How to Sell RSUs on Fidelity: A Step-by-Step Overview

Restricted Stock Units (RSUs) are a common form of employee compensation, often granted as part of an equity package. Once they vest, you can hold or sell them. If you’re using Fidelity to manage your RSUs, understanding how to navigate the platform is key to efficiently selling your shares.

Selling RSUs on Fidelity requires verifying share availability, selecting an order type, and considering tax implications. A clear process ensures you maximize value while avoiding unexpected issues.

Account Requirements

Before selling RSUs on Fidelity, you need a brokerage account, as RSUs are not automatically held in a standard Fidelity NetBenefits account. If you haven’t linked a brokerage account, you must open one and connect it to your RSU holdings.

Your account must be in good standing, with no restrictions that could prevent a trade. Common issues include pending verification, incomplete documentation, or regulatory holds. Ensuring your account is fully verified with up-to-date personal and tax information helps avoid disruptions. Fidelity may require a W-9 form for U.S. residents or a W-8BEN for non-U.S. persons to determine tax withholding rates.

Review your payment and settlement preferences before selling. Fidelity allows proceeds to be deposited into a linked bank account or reinvested. Setting up electronic funds transfer (EFT) in advance can expedite access to your funds. If you have a margin account, you may have additional flexibility for reinvesting proceeds, though this carries risks.

Checking Vesting and Share Availability

Confirm that your RSUs have vested and are available for trading. Vesting schedules vary by company, with shares becoming available annually, quarterly, or based on performance milestones. Fidelity provides a vesting schedule in your account, detailing when shares become unrestricted.

If a vesting date has passed but shares are not available, administrative delays or employer-imposed trading restrictions may be the cause. Many companies enforce blackout periods, preventing employees from selling shares during earnings announcements or other corporate events. These restrictions are outlined in your company’s insider trading policy and may require pre-clearance before executing a trade.

Your employer may withhold a portion of vested RSUs to cover taxes, reducing the number of shares available for sale. Fidelity’s “Stock Plan Summary” section shows your RSU balance, including vested shares, unvested grants, and pending transactions. If discrepancies arise, reviewing your grant agreements and transaction history can clarify adjustments due to taxes, forfeitures, or corporate actions like stock splits.

Order Options

Once your RSUs are vested and available for sale, selecting the right order type is important. Fidelity offers multiple order types, each affecting execution price and timing.

Market Orders

A market order sells shares immediately at the best available price. This is useful if you want to sell quickly, but the final price may differ from the last quoted price, especially in volatile markets.

For example, if your company’s stock is trading at $50 per share, a market order will execute at the next available bid price, which could be slightly higher or lower. While market orders ensure execution, they do not protect against sudden price drops, which can be a concern if selling a large number of shares.

Limit Orders

A limit order allows you to set the minimum price at which you are willing to sell. The order will only execute if the stock reaches or exceeds your set price.

For instance, if your company’s stock is trading at $48 per share and you place a limit order at $50, the shares will only sell if the price rises to $50 or higher. If the stock remains below that threshold, the order stays open until it expires or is canceled. Fidelity allows you to set expiration conditions, such as “Good Till Canceled” (GTC) or “Day Order,” which expires if not executed by the end of the trading session.

Stop-Limit Orders

A stop-limit order is triggered when the stock reaches a specified stop price, at which point it converts into a limit order. The shares will then only sell at the limit price or better.

For example, if your company’s stock is trading at $55, you might set a stop price at $50 and a limit price at $48. If the stock falls to $50, the order activates, but it will only execute if the price remains at or above $48. If the stock drops below $48 before the order is filled, the sale will not occur. This strategy helps prevent selling at excessively low prices during market downturns but carries the risk of the order not executing if the stock price declines too quickly.

Placing the Transaction

To sell RSUs on Fidelity, log into your brokerage account and navigate to the trading section. Your stock plan holdings will be listed alongside real-time market data. Selecting the correct stock symbol and quantity ensures accuracy, especially if you have multiple grants with different cost bases.

The timing of your sale affects the final proceeds. Market liquidity, bid-ask spreads, and trading volume influence execution speed and price. Monitoring pre-market and after-hours activity can provide insights into potential price movements before placing an order. If the stock is volatile, selling in increments rather than all at once may help reduce the impact of price swings.

After submitting the order, Fidelity generates a confirmation screen summarizing trade details, including estimated proceeds, fees, and settlement timelines. Reviewing this information before finalizing ensures all parameters align with expectations. The settlement period follows the standard T+2 clearing cycle, meaning funds become available two business days after execution.

Tax Withholding Considerations

Selling RSUs has tax implications. Unlike stock options, RSUs are taxed as ordinary income upon vesting, based on the fair market value of the shares at that time. This means that even if you do not sell immediately, you owe taxes on the vested amount.

Fidelity typically withholds a portion of the shares to cover federal, state, and local tax obligations, but this default withholding may not fully cover your actual tax liability, particularly if you are in a higher tax bracket.

The default federal withholding rate for RSUs is 22% for income up to $1 million and 37% for amounts exceeding that threshold, per IRS regulations. However, if your marginal tax rate is higher, you may owe additional taxes when filing your return. Some employees sell additional shares to cover the shortfall, while others make estimated tax payments to avoid penalties. State tax rates vary, with some jurisdictions imposing additional levies on equity compensation. Consulting a tax professional can help determine whether additional planning is necessary.

Tracking the Trade Confirmation

After executing the sale, verify the transaction details for accuracy and tax reporting. Fidelity issues a trade confirmation, accessible through your brokerage account, which includes the number of shares sold, execution price, total proceeds, and any applicable fees. This document serves as proof of the transaction and should be retained for record-keeping.

The settlement process follows the standard T+2 timeline, meaning funds from the sale will be available two business days after execution. If proceeds are needed sooner, Fidelity offers options such as margin access or expedited transfers, though these may incur additional costs. Reviewing the final settlement amount allows you to confirm that all expected deductions, including taxes and fees, have been accounted for. Additionally, the cost basis of the shares is reported on Form 1099-B, which Fidelity provides for tax filing purposes. Ensuring that this information aligns with your records can help prevent discrepancies when reporting capital gains or losses.