How Can I Best Utilize My Microsoft Employee Benefits Package?

You have questions about your Microsoft benefits. We have the answers and are here to help. Feel free to give us a call or click below to get in touch with one of our advisors.

You have questions about your Microsoft benefits. We have the answers and are here to help. Feel free to give us a call or click below to get in touch with one of our advisors.

Understanding the Value of Your Microsoft Benefits

Our experienced advisors have worked with Microsoft employees for well over a decade, so we understand the potential value of your employee benefits package. With the appropriate planning, you have the opportunity to save thousands of dollars each year in taxes. When you partner with Avier Wealth Advisors, we help you take full advantage of the most underutilized options available to you. As fiduciaries, you can depend on us for honest, straightforward advice on how best leverage these benefits.

Your Microsoft Benefits At A Glance

Click on a tile below to learn more about a specific Microsoft Benefits area, or simply scroll down the page for a comprehensive overview of the key benefits available to you as a Microsoft employee.

Key Dates for Microsoft Employees

We have outlined the key dates concerning your benefits that you should remember as a Microsoft employee. Download the calendar as a PDF or click the button below to view the timeline.

Q1

January – March

JanuaryReview 401(k) Contributions

  • Update 401(k) contribution percentages to reflect new tax laws
  • Adjust for increases in salary and September bonus
  • Confirm after-tax contributions with in-plan Roth conversion benefit
  • Increase contributions due to the catch-up provision (Age 50+)

FebruaryMSFT Stock Awards

  • Sell and diversify vested shares
  • Determine investable amount and reserves for cash needs

MarchMSFT ESPP

  • Sell ESPP shares at the end of the quarter
Q2

April – June

MayMSFT Stock Awards

  • Sell and diversify vested shares
  • Determine investable amount and reserves for cash needs

JuneMSFT ESPP

  • Sell ESPP shares at the end of the quarter

JuneDeferred Compensation Election (Level 67+)

  • Identify deferral amount for following year’s cash bonus
Q3

July – September

JulyReview 401(k) Contributions

  • Confirm contributions are on pace to max out benefits
  • Review and adjust allocation if needed

AugustMSFT Stock Awards

  • Sell and diversify vested shares
  • Determine investable amount and reserves for cash needs

SeptemberEmployee Reviews Completed

  • Cash bonus and new MSFT stock awards are received
  • Download new stock grants and vesting schedules

SeptemberMSFT ESPP

  • Sell ESPP shares at the end of the quarter
Q4

October – December

NovemberMSFT Stock Awards

  • Sell and diversify vested shares
  • Determine investable amount and reserves for cash need

NovemberLife Insurance and Health Plan Review

November/DecemberCharitable Giving Review and Tax Loss Harvesting

DecemberMSFT ESPP

  • Sell ESPP shares at the end of the quarter

DecemberDeferred Compensation Election (Level 67+)

  • Identify deferral amount for following year’s salary

Microsoft 401(k) Plan

Contribution Matching

Microsoft matches 50 percent of contributions that you make into your 401(k) account up to $19,000. We encourage you to make the most of Microsoft’s offer by maxing out your 401(k) contributions before utilizing any other benefits available to you. When you do the math, this is a lot of free money that Microsoft is putting on the table. $9,500, to be exact. We encourage all of our Microsoft clients to max out this benefit.

After-Tax Roth Conversion

Otherwise known as the Mega Backdoor Roth Conversion, this benefit is relatively new in the 401(k) world and many Microsoft employees are simply unaware of it. This feature allows you to make additional after-tax contributions to your 401(k) to make up the difference between your contributions, Microsoft’s matching contributions, and the annual federal 401(k) contribution limit. These contributions are then converted to tax-free Roth dollars on a quarterly basis. By taking advantage of this benefit, you can contribute over four and a half times the traditional Roth IRA annual limit and build a nice nest egg of tax-free dollars.

BrokerageLink Option

BrokerageLink is one of 22 options offered within your Microsoft 401(k) plan. This option gives you access to thousands of additional mutual funds not available with the standard plan, including funds managed by Vanguard, PIMCO and Eaton Vance. Why does this matter? For starters, it allows you to invest in asset classes that would otherwise be unavailable to you. This increases diversification, which may potentially create opportunities to increase the value of your long-term returns.

