Understanding Your Microsoft Compensation Package

Building a career at Microsoft is an opportunity to work at the forefront of technology alongside some of the brightest minds in the industry. Microsoft compensation packages are also quite robust with excellent salaries and a benefits package with incredible potential.

Microsoft Compensation

Your total compensation is the sum of your:

• Base salary
• Bonuses
• RSU grants

Microsoft Benefits

Beyond your salary, bonus and RSU grants, Microsoft also offers some incredible benefits in their compensation package. Your benefits include:

• 401k match
• HSA match
• Employee Stock Purchase Program
• Deferred Compensation Plan
• Life insurance
• Long-term disability
• And more

HSA Match = $1,000 – $4,375

Microsoft’s HSA match varies and depends on which level you fall into and how many dependents you have on your health plan.

You must be in a high deductible health plan (HDHP) to be able to participate in a Health Savings Plan (HSA). Due to the amazing tax advantages of the HSA account, we love to recommend this to clients, but that doesn’t mean it is right for everyone. If you’re considering a HDHP, it’s important to consider all the factors including your providers, your health needs, if you’ll have a baby that year, etc.

• Tip: The employer contribution that Microsoft offers counts towards the annual contribution limit of $4,300 for an individual and $8,550 for a family (plus a $1,000 catch up if over 55).

Life Insurance = 3x salary

At Commas, we’ll weigh if you need additional coverage—whether that is through voluntary coverage at Microsoft or via the open market.

• Tip: Be sure to add beneficiaries to your Microsoft life insurance policy so that it passes to the appropriate people if something happens to you.

Long-term Disability = 60% salary up to a maximum of $15,000 per month

This is a benefit that you pay for—but that means the benefit is tax-free to you if you need to claim disability. You can also consider purchasing additional disability insurance from an outside provider to cover a higher percentage of your lost income.

Employee Stock Purchase Program (ESPP) = 10% discount on Microsoft’s stock price

Every year you can contribute a maximum of 15% of your cash compensation, up to a limit of $25,000, which means an immediate benefit of $2,500/year!

Be aware of qualifying and disqualifying dispositions. While qualifying dispositions come with favorable tax treatments, it also comes with the risks of holding Microsoft stock for a prolonged period of time.

• Qualifying disposition means the stock must be held 1 year from the purchase date, and 2 years from the initial offering date to gain favorable tax treatment.

Deferred Compensation Plan (DCP) = Defer some of your taxable income today to a year in the future

This benefit is only available to employees who are Level 67 and higher and there are only two times during the year to enroll:

• May (defer next year’s bonus).
• November (defer next year’s salary).

When considering taking advantage of this benefit, you should weigh tax rates today vs. future tax rates and the risks of Microsoft’s longevity. With DCP, you are deferring compensation to a later year, in anticipation of Microsoft still being in business.

Maximizing Your Awards 

Think of the mix of salary, RSUs, and benefits that comprise your compensation as distinctive sources of wealth. Each has unique properties—advantages, as well as limitations—that enable you to achieve particular goals.

You can find more details about your specific benefits in HRweb – Benefits (aka.ms/benefits). When you are hired—and each year during open enrollment—you will make your benefit selections via aka.ms/benefitsenroll.

Our team has an in-depth understanding of Microsoft’s multi-level incentive structure, and we can help you navigate and optimize your specific compensation package, as well as make your benefit selections and review them annually.