and one year from purchase (qualifying disposition), you pay ordinary income tax only on the discount; appreciation is long-term capital gains. If you sell earlier (disqualifying disposition), the entire discount is ordinary income.

Always participate

The 15 percent discount is free money. Even after taxes at a 35 percent rate, you net roughly 11 percent on your contribution with zero investment risk. Sell immediately after purchase. You've captured the discount gain, and holding just adds concentration risk.

Common Mistakes to Avoid

Holding RSUs and ESPPs too long for tax optimization

The gain is already taxed when the RSU vests. Holding afterward doesn't save taxes; it exposes you to unnecessary risk. A 20 percent stock decline wipes out years of diversification discipline.

Exercising ISOs without understanding AMT impact

Large exercises in a single year create phantom income triggering AMT. Calculate your exposure before exercising and ensure you can absorb that liability.

Not coordinating stock comp with your spouse's income

If both spouses receive stock compensation or significant bonuses, large vests can push your household into higher brackets. Coordinate timing to minimize tax.

Treating company stock as different

There's psychological bias toward holding company stock, but from a portfolio perspective it's just a concentrated position. Apply the same risk principles you would to any concentration.

Coordinating Stock Compensation with Your Overall Tax Strategy

Stock compensation doesn't exist in isolation. It's part of a larger picture including salary, bonuses, spouse's income, and investments.

If you receive significant RSU vests annually, spread sales across tax years. Selling 50 percent at vesting and 50 percent in January spreads income and potentially avoids higher brackets. For someone receiving $100,000 in annual RSU vests, strategic spreading can save $2,000 to $5,000 per year.

After diversifying, asset location matters. Bonds and cash belong in taxable accounts; growth stocks and REITs in tax-advantaged accounts. Don't optimize taxes at the cost of diversification. A five-year delay to save $5,000 is terrible if company stock declines 30 percent.

For professionals with meaningful stock comp, coordination is where advisors add real value. You're balancing income timing, retirement contributions, and portfolio construction simultaneously.

When to Work with a Financial Advisor

Stock compensation becomes worth advisory help when complexity crosses a threshold. If you're receiving $200,000 or more in annual stock comp, or multiple types of compensation, coordination decisions are complex enough that a few hours with an advisor easily pays for itself.

The bigger value is portfolio construction around your concentrated position. You have significant wealth in company stock, and the rest of your portfolio needs intentional design around that constraint. This means deliberate allocation, diversification, and tax efficiency across your entire portfolio.

An advisor who understands both tax mechanics and financial planning can help you think through not just when to sell, but where proceeds go and how to build a portfolio that makes sense given your company stock exposure.

The Bottom Line

You received $80,000 in RSUs. Now you know the answer: sell at vesting, manage the taxes you already owe, and redeploy the proceeds into a diversified portfolio that works for your whole financial life. The mechanics vary by vehicle. ISOs require strategic timing, and ESPPs reward consistent participation. But the principle is consistent. Stock compensation is valuable only when it's part of a coherent plan.

Learn More

For a comprehensive overview of the broader tax planning landscape for Maryland high earners, see The Maryland High Earner's Tax Playbook for 2026.

For additional guidance on managing concentrated positions, visit our Investment Management page.

For integrated tax planning strategies across your full financial picture, explore our Tax Planning services.

Ready to optimize your stock compensation strategy?

If you're receiving stock compensation and want to minimize taxes while managing concentration risk, schedule a free introductory call to discuss strategies tailored to your situation.

Stock CompensationRSUsISOsESPPsEquity Compensation

Alex Ruda