Lumen Is Moving to Nasdaq. His RSUs Will Count as Wages When They Vest, but the Next $50,000 Gain Won’t Count for Social Security
A Lumen Technologies employee is about to see $100,000 in RSUs vest, but Social Security treats that windfall and any future gain on those same shares as two entirely different animals with separate rules that can quietly shrink his retirement…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
A 64-year-old employee of legacy telecom company Lumen Technologies (NYSE:LUMN) has $100,000 of restricted stock units (RSUs) vesting soon. Lumen’s stock transfers to Nasdaq on Oct. 6, 2026.
He plans to hold the shares. If they rise another $50,000, Social Security treats the vested amount and the gain as two different kinds of income. Each has separate tax and benefit consequences.
Vesting Day Turns His Stock Into a Paycheck
Restricted stock units become wages on the day they vest, and their full market value is reported on his W-2, the same as salary.
Social Security payroll tax uses the 6.2% employee rate. On the vest, that is $6,200, as long as total wages stay under the 2026 taxable maximum of $184,500. Wages above that cap do not reach his earnings record.
These income streams can raise his future benefit if they replace a lower year among his 35 highest-earning years, or fill a zero if he has fewer than 35 years of covered earnings. If his record is already strong, the increase may be small.
A Big Vest Can Pause Checks for Early Claimers
If he claimed before full retirement age (FRA) of 67, the earnings test applies. In 2026, someone under that age can earn $24,480 before Social Security withholds $1 in benefits for every $2 above the limit.
If the $100,000 vest were his only earnings for 2026, it would put him $75,520 over the limit and produce a $37,760 earnings-test cut. Because he is also a Lumen employee, his regular salary counts too, so the actual decrease depends on his total wages for the year.
Growth After Vesting Lives in a Separate Tax World
Once vested, the taxed amount becomes his cost basis. If he later sells for $150,000, the extra $50,000 is a capital gain. Holding more than a year after vesting qualifies it for lower long-term rates.
Social Security ignores that gain on three levels:
- Earnings test: $0 considered as earnings
- Earnings record: $0 added as wages
- Payroll tax: none owed on the gain
Capital gains and investment income do not count toward the earnings test, so later appreciation in these shares cannot create another earnings-test hit when he sells. His wages, including any other compensation from Lumen, can still affect his checks until he reaches full retirement age.
Where the $50,000 Gain Still Reaches His Benefits
There is one catch. If he is collecting benefits, the gain raises his adjusted gross income (AGI), which feeds the IRS formula that decides how much of his Social Security gets taxed. The formula is about his adjusted gross income, plus tax-free interest, plus half his benefits.
Once that total passes $25,000 for single filers or $32,000 for joint filers, part of his benefits becomes taxable, up to 85%. A year with $100,000 in wages may already make the maximum 85% of his benefits taxable, depending on his filing status, benefit amount, and other income. The $50,000 gain becomes more consequential if he sells in a quieter retirement year, when it could pull substantially more of his benefits into taxable income.
Nasdaq Switch Leaves His Tax Math Intact
Lumen says shareholders will not be required to take any action, and the stock keeps trading as LUMN. The exchange change leaves vesting dates, values, and basis intact. These four details drive his outcome:
- Vesting date: This decides when the wage income lands and which year’s earnings test it considered toward.
- Value at vesting: This sets both his W-2 wage figure and his cost basis for any later sale.
- Sale date: This decides whether the gain is short-term or long-term, and which tax year it falls in.
- Sale price: The gap between this and his basis is his capital gain or loss.
Keep the Paycheck and the Profit on Separate Ledgers
The easiest mistake is paying tax twice. Brokerage forms for restricted stock units can show a zero or blank cost basis even though the shares already generated wage income at vesting. If he reports zero basis without making the proper adjustment, he could pay capital gains tax on income already taxed as wages. His vesting records can help establish the correct basis.
Social Security has the same split. The first $100,000 acts like a paycheck. The next $50,000 acts like an investment. If he claimed early, estimating the earnings-test hit before vesting prevents surprise benefit pauses. Run your numbers before shares vest or sell.
Contact [email protected] for any questions or corrections.
Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
