Equity compensation
The comprehensive guide to RSU vesting schedules for E*TRADE RSUs
If your employer's stock plan runs on E*TRADE, your restricted stock units live in a Morgan Stanley at Work stock plan account linked to an E*TRADE from Morgan Stanley brokerage account. This guide explains how to read your vesting schedule, what the withholding elections do, why "vested" and "released" are different dates, how to repair the cost basis on your Form 1099-B, and how to set up an automatic sale at vest.
- What E*TRADE from Morgan Stanley is, and who uses it
- Reading your vesting schedule
- Sell-to-cover, sell-all, and pay-cash elections
- Vested versus released shares
- The $0 cost basis problem and the supplemental statement
- Forms 3921 and 3922 for options and ESPP shares
- Setting up an automatic sale at vest
- Common mistakes
What E*TRADE from Morgan Stanley is, and who uses it
E*TRADE's corporate services arm administered employee stock plans long before Morgan Stanley bought the company in 2020. In its 2016 annual report E*TRADE described "approximately 1.5 million individual stock plan accounts across approximately 1,000 corporate clients that represent approximately 20% of S&P 500 companies." Morgan Stanley had also acquired Solium's Shareworks in 2019, saying the combined business would serve "more than 3,300 stock plan clients with 2.5 million participants" (Morgan Stanley). Everything is now branded Morgan Stanley at Work, whose stock plan accounts "were previously referred to as Shareworks, StockPlan Connect or E*TRADE stock plan accounts, as applicable" (Morgan Stanley at Work). The administrator-side software is Equity Edge Online.
Named employers on the E*TRADE platform include Amazon, whose employees open a Morgan Stanley at Work account from the Amazon Stock portal (Morgan Stanley's Amazon microsite); Procter & Gamble, which selected E*TRADE Financial Corporate Services as its equity administrator in 2019 (P&G investor site); and Intel, whose stock benefits guide says grants are "loaded to E*TRADE within approximately one week after grant date" (Intel benefits module). Apple's stock plan administration job postings, as reproduced on job boards, reference E*TRADE accounts and Equity Edge Online; treat that as reported, not confirmed. The Amazon money guides hub shows one company's version in detail.
Reading your vesting schedule
After login, the Dashboard shows portfolio value, outstanding tasks, and upcoming events, with a banner for market closures or blackout periods (Morgan Stanley navigation guide). The Portfolio tab lists each grant: grant date, total units, vested and unvested units, and future vest dates with the units at each. Documents holds grant agreements, statements, and tax forms; Activity shows past vests.
A vesting schedule has three parts: the vest commencement date, the cliff, if any, before which nothing vests, and the tranches after that. The platform does not interpret the schedule; it displays what your employer loaded. Three checks on day one:
- Confirm the total units match your offer letter or grant notice.
- Confirm the first vest date and whether it is a cliff. Amazon's reported schedule, for example, vests 5% at the first anniversary and 15% at the second before switching to six-month tranches.
- Note the release date shown next to each vest date, which can lag by a few days (see below).
If your employer changes the schedule, for example by prorating vesting during a reduced-hours return from leave, the new one can take weeks to appear; Amazon says an updated schedule "may take up to four weeks to appear in your Morgan Stanley or Fidelity account" (Amazon benefits overview). Our RSU vesting schedule calculator reproduces any schedule and shows how overlapping grants stack.
Sell-to-cover, sell-all, and pay-cash elections
When RSUs vest, their value is wages and your employer must withhold tax. The stock plan account lets you choose how that withholding is funded, set per grant under "Elect Release Method." Morgan Stanley's election guide for Amazon employees describes three methods; the structure is similar at other E*TRADE employers even if labels differ:
| Election | What happens on the vest date | Action required |
|---|---|---|
| Sell to cover (default) | Enough shares are sold to pay withholding taxes and fees; the rest are deposited in your brokerage account | None |
| Sell all shares | Every vesting share is sold; taxes and fees come out of proceeds and the rest is paid to you (US dollar payments two business days after the trade) | Elect at least one day before the vest |
| Pay cash (receive all shares) | Taxes and fees are debited from cash you deposited; you keep every share | Elect "pay for taxes and fees separately" and fund the E*TRADE account at least five trading days before the vest; partial funding falls back to sell-to-cover |
Two warnings. The withholding collected is an estimate: the federal portion is withheld at the 22% supplemental wage rate, or 37% once supplemental wages in the year exceed $1 million (IRS Publication 15), so if your marginal rate is higher you owe the difference in April. And "pay cash" only makes sense if you intend to hold every share; the RSU taxes guide argues the sensible default is the opposite. Estimate your vest with the RSU tax calculator.
Vested versus released shares
Morgan Stanley's own explainer draws the line: "Once your grant has vested and your company has released the shares to you, you can sell them at your discretion" (Morgan Stanley at Work). Vesting is the moment you earn the shares and the tax is measured. Release is the administrative step where your employer instructs the broker to deliver the net shares to your brokerage account after the sell-to-cover trade settles. Until release, shares show as vested but not available; after release they sit in the linked E*TRADE account and can be sold or transferred. A vested balance you cannot sell usually means you are waiting on release.
