The 3 most expensive year-end mistakes we see tech employees make

If you work in tech, your money life probably does not feel simple.

You might have RSUs vesting every quarter, ESPP quietly buying shares, old grants from a previous job still vesting, maybe some startup equity from years ago. All of that sits on top of a high W-2 salary and a bonus that often lands right at year end.

From the outside, it looks like you are doing great.
From the inside, it can feel more like:
"I know I make good money, but I am not fully sure where it is all going or what my tax bill will be."

The good news: this complexity can absolutely work in your favor.
The bad news: a few quiet patterns show up again and again and cost tech employees real money every year.

Not because you are careless.
Because you are busy, year end sneaks up, and nobody has walked you through the full picture.

Here are the three most expensive year end mistakes we see again and again, and what you can do instead.

Mistake 1: Treating RSUs like a bonus you will "figure out later"

RSUs are sneaky.

On vest day, stock shows up in your account. Some shares get sold to cover taxes. You see a confirmation email from your equity portal.

Mentally it feels like:
"Taxes are already taken out. I will decide what to do with this later."

So the shares just stay there.

What is actually happening

RSUs are taxed as ordinary income when they vest.

That means:

Your employer withholds at a flat rate, often around 22% to 24% on RSUs and bonuses.
If your total compensation is high, for example 350,000 dollars, 450,000 dollars, 600,000 dollars or more, your real marginal tax bracket is usually higher than that.
The difference does not show up on vest day. It shows up when you file your tax return.

A simple example:

Total compensation: about 420,000 dollars (base, bonus, RSUs).
Withholding on RSUs and bonus: about 24%.
Marginal tax bracket: 35% or higher, plus state taxes.

If nothing is adjusted, it is very common to be under-withheld by 15,000 dollars to 30,000 dollars or more. That is where the "How do I owe this much, I thought they were taking taxes out" shock comes from.

The second layer: concentration risk

There is another quiet problem that builds up over time.

A very normal tech career pattern looks like this:

RSUs vest every quarter.
You hold all of them.
You stay at the company for 3 to 5 years.
The stock has some strong years.

Fast forward a bit and:

30% to 60% of your net worth is now in your employer stock.
Your salary, bonus and future career already depend on the same company.

When the stock is going up, it feels amazing.
When the stock drops 30% to 50%, which many of us have seen, it can wipe out years of progress in one cycle.

The real issue: no job assigned to RSUs

For most tech employees, RSUs are not a lottery win.
They are part of your paycheck, just delivered in stock instead of cash.

If you do not decide what RSUs are supposed to do for you, they default into a pile of concentrated risk that also drives your tax bill.

What to do instead before year end

You do not need to guess the market top. You do need a simple RSU system that you can stick to.

1. Set your RSU rule in advance

Pick one clear rule such as:

"Sell 80% to 100% of vested RSUs within 7 to 30 days and move the money into my long term portfolio."

"Keep at most 10% to 15% of my net worth in employer stock. Anything above that gets sold and diversified."

This changes RSUs from a feelings based decision into a process.

2. Run a quick tax projection for the year

Before 31 December:

Pull your year to date pay stubs.
Add your remaining RSU vests and expected bonus.
Use a calculator or a tax professional to estimate your total tax for the year versus what has already been withheld.

If it looks like you will owe a lot more:

Update your W 4 for the last few pay periods, or
Make an estimated tax payment before year end.

That one step can turn a painful surprise into a manageable number.

3. Give RSU money a clear job

When RSUs are sold, do not let the cash just sit there "until I decide." Decide in advance what they are funding.

For example:

Long term diversified portfolio in a taxable account.
Down payment fund for a home.
Emergency fund boost, if that is not fully in place yet.
Big goals such as kids' education or an early retirement / career break fund.

RSUs should move according to your life plan, not according to the last month of stock performance.

Mistake 2: Treating taxes as an April problem

Most people treat taxes as something you "deal with when you file."

The problem is simple. By the time you are filing in March or April, you are mostly just reporting what already happened.

Almost all the real tax savings levers live earlier in the year, especially between October and December.

What gets missed when you wait

Here are some of the common missed opportunities I see with tech employees who only think about taxes at filing time.

Not using tax advantaged accounts fully

For example:

401(k) contributions and the employer match.
HSA, if you are on a high deductible health plan.
FSA funds that may expire or have limited carryover.

If you realise in April that you could have contributed more last year, it is too late to change anything for that tax year.

Skipping tax loss harvesting

If you have:

A taxable brokerage account.
ESPP shares you kept.
Old stock positions that did not work out.

You might have positions sitting at a loss.

Realising those losses before 31 December can:

Offset current gains.
Offset future gains.
Sometimes offset a portion of ordinary income, within the allowed limits.

Many people have heard the phrase "tax loss harvesting" but either never do it or do it in a way that accidentally triggers wash sales.

Leaving more efficient giving strategies on the table

If you donate meaningful amounts and you only give in cash, you may be missing better options, such as:

Donating appreciated stock instead of selling it and giving cash.
Grouping several years of giving into one year using a donor advised fund, especially if you have a high income year or a large RSU / bonus event.

These need to be set up before year end, not in April.

Ignoring state tax and timing issues

In a single year you might:

Move states.
Switch jobs.
Receive a large bonus or equity event late in the year.

