Microsoft Deferred Compensation (DCP) can help reduce your tax bill by thousands. This exclusive benefit is available to Microsoft employees who are Level 67or higher.
DCP enrollment deadlines:
May 1- 31: Defer up to 100% of next year’s bonus
November 1-30: Defer up to 75% of next year’s salary
There are only two times a year you can enroll in Microsoft DCP.
DCP is similar to your Microsoft 401(k). Your 401(k) contributions and DCP contributions can reduce your taxable income. You can invest the funds in your DCP account (like you can in your 401(k)) for future growth. The dollars contributed to your Deferred comp plan grow tax deferred.
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Video highlights:
00:37 Why participate in DCP?
00:58 How does DCP differ from the Microsoft 401(k)?
01:46 Key dates for Microsoft employees
02:42 Important Microsoft DCP considerations
02:59 Example of how Microsoft DCP can help reduce taxes
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SCHEDULE TIME to discuss MICROSOFT DCP: calendly.com/a...
We will talk through the following:
-- Strategies for reducing your taxable income and deferring taxes
-- Maintaining your cashflow to cover your lifestyle expenses
-- Developing a comprehensive payout strategy
-- Leveraging Microsoft DCP along with your other compensation benefits
What are some differences between Microsoft DCP and the Microsoft 401(k)?
Contributions and changes to your Deferred Compensation plan are much stricter than your 401(k). The MSFT DCP enrollment windows are only open twice a year, in May and November.
Unlike your 401(k), which is very secure the Deferred Compensation Plan has different consumer protections. Like any Deferred Compensation program, you become an unsecured creditor of the company. Microsoft has a high credit ranking, making the risk of participating in DCP low.
Once you are eligible, distributions from your 401(k) can be pretty flexible, whereas Deferred Comp pay outs are rigid and there are strict rules you must adhere to. There is a significant amount of cashflow planning that must be done when establishing or adjusting distributions.
Lastly, the IRS sets limits for 401(k) contributions each year. The Deferred Comp plan allows for significantly higher contributions. You are allowed to defer 100% of your bonus and 75% of your salary.
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CONNECT with Aaren Strand, CFP® on LinkedIn: / aaren.strand
MICROSOFT RESOURCES www.avieradvis... More information for Microsoft employees on their benefits including the Microsoft 401k plan, Mega Backdoor Roth, Sustainable Investing, and RSUs.
QUESTIONS?: Schedule time to chat with one of our advisors
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Avier Wealth Advisors
425-467-1011
10655 NE 4th Street, Suite 500
Bellevue, WA 98004
info@avieradvisors.com
Website: avieradvisors....
We focus on providing comprehensive financial planning and investment advisory strategies for tech professionals and their families.
Third Party: Avier Wealth Advisors is not affiliated with Microsoft. There is no guarantee that the information we have provided is accurate. Microsoft employees are encouraged to contact their employer should they have any questions regarding their employee benefits.
Taxes: Avier Wealth Advisors does not prepare taxes. The tax ideas presented are meant to demonstrate general concepts rather than precise calculations. We consult with your tax professional for exact calculations.
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