On today’s show, Meg Bartelt, CFP®, MSFP joins me to talk about how you should think differently about your total compensation in order to take advantage of your employer benefits. 

Meg is the founder of Flow Financial Planning, LLC, a fee-only, virtual financial planning firm dedicated to women in their early-to-mid career in tech. She specializes in equity compensation and not making people feel bad about their finances.

Many employees of large tech companies are not taking full advantage of their employee benefits and leaving significant money on the table. If your employer offers after-tax 401k contributions and/or an Employee Stock Purchase Plan (ESPP), you need to understand those benefits.

But what if you cannot afford to save more from your paycheck because you are already just barely covering your living expenses plus vacations, home improvements, etc? Take another look by understanding your total compensation and account balances. Do you get an annual bonus? Do you receive RSUs?  

You have to think a little differently: your total compensation is available to spend on living expenses, not just your bi-monthly paycheck. Maximizing your after-tax 401k contributions may reduce your paycheck, but you can make that up using your quarterly RSUs. Sell the stock and transfer the cash to your everyday checking account to fund monthly expenses.

Your future self is going to thank you.


I'm working one of these companies making pretty good income. And saving, the maximum I can to my 401k. So 19,500 this year, and Meg I come in, I can't really save anymore. I know I might have I've heard of this thing after. 401k contributions. But I'm spending everything that the rest of my paycheck, it look, I'm setting aside almost 20,000 out of my salary and everything else, pretty much going to go into my living expenses for my kids and my family.

And you notice though, I also do have some RSUs. They come in quarterly, maybe, 10,000 a quarter or something like that in terms of how much they're worth. But it's not part of my income. So walk me through the example there. How do we take advantage? Or how do I think about taking advantage of that? After-tax 401k. I know it's part of my benefits. But I just don't have the income, off of my paycheck. Everything else is for my living expenses.


If you make more than that. I don't remember the specifics, but as a single person, if you make more than $140,000 a year, or thereabouts, you cannot, you may not contribute to the Roth IRA. But contributing to a Roth IRA is really beneficial because any money you put in there is forever more tax-free I mean, amazing. But if you work in tech, you're pretty likely to have income over that threshold. Here comes your employer. Who pays you between salary and RSUs $300,000 a year, and basically says, we don't give a crap about that income threshold. You can make this effectively, this Roth contribution above and beyond your 19,500. And basically trust me your future. You is going to love now you, if you do this for yourself.


So now you've been able to do after tax 401k and. The STP or whatever because you are living in part on the RSU income, you get a recorder.


Now we've mentioned making up from RSU. I assume also you could make it up from savings that you just have in a brokerage or checking account. If you have some extra savings to take advantage of this. Right.


You've got a brokerage account at Robin hood or E-Trade or Vanguard or Schwab. It is reasonable to actually live on that. So that you can take advantage of these better opportunities through your paycheck. A taxable investment account is great. And if you need the money before retirement, that's preferable, but in retirement, a Roth account is going to be better.


It is just an opportunity to buy your company's stock. They are allowed to offer up to a 15% discount. And I think all of the big tech companies that we work with, clients that offer that full 15% discount. So that is quote unquote free money. I'd probably remove the quotes if I weren't subject to like regulation. But ESPPs can be almost a very straightforward way of just getting free money because you are automatically given this 15% discount if you participate in it, but that can be $20,000 a year. So that's a big cut out of your take home pay. But then you get these shares at a discount. If you sold them immediately, you just, you'd get cash.

You'd end up with more money.


Are there other account types or opportunities that we should look at from an employee benefits package?


It was one of the hardest things in the world. So I just want to acknowledge that this isn't just a flip you switch.


thanks for joining us on financial planning for entrepreneurs. If you like, what you heard, please subscribe to and rate the podcast on Apple iTunes, Google play Spotify, or wherever you get your podcasts. You can connect with me on linkedin or mortonfinancialadvice.com. I'd love to get your feedback. If you have a comment or question, please email me at . Until next time thanks for tuning in!

Subscribe to my podcast

Subscribe to my podcast