The timing of income and deductions can change your total tax bill. If you only look in April, you have no room to adjust.

A practical year end tax checklist

Some time in November or December, block out one focused session. You do not need to know everything. Just work through a few key questions.

1. 401(k), HSA, FSA

Am I on track to hit my 401(k) limit for the year?
If I have an HSA, am I using the full contribution room?
Do I have FSA money that I might lose if I do not use it soon?

A small change in contributions in the last few paychecks can still help.

2. Taxable accounts

Do I have positions at a loss that I am comfortable selling?
If I harvest losses, am I avoiding buying the same or a "substantially identical" security within the wash sale window?

The goal is not perfect timing. It is to make sure red days are not wasted from a tax perspective.

3. Charitable giving

Am I planning to donate a meaningful amount this year?
Would it be helpful to bunch a few years of giving into this one using a donor advised fund?
Do I have low basis stock that might be better donated than sold?

4. Cash, RSUs and bonus

Looking at my real income for the year, does my current withholding look in the right range?
Would an estimated payment now reduce penalties and stress later?

You do not need to become a tax expert to do this.
Even one intentional year end session can easily be worth more than a weekend away.

Mistake 3: Letting a scattered portfolio drift for another year

Here is a very familiar picture for many tech employees in their 30s and 40s.

Old 401(k) from your first job.
Another 401(k) from a second job that you never rolled over.
A current 401(k) sitting in the default target date fund.
RSUs at your current employer.
ESPP shares from different purchase periods.
A Robinhood, Public, SoFi or Fidelity account with a mix of single stocks and funds.
Maybe some startup equity, angel investments or crypto on the side.

Each move felt reasonable at the time.

"I will leave that 401(k) for now."
"I will hang on to this ESPP lot, it has done well."
"Everyone is talking about this stock, I will put a little in."

Put together, it often becomes:

"I am doing a lot of things, but I do not really know my overall risk or allocation."

At year end, it is very tempting to push this review to "next year" again. That choice has a cost.

How this setup quietly costs you money

Hidden concentration

On the surface it looks like you hold plenty of different positions. When you add it up, you might find:

More than half your portfolio is in one sector, often tech.
A very large percentage is tied directly or indirectly to your employer stock.

That is a lot of your future riding on a narrow part of the market.

Cash drag

Many high earners have six or seven figures sitting in low yield accounts because there was never time to decide.

"I will figure out what to do with it later" quietly turns into years of lost growth.

Risk that does not match your life

Your actual investment risk can be out of sync with your real situation.

If you want the option to retire early or take time off, you might be too conservative.
If your job already feels risky or your industry is unstable, you might actually be taking too much market risk on top of concentrated employer equity.

No system for new cash

Every time money comes in:

A bonus.
An RSU vest.
An ESPP purchase.

You have to make another one off decision. That is tiring and often leads to inaction.

How to set a "money operating system" for 2025

Year end is a natural time to reset how everything fits together.

1. Get one clear view

Start by pulling your accounts into a single dashboard or spreadsheet, even in read only form.

You want to see:

Total net worth.
Allocation across stocks, bonds, cash and alternatives.
Employer stock as a percentage of your net worth.

Simply seeing this in one place often changes how you think about it.

2. Define a target allocation

Use your:

Time horizon.
Comfort with risk.
Level of concentrated employer or startup equity.

You do not need to chase a perfect model. You just need a clear direction, for example:

"Roughly 75% stocks, 20% bonds, 5% alternatives, and no more than 10% to 15% of my net worth in employer stock."

3. Clean up the obvious outliers

You do not have to fix everything at once. Start with the easy wins.

Consider rolling old 401(k)s into your current 401(k) or an IRA if that simplifies tracking.
Consolidate very small or forgotten accounts where it makes sense.
Any cash beyond your emergency fund target should get a clear job. Invest it or assign it to near term goals.

4. Create rules for how new money flows in 2025

This is where things become much less stressful.

You might decide:

RSUs:
"All vested RSUs are sold on a set schedule and invested according to my target allocation within 14 days."
ESPP:
"ESPP shares are sold after purchase so I keep the discount, then reinvest according to the plan. I do not let this build into a big single stock position."
Bonuses:
"Bonus money is split 50% to long term investing, 30% to specific goals, 20% to guilt free spending."

Once these rules are in place, you stop making dozens of small decisions every month. You just follow your own system.

Bringing it all together

If you are a tech employee, you do not need more noise about markets or hot stock picks.

You need a calm and practical way to work with the money you already earn.

At year end, it helps to focus on just three areas:

RSUs with intention
Treat RSUs as part of your paycheck. Decide how much to hold, how much to sell and what they are funding in your actual life.
Taxes before they become a surprise
Use the calendar while you still can. Max useful accounts, harvest losses in a thoughtful way and fix under withholding instead of waiting for April.
One coherent view of your wealth
Bring scattered accounts into one picture, choose a target allocation and set simple rules for how new money flows in 2025.

You are already doing the hard part, which is earning the money.
A few intentional moves at year end can be the difference between:

"I hope this is fine"

and

"I know what is going on with my finances."

If you’d like to learn more, you can request a callback from our advisory team, and we’ll help you get your year-end planning set up so you avoid any April tax surprises.