When you leave a company, your vested RSUs stay yours and your unvested RSUs are almost always forfeited. That is the whole answer in one line, and it holds whether you resign, get laid off, or move to a competitor. What changes the picture around the edges is the reason for your departure, the exact language of your grant agreement, and whether your employer is public or private. This guide walks through what happens to RSUs when you leave a company, tranche by tranche and tax by tax.
Vested RSUs Are Yours to Keep
Once RSUs vest, they convert into actual shares of company stock that belong to you. You have the same rights as any other shareholder: sell, hold, transfer to another brokerage, vote, and collect dividends if the company pays them. Your former employer cannot claw those shares back simply because you left, regardless of whether the departure was your idea or theirs.
There is a small timing wrinkle worth knowing. Vesting is when you earn the legal right to the shares. Settlement is when they actually land in your brokerage account, which can happen a few business days later. Your ownership right is fixed at vesting, so a final tranche that vests on your last day still belongs to you even if it settles after you have handed in your badge. The company withholds taxes on that final vesting event the same way it would for any other.
Unvested RSUs Are Forfeited
Anything still on the vesting schedule when your employment ends is canceled. Your grant agreement almost certainly contains a forfeiture clause requiring you to surrender any units that have not yet vested, and the units return to the company’s equity pool. You receive no cash payout, no partial credit, and no ability to negotiate after the fact unless a severance agreement says otherwise.
The structure of a typical grant makes this brutal. Most RSU grants follow a four-year vesting schedule with a one-year cliff, meaning nothing vests until your first anniversary. After the cliff, shares usually vest monthly or quarterly over the remaining three years. Leaving one day before a vesting date means losing that entire tranche, even after 364 days of service toward it.
Courts have consistently upheld these forfeiture provisions as valid contractual terms rather than improper wage deductions. Unvested RSUs are a promise of future compensation tied to continued service, not earned property, so the plain language of the grant agreement controls.
When Unvested RSUs Can Survive Your Departure
The default rule assumes a voluntary resignation. Several other kinds of departures can preserve some or all of your unvested equity.
Layoffs and Termination Without Cause
Some grant agreements and severance packages include accelerated vesting when the company terminates you without cause. Single-trigger acceleration vests unvested RSUs immediately on the termination event itself. Double-trigger acceleration requires two events, typically a change of control such as a merger or acquisition followed by your termination; if only one trigger fires, the unvested units either stay on their original schedule or are forfeited if you leave.
Even without a formal acceleration clause, a layoff creates negotiating leverage. If you are terminated close to a vesting date, an employment attorney can sometimes negotiate pro-rata vesting of the current tranche as part of a severance package, especially if the timing suggests the employer acted in bad faith to avoid paying out equity.
Retirement, Disability, and Death
Many equity plans carve out special treatment for these departures. Retirement-eligible employees may get accelerated or continued vesting under company-specific formulas; some large employers use a combined age-plus-years-of-service threshold, such as a total of 70, to determine retirement eligibility for equity purposes. Disability and death provisions frequently grant pro-rata vesting based on the portion of the vesting period the employee completed. Terms vary substantially between companies, so read your specific grant agreement and equity incentive plan rather than assuming.
Wrongful Termination
If you successfully prove wrongful termination, lost RSU value can be part of your damages. Courts have awarded millions of dollars for lost equity compensation in breach-of-contract cases. Winning requires establishing that the termination itself violated the terms of your employment agreement or applicable law; the loss of unvested RSUs alone is not enough.
Private Company RSUs Work Differently
RSUs at private companies carry an added risk because there is no public market for the shares. Most private companies use double-trigger vesting that requires both time-based vesting and an exit event, such as an IPO or acquisition, before the units settle into actual shares. Many of these plans also include a “must be present to win” condition: only current employees at the time of the exit event receive their shares.
If you leave a private company before the exit event, you typically lose all of your RSUs, including those that have met the time-based vesting condition, because the second trigger has not occurred. Public-company RSUs, by contrast, convert to tradable stock on a predictable schedule, so leaving after a tranche vests preserves those shares.
Clawbacks Can Reach Even Vested Shares
Vesting is not always the final word. Two kinds of clawback provisions can require you to return value after you have already received shares.
