Under normal federal income tax rules, an employee receiving a Restricted Stock Award is not taxed at the time of the grant (assuming no election under Section 83 (b) has been made, as discussed below). Instead, the employee is taxed at vesting, when the restrictions lapse.
What are restricted stock awards?
Restricted stock awards (RSA) are a type of equity compensation that grants you company stock with certain restrictions. You’ll own the shares on the date the grant is issued and you satisfy any purchase price requirements, but typically, the shares will still be subject to vesting conditions.
What happens if an employee accepts a restricted stock award?
Once an employee is granted a Restricted Stock Award, the employee must decide whether to accept or decline the grant. If the employee accepts the grant, he may be required to pay the employer a purchase price for the grant. After accepting a grant and providing payment (if applicable) the employee must wait until the grant vests.
