I joke that we are paid in Gold bars at Microsoft because it feels like so much money. On top of the standard issued gold bars Microsoft offers a number of ways to obtain bonus Silver bars. Today I shall write about my version of extracting those gold and silver bars; how to extract the maximum benefits from my employer; Microsoft. I’ll also share, where ever possible, what I actually do to provide a reference for example.
Disclaimer – Everything I’m writing about benefits wise can be found in publicly available references. Because I have no clue where NDA applies in this – and – I love my job and don’t want to be asked to leave for disclosing things I should not have. See the last section at the bottom for reference sources.
Disclaimer 2 – <insert standard financial witting disclaimer here> I’m in no way providing direct financial advice you should act on in real life. I’m providing my point of view and consolidated information about benefits. Before acting on anything I write here you should seek the assistance of a professional financial advisor, preferable a fiduciary. bottom line, I’m not a professional, don’t trust me, seek help , don’t try to sue me if your results are not what you want = ] pretty please paying for Lawyers makes me cry.
Background – about me stuff
In life I’ve always been a fan of working the system to extract maximum benefits with the minimal results. My uncle Scrooge McDuck taught me young to work smarter not harder. In school that meant reading the course syllabus to work out max results with little effort. In life that means finding the best places to purchase things for less, how to save more, and how to do more myself for less.
For example – in High School English all of the classes offered 2 points per one page journal entry “extra credit” with no cap points. Total class was like 100 points. Math tells me I can write 1-5 pages a day in class while randomly doing home work projects. More math tells me I only need to do about 20 days of work to pass the class with a perfect grade and I can do that with zero home work and zero tests.
Along with achieving max results I’m a fan of logistics, numbers, and investing. These obsessions have led to me accumulating a few commas worth of wealth over my life time, and trying all kinds of investment math schemes. My obsession with obtaining as much money as possible has been a helpful step towards accumulating more. I’ve been working for Microsoft for a handful of years. The below words are what I’m currently aware of and use for Microsoft company benefits to help me obtain more wealth and happiness in life
Overview of what Microsoft offers
The core Microsoft benefits for Max money extraction:
- 401k – 9000$ in free matching money from Microsoft. ~4,500$ a year in tax savings
- ESPP – Purchase up to 15% of you pay in Microsoft Stock at 10% off the cover price. instant 2,500$ in taxable income gains with no work.
- HSA – 6,750$ a year dumped into an investment account where gains are not taxed, plus ~1,000$ in taxable income savings.
- Stayfit – 800$ a year to spend on fitness things
- Vacation – 37 days of paid time not working
- FSA – tax-free coverage of recurring expected medical costs
Ancillary additional benefits some might use, some might not, but they are there for the taking if you’re creative and can create the need to use the benefits.
- Tuition reimbursement – 5,000-8,000$ a year in tax-free reimbursement for college level courses
- Company store discount on software – As employees we’re allowed to buy a dollar amount of Microsoft software at a significant discount every year.
- Adoption assistance – Microsoft covers 5,000$ of cost of an adoption if you’re adopting a child
- Prime card discounts – see https://www.microsoftprime.com/ for examples of savings
- Metro card – You have the option of an Orca card covering commute costs if you use public transit.
- Employee giving matching – Microsoft matches dollar for dollar or dollars for hours worked /donated to any organization you give to that’s a qualified not-for-profit.
- Discounted Charging stations for electric vehicles
- Garage Maker spaces – The garage spaces have a massive collection of tools and materials to build, print, CNC, sew, grow, ETC, about anything you can image
- Lockers – I use the miles of running trails around campus along with the showers and locker rooms every day before work.
I’m not going to go deep into all of the above topics I’m only going to go into a few of them that have the largest financial impact on my life.
TL;DR of what I do
I save first, save often, and plan for long-term hording of cash. One of the best money rules I’ve ever employed comes from 2002 Kevin. The rule was to not increase my take home pay whenever I made more money. because of that rule my take home has, for the most part, never changed since 2002 when I worked for John L Scott as their System Admin. Quick list of how I extract maximum value from the Microsoft.
