Concentration is the real risk. I know many people at Apple and Microsoft whose only investment is their company stock. It has worked out well for them but they're just one big scandal away from disaster.
Holding vested RSUs is only wise if your conviction is that the company you work for is the best investment available at the time.
You can easily sell them and invest in other stocks instead, which reduces your risks substantially
My last two employers deducted shares at vest as tax. This is in US, btw. I am surprised it isn't the common practice. The only problem was that the withholding rate was too low for my effective tax rate which means I always have to pay estimated taxes.
Default withholding has been 22% now for a few years. I bring this up because the gap between default withholding and the higher marginal rates has widened compared to the years it was at 25%.
> Yet, base comp tends to be withheld at marginal rates
To clarify, default withholding on base pay uses your bottom tax rates. It assumes you have no other income, so it will calculate based on standard deduction, 10%, 12%, then working upwards. So I wouldn't use the word "marginal" to refer to base pay because most people understand that as their top tax rates.
This means that for bonus, stock, and other compensation, it's reasonable to increase withholding to reflect the top tax rates.
> most folks’ effective tax rates
A bit of an aside, but I'm not a big fan of the idea of "effective tax rates". It's not a term the IRS uses, but something that tax software companies like to push for whatever reason. You also can't do much with it in practice: regarding withholding, it's not useful and potentially confusing.
Most people should always just sell the stock immediately to cover tax burden. I mean, do whatever you want, but why set yourself up for tax liability risk at all. There are tons of other good investments out there that will mitigate concentration risk.
If there's actually a strong fundamental basis for upside (not 10x sales fantasy valuation), it could be prudent to hold in some cases