[jfim]

You have to pay taxes on RSU when they vest, regardless of whether you sell or not. It's basically considered cash compensation, but instead of cash you receive shares.

Since your company is pre IPO, they may have a dual trigger vesting schedule, where shares vest over time but require an actual liquidity event for you to actually receive the shares, giving you no tax liability while the company isn't public. However, this means that once the company goes public, you'll have to pay all of that liability at once, at ordinary income tax rates.

Disclaimer: not an accountant, much less your accountant, this is not financial advice, seek proper advice from a qualified professional.

[hedora]

The tax rates will probably not be what most people consider "ordinary". In CA, the top marginal bracket is about 52%.

If you're getting N years of windfall-level income in one year, some of the income is likely to be in that top bracket. This means that all sorts of tax stragegies you probably are not familiar with will kick in.

For instance, it might make sense to move charitable contributions into that year, since the IRS will effectively be matching them.

Also, AMT will probably kick in, so consider hiring an accountant.