- 25% of my pay goes Pre-Tax into my 401k – Once this is maxed out (18,000$ a year) I put 25% post tax into my 401k then back door convert those dollars into ROTH IRA contributions allowing me to go over the 6,000 a year federal max, or by pass the you cannot roth at all you make too much money barrier.
- 15% (max allowed) goes in ESPP – for savings, for annual or semi-annual costs like property tax and insurance, to give to my kids, ETC.
- Max amount possible goes into HSA – All medical is paid out-of-pocket not out of HSA. All HSA money is invested. Goal is 200k in HSA when I retire.
- 15% goes into short-term personal savings accounts. For things like building houses, giving to kids, trips, cars, ETC
- I spend max level stayfit – because free money and we could always use another kayak
401k – Max it out
TL;DR – Max out as soon as possible. Free 9k employee match and less federal taxes paid on lower taxable income.
18,000 is maximum pre-tax contribution your allowed to make in 401k for 2017. Microsoft matches 0.50$ for every dollar you add, for a total of 9,000 dollars in matching. That’s an instant 50% return on your 401k investment. Not to mention the 18.000$ put in your 401k is Pretax dollars and drops your taxable income. Less taxable incomes saving you about 4,500$ in taxes to the federal government.
I am in no way an expert, I play investment guy on TV. All of the words I say here should be something you think about and choose to follow on your own or not, in fact go hire a fiduciary before you do anything. My view of risk might not match yours at all. My words are what I personally do to be used as an example to follow or as something to not follow. My current payroll contributions each pay period are invested in the following funds.
I say current because I change where my money goes from time to time. I’m not doing horrible at 18% gains last year, and 14% the year before, but I’m not doing awesome by any means. A few of the guys at work shared 40-60% gains for the year, against others who shared 3%. It is all about the risk you’re able to tolerate.
My goal for my 401k contributions are to maxout the 18,000 before end of June this year. Using the thinking the sooner I max them out for the year the more time there is for the money to grow with compound interest. Some of my co-workers contribute 70% of their pay and try to max out in the first few months. I’m not that hardcore yet; I say yet.
Math – 18,000 + 9,000 = 27.000$ of real money in an investment account where all gains are tax-free. Plus a 4,500$ savings in taxes paid. 31,500$ in financial impact for the cost of 18,000$. DO IT!
Medical HSA Things
TL;DR – max out the HSA, invest every dollar of it, pay for medical with out of pocket dollars.
Back in 2010 Microsoft moved from all medical is free to Health Savings Accounts (HSA) for everyone; I miss free everything, but savings accounts are rad. The HSA has a federally mandated max level contribution cap of 3,400 for individual and 6,750 for a family. Microsoft gives you some money towards that account maximum and allows you contribute the rest pre-tax. The money in the account you’re able invest in ETF funds and all gains are tax-free as well. Lower taxable income, and make money tax free – give me all of these things!!!
My HSA investments look like this.
I have a pile of kids so I’m at 6,750 for the max I’m able to contribute and I contribute that max level. I also kick it up a level and refuse to use any money in the account to cover medical costs and use taxed dollars from my pay check to pay for medical expenses before insurance kicks in.
Why do I pay out-of-pocket you ask? – There is a limit to how much money you can add to your HSA and I want to have the biggest pile of money in there when I am old and need it. Plus all gains are tax-free, and it’s not simple to get money into tax-free growth accounts.
My father at age 60 something spent last week in a Critical Care unit at about 13k a day. Right now I’m working and have killer medical. At 60 something I won’t be working and who knows what my medical expenses or income will be. I’d like to have 200k or more in a tax-free account whose sole purpose is medical things. Do it right and 8% gains might even pay for my insurance when I have to buy my own after retirement.