Sustainable Investing

Sustainable Investing, also known as Socially Responsible Investing (SRI), means incorporating Environmental, Social, and Governance (ESG) criteria into the investment selection process. Essentially, it allows you to invest in a way that aligns with your values without necessarily compromising diversification or returns. While there are currently no Sustainable Fund options within your standard Microsoft 401(k), you can access hundreds of SRI mutual funds and ETFs through BrokerageLink. These options allow you to create a Sustainable Portfolio within your 401(k).

Microsoft Stock Awards

Restricted Stock Units

For many employees, stock awards can be a significant portion of total compensation. You may receive these awards upon being hired, as a part of your annual compensation package, or as a special award. These awards come in the form of Restricted Stock Units (RSUs). These RSUs become available to you as they vest over time. As the stock shares vest, you are taxed at ordinary income tax rates based on the total value of the vesting shares of stock.

Microsoft directs Fidelity to sell some of the shares to withhold for taxes so you will only receive a portion of the shares that have vested in your brokerage account. If shares are held for over a year after they vest, any potential gains will get preferential long-term tax treatment. However, there is nothing that can be done to defer the taxable income generated by vesting shares of stock.

Typically, Microsoft employees let their stock grants accumulate in their investment accounts while covering expenses through their salaries. We encourage our clients to flip this thinking. By living off of vesting shares of stock, you gain cash-flow flexibility and can then take advantage of the many tax-preferred benefits available to you. Restricted Stock Units vest multiple times per year and vary significantly in amount each time. We can work with you to organize and plan your cash flows in order to implement many of these tax-saving strategies.

Microsoft Deferred Compensation Plan

Taxable Income Reduction and Tax Savings

Available to senior directors, partners, general managers, and other executives, the Microsoft Deferred Compensation Plan allows you to save a significant amount of money on taxes by reducing the amount of your taxable income. It works similarly to a pre-tax 401(k) plan, and any dollars you contribute can then be invested for growth and used down the road during your retirement. If you are eligible for this benefit, you can defer up to 75 percent of your salary and a full 100 percent of your cash bonus. This has the potential to save you tens or even hundreds of thousands of dollars in taxes each year.

Other Microsoft Benefits

Employee Stock Purchase Program

This benefit allows you to purchase Microsoft stock at a discount (typically around 10 percent) to the open market. Since these contributions are not tax-advantaged, the Employee Stock Purchase Program is usually one of the benefits we suggest that Microsoft employees take advantage of last. You may already be too heavily concentrated in Microsoft stock as a result of RSUs, and participating in the ESPP would exacerbate this problem. Please reach out to us to discuss your specific situation and whether the benefit would be a good option for you.

Charitable Giving

Double the donation! Microsoft matches gifts to qualified charitable organizations made by employees dollar-for-dollar, up to $15,000 per year! Increase your impact for the causes that matter most to you by leveraging this benefit. If you’ve already made charitable gifts, you can submit requests for Microsoft to match gifts made anytime in the last 12 months. For more information or to register for this program, click here.

Latest Articles about Your Microsoft Benefits

At Avier Wealth Advisors, client education is the bedrock of our service model. Our advisors regularly publish articles on how you can best leverage the benefits available to you as a Microsoft employee. Take a moment and check out their latest tips below.

Microsoft 401(k) – Sustainable Investing Through BrokerageLink

Paige Lee | March 5, 2019
Sustainable Investing, also known as Socially Responsible Investing (SRI), means incorporating Environmental, Social, and Governance (ESG) criteria into the investment selection process. Essentially, it allows you to invest in a way that aligns with your values without necessarily compromising diversification or returns. While there are […]

2019 Microsoft 401k Mega Backdoor Roth Conversion

Lars Phillips, CFA, CFP® | January 9, 2019
With 401(k) contribution limits increased in 2019, Microsoft employees have the ability to save even more into Roth by utilizing the 401(k) After-Tax Roth Conversion benefit, also known as the Mega Backdoor Roth Conversion. Thanks to a recent IRS ruling, individuals at specific companies can […]

Should You Be Participating in Your Company’s ESPP?

Jordan Edwards, CFA, CFP® | October 15, 2018
Many companies in the Northwest, especially within the tech industry, offer access to an Employee Stock Purchase Plan (ESPP). These plans are often overlooked because they do not offer tax benefits like pre-tax 401(k) or Deferred Compensation contributions. ESPPs vary significantly across companies, so please […]

Microsoft Benefits Video Library

We invite you to peruse our video library to learn more about the key benefits available to you as a Microsoft employee. Our advisors break down complex financial topics into the basics of what you need to know to get the most out of your plan.