Under SEC rules, publicly traded companies must maintain a policy to recover excess incentive-based compensation from current and former executive officers if the company is required to restate its financial results. Recovery covers compensation received during the three fiscal years before the restatement date and applies regardless of whether the individual was at fault for the accounting error.1Securities and Exchange Commission. Recovery of Erroneously Awarded Compensation – Final Rule Fact Sheet The rule reaches incentive-based compensation broadly, which can include RSUs tied to financial performance metrics or stock price.
Beyond that mandate, many companies write their own forfeiture and clawback language into equity agreements. Common triggers include termination for cause, violation of non-compete or non-solicitation agreements, and breach of confidentiality obligations. Some plans let the company cancel unvested awards, and in some cases claw back the proceeds from already-vested shares, if you violate restrictive covenants after departure. Enforceability varies by state; jurisdictions that disfavor non-compete agreements may refuse to enforce a clawback tied to one.
Taxes on RSUs That Vested Before You Left
Even after you are gone, the tax paperwork from your final year of employment follows you. When RSUs vest and settle, the full fair market value of the shares on the settlement date counts as ordinary income. Federal tax law treats property received in exchange for services as taxable income once it is no longer subject to a substantial risk of forfeiture.2Office of the Law Revision Counsel. 26 USC 83 – Property Transferred in Connection With Performance of Services Your former employer reports that income on the W-2 for the year the shares vested, whether or not you have sold any of them.
To cover the tax bill, most employers automatically sell a portion of your vesting shares through a process called sell-to-cover. If 100 shares vest and your combined withholding rate is 35 percent, roughly 35 are sold and you keep 65. Supplemental income like RSU proceeds is subject to a flat federal withholding rate of 22 percent on amounts up to $1 million and 37 percent above that threshold. State income taxes, Social Security, and Medicare come out on top. Because the flat rate may not match your actual bracket, you could still owe additional tax, or receive a refund, when you file.
Watch your mailbox in January. A W-2 from the former employer will report the RSU income for any tranche that vested during your final year, and any sales will generate a Form 1099-B from your brokerage.3Internal Revenue Service. Instructions for Form 1099-B (2026)
The Cost Basis Trap When You Sell
Once you own the shares, any change in value between the vesting date and the date you sell creates a separate capital gain or loss. Your cost basis is the fair market value on the vesting date, the same figure reported as ordinary income on your W-2. Hold the shares more than a year after vesting and any profit qualifies for long-term capital gains rates; sell sooner and the gain is taxed at ordinary rates.
For 2026, federal long-term capital gains rates are 0 percent, 15 percent, or 20 percent depending on taxable income. Single filers pay 0 percent on gains up to $49,450 in taxable income, 15 percent between $49,451 and $545,500, and 20 percent above that. For married couples filing jointly, the 15 percent bracket runs from $98,901 to $613,700.
The expensive mistake is on the 1099-B itself. IRS rules prevent brokerages from including the full adjusted cost basis for RSU shares, so the form may show a cost basis of zero or leave the field blank, making the entire sale price look like taxable gain. To avoid paying tax twice on income already taxed at vesting, use the adjusted cost basis from the supplemental information form your brokerage provides and report it on Form 8949.
Practical Steps After Your Last Day
Your vested shares remain in the brokerage account your employer set up for the equity plan, typically at Fidelity, E*TRADE, or Schwab. You keep full access after leaving, but update your contact information and swap in a personal email address before your corporate email is deactivated. Moving shares to a different brokerage is possible; expect an outbound transfer fee of somewhere between $0 and $125 at most major firms.
Federal insider trading rules do not expire when your employment ends. If you had access to material nonpublic information, you remain prohibited from trading on it after you leave, and some companies impose post-departure trading restrictions in their insider trading policies. Be cautious about trading immediately after departure if you had access to undisclosed financial results, pending deals, or other sensitive information.
Leaves of Absence Are Not Departures
If you are on leave rather than leaving, your vesting schedule most likely continues. Industry surveys show that over 90 percent of companies do not adjust vesting during statutory or paid leaves, and roughly 83 percent keep vesting on the original timeline even for unpaid non-statutory leaves. Some plans do pause vesting during extended unpaid leaves, so check the grant agreement and leave policy before assuming.
If your employment is terminated during a leave, the standard forfeiture rules apply to any units not yet vested. Protected leave under federal law such as FMLA safeguards your job, not your unvested equity as a separate matter.