Numbers – say 2,000-4,000$ a year of pre-tax money out my paycheck goes into the account. Pretax lowers my taxable income and saves 1000$ a year in taxes. The total contribution of about 6700$ after match (Math = free money) And the accounts allows me to invest in vanguard ETFs. I made ~3200$ last year in gains and dividends not including the Microsoft contribution; Winning!
ESPP – Buy it All
Microsoft has an Employee Stock Purchase Program (ESPP) where you’re allowed to stick up to 15% of your post tax pay into escrow for 3 months. At the end of 3 months the money is used to purchase Microsoft Stock at 10% off of the cover price. There are a number of different plans and methods you can use to deal with ESPP – I employ the following:
- Use the money to pay my none monthly bills – Property taxes (4k), insurance both car and home(2k), Amazon Prime, Costco, ETC – for these expenses I sell as soon as I can and hold the money in an account I buy free to trade ETF’s with untill I need the money.
- Hold the stock for a year to move from short-term to long-term capital gains tax on the 10% gain. While you’re waiting sell covered calls on the stock – http://joshmaher.net/2012/01/16/you-have-an-espp-now-what/
- There is a rule blocking me from giving the stock directly to my kids in their UTMA accounts for two years after purchase. Instead of share transfers , I sell, then gift the proceeds to my kids in their UTMA accounts. Once they have money I buy free to trade low-cost ETFs.
Time off – Vacation, Sick, Holidays
We have it pretty gosh darn great when it comes to time off as Microsoft Employees. Starting out the door on your first day until the end the year you could take about 37 days off of work paid. If you math 20 working days in a month you’re almost at 2 months off.
- Vacation starts from day one. You accrue vacation at a rate to end up with 15 days at the end of the year; something like 5 hours a pay check. This increases a few times over your career when you’ve been here a number of years. You’re allowed to carry over one years worth of vacation to the next year.
- You start the year with 10 paid sick leave days. These don’t carry over and are use it or lose it. You’re able to use them for you being sick or to care for a loved one whose sick. I used mine last year to take care of wife after baby 4.
- The year starts with two floating holidays used as a catch-all to let you cover any holiday we don’t cover with our normal paid holidays
- Over the course of the year in the US there are 10 paid company holidays.
- The birth of kid affords you 3 months of paid leave to be used before your kiddo turns one.
I’m a complete failure when it comes to taking all of my time off every year. Every year I’ve been here I’ve left vacation time on the table at roll over time. Every year I feel like I’ve hardly been work I take so many days off.
Public data about benefits – I ain’t breaking on NDA here
- Basic benefits overview – https://careers.microsoft.com/benefits/usbenefits
- Changes to 401k for more money and longer new baby leave https://blogs.microsoft.com/blog/2015/08/05/the-employee-experience-at-microsoft-aligning-benefits-to-our-culture/#sm.001yjuya61cmzf02vqq20vv55sr70
- Comments on mini Microsoft about direct numbers in medical – https://www.blogger.com/comment.g?blogID=7555958&postID=8344867577194536996 // http://www.zdnet.com/article/microsoft-to-tweak-employee-benefits-and-more-news-of-the-week/?tag=mantle_skin;content
- Espp Maximum – https://www.microsoft.com/investor/reports/ar13/financial-review/notes/employee-stock-savings-plans/index.html
- StayFit 800$ a year – http://www.geekfit.us/microsoft-stayfit-reimbursement/
- Tuition reimbursement – https://iworkformicrosoft.wordpress.com/tag/tuition-reimbursement/ — from the IRS https://www.irs.gov/publications/p970/ch11.html
- Adoption assistance – https://www.glassdoor.com/Benefits/Microsoft-Adoption-Assistance-US-BNFT24_E1651_N1.htm
- Bus Pass – https://www.quora.com/How-can-I-commute-to-Microsoft-from-Seattle
All posts should end with Pictures, and Wifey sent me a great one tonight.