For tax, your taxable amount and cost basis are set by the fair market value on the vest date under the IRS restricted property rules (Publication 525), not the price on the release date.
The $0 cost basis problem and the supplemental statement
This is the most expensive mistake E*TRADE RSU holders make. When you sell RSU shares, E*TRADE reports the sale on Form 1099-B, generally sent by February 15 (E*TRADE's Tax Filing Basics for Stock Plan Transactions). For restricted stock with a grant price of zero, that guide shows the 1099-B basis as $0, both for sell-to-cover trades and for later sales. The reason is regulatory: under the Form 1099-B instructions, a broker "cannot increase initial basis for income recognized upon the exercise of a compensatory option" or "the vesting or exercise of other equity-based compensation arrangements granted or acquired after 2013." You paid nothing for the shares, so the reported basis is nothing, even though the vest-date value was taxed as wages.
Copy the 1099-B into your return unchanged and you pay tax on the same dollars twice: as wages on your W-2 and again as capital gain. The fix:
- Download the Stock Plan Transactions Supplement from the Tax Center at etrade.com. It lists each sale with the adjusted basis, which for RSUs is shares sold times fair market value at vest, plus acquisition fees.
- On Form 8949, enter the 1099-B basis in column (e), code B in column (f), and the correction in column (g) so the gain equals proceeds minus true basis. If the basis was not reported to the IRS (noncovered shares), enter the correct basis directly in column (e) with no adjustment.
- Keep the supplement, vest confirmations, and W-2 together. E*TRADE warns that shares transferred out of the stock plan account "are still subject to cost basis reporting rules," so the problem follows the shares to any other broker.
RSU shares not acquired for cash are typically noncovered securities, so the broker is not required to report their basis at all. Tax software handles code B, but only if you tell it the shares were RSUs and enter the vest-date value.
Forms 3921 and 3922 for options and ESPP shares
RSUs generate no IRS information return of their own; the vest shows up on your W-2. Two other equity types do:
- Form 3921 is filed by your employer for each transfer of stock when you exercise an incentive stock option under section 422(b) (IRS). It reports the grant date, exercise date, exercise price, fair market value at exercise, and share count, which you need for the alternative minimum tax and for basis when you sell.
- Form 3922 is filed when legal title to shares bought through a qualified section 423 employee stock purchase plan is first transferred (IRS). It reports grant-date and purchase-date values and the price paid, which determine how much of your gain is ordinary income. A sale is a qualifying disposition only if you hold until the later of one year after the shares were transferred to you or two years after the option was granted (Publication 525).
Employers must furnish both forms by January 31 of the following year; for 2025 events, by January 31, 2026 (Publication 525). E*TRADE's guide shows that option and ESPP sales on the 1099-B carry only the exercise or purchase price as basis, so the ordinary income portion is added back on Form 8949 the same way.
Setting up an automatic sale at vest
Most people who decide to sell at vest should automate it, to remove the temptation to time the market and, for employees subject to trading windows, to avoid selling in a blackout by accident. In the stock plan account, open the grant, choose Elect Release Method, and select the sell-all option. Set delivery instructions at the same time; Morgan Stanley's guide notes that changing payment instructions later does not update an existing election, so re-save it after any change, and make or change the election at least one day before the vest date. The sale executes on the vest date at market, withholding and fees are deducted, and the balance is paid on the settlement timetable.
If you are restricted to trading windows, your employer may require that a standing sell election be set or changed only inside an open window, or be written into a Rule 10b5-1 plan. Amazon, for example, treats "making and changing sell-all or tax elections" as transactions covered by its insider trading policy (Amazon Exhibit 19.1). Our Amazon RSUs page covers 10b5-1 mechanics, and the Amazon 401(k) guide shows one place to put sale proceeds.
Common mistakes
- Filing the 1099-B as printed. A $0 basis on RSU sales means paying tax twice. Use the supplement and code B.
- Assuming withholding equals tax owed. Sell-to-cover at 22% federal leaves a shortfall in higher brackets.
- Electing pay-cash without funding in time. Miss the five-trading-day deadline and the platform reverts to sell-to-cover.
- Panicking over a vested-but-unavailable balance. You are waiting for release.
- Transferring shares to another broker without records. The new broker will not know your basis either.
- Changing an election inside a blackout. At some employers that is a policy violation even with no trade that day.
Bottom line. In E*TRADE from Morgan Stanley, your vesting schedule is a display of what your employer loaded, so verify it against your grant notice; the release method election decides whether you keep shares or cash on each vest date, with sell-to-cover as the default; and every RSU sale comes with a Form 1099-B showing a basis near zero that you must correct on Form 8949 using the Stock Plan Transactions Supplement. If you want to sell at vest, set a sell-all election before the vest date.
Platform labels, settlement timetables, and employer rules change. Confirm your schedule and elections in your Morgan Stanley at Work account, check your employer's trading policy before changing an election, and verify basis-reporting rules in the current IRS instructions for Forms 1099-B and 8949 before you file.