Restricted Stock Award (RSA)
Actual shares granted upfront with vesting restrictions, often paired with an 83(b) election.
Definition
A restricted stock award is an outright grant of shares that are subject to vesting. Unlike RSUs (a promise of future shares) or options (a right to buy shares), RSAs give you real shares immediately, but unvested shares are subject to repurchase by the company at the original price if you leave. RSAs are most common at very early-stage companies and are usually paired with an 83(b) election.
Why it matters
RSAs paired with an 83(b) election at a very early stage let you start the long-term capital gains clock immediately and pay minimal taxes upfront. This can save enormous amounts in taxes if the company succeeds.
Example
A founding employee receives 100,000 RSA shares at $0.01/share and files an 83(b) election, paying $1,000 in income tax. Four years later, the shares are worth $10 each. The entire $999,000 gain qualifies for long-term capital gains treatment.