Getting the Most from Your Google Benefits

Google provides an extensive range of benefits that can enhance your wealth, manage risk, and secure your future. By integrating Google’s compensation, retirement, and health benefits into your financial plan, you can better align these offerings with your long-term goals.

Equity Awards

Google’s stock units (GSUs) can be a powerful tool for achieving financial objectives. Income taxes apply as shares vest, and Google will withhold the appropriate tax amounts, currently at a default rate of 22% for most employees. If your vested shares push you into a higher tax bracket, consider making estimated tax payments or adjusting your tax withholding directly through the broker portal (either Morgan Stanley or Charles Schwab).

GSUs typically vest monthly over a multi-year period. If you’re subject to restricted trading windows, a 10b5-1 trading plan may help you automatically sell shares as they vest while staying compliant with insider trading policies.

Retirement Savings

Pre-Tax 401(k) and Roth 401(k)

Google’s 401(k) plan allows you to contribute on a pre-tax or Roth basis, with an employee deferral limit of $23,000 in 2024. Employees over 50 may make additional contributions of up to $7,500. The traditional pre-tax 401(k) option reduces your taxable income now, whereas the Roth 401(k) option offers tax-free withdrawals in retirement.

Rule of Thumb: if you expect your tax rate to be higher in retirement, it may be best to choose the Roth 401(k) now, or fund both types of 401(k) plans to provide tax diversification. Whichever plan (or combination) you choose, we suggest you make the maximum annual contribution, if possible, to maximize retirement savings.

Google Matching

Google provides a generous 50% match on contributions, and Google’s employer matching contributions are immediately vested. If you are a highly compensated employee, your contributions to the plan may be limited.

After-Tax 401(k) (“Mega Backdoor Roth”)

In addition to the $23,000 employee deferral limit, Google permits their employees to contribute an additional amount to an after-tax 401(k). This should not be confused with the Roth 401(k) contributions previously discussed. The IRS maximum 401(k) contribution limit is $69,000 and is inclusive of the employer match. This after-tax contribution is often called a “Mega Backdoor Roth.” It’s a highly appealing strategy for employees that have the means to contribute. You are taxed on all contributions into the after-tax portion of the 401(k).

Once the contributions are made to the account, you have two options:

1. Do not convert to Roth: your contributions will not be taxable upon withdrawal, but your earnings will be taxable when distributing the funds (similar to how a traditional pre-tax 401(k) works).
2. Convert after-tax to Roth: both contributions and earnings can grow tax-free. If you elect to auto-convert the after-tax contributions on Charles Schwab or Vanguard’s website, the full conversion is a tax-free event (since it will be 100% basis).

Please consult a Coldstream Wealth Manager on how to request a Roth in-plan conversion for existing after-tax contributions or to determine if this strategy is right for your financial situation.

How much can you contribute to this after-tax 401(k)? For example, if you are under 50 years of age and maximize your employee deferral amount ($23,000 in 2024), and Google matches $11,500 (assuming $300,000 salary), this would allow you to contribute $34,500 into your after-tax 401(k) as highlighted below.

Maximum 401(k) Contribution Illustration

Investing your 401(k)

The Google 401(k) plan is administered by either Charles Schwab or Vanguard. Each custodian provides a selection of investments with low fees and self-directed investment options. The default investment is the Target Retirement Fund nearest the year you would reach the age of 65. You may want to select a different target-date fund or specific investments depending on your retirement goals and risk tolerance.

Health Insurance

You have the option to choose from five comprehensive plans which include a variety of deductibles, out-of-pocket maximum costs, and prescription costs.

1. Anthem gHIP (Health Savings Account)
2. Anthem PPO
3. Surest PPO
4. Kaiser (California residents only)
5. Kaiser (Hawaii residents only)

Google also has the following medical benefits for their employees:

• Medical, dental, and vision insurance for employees and dependents
• Employee assistance programs focused on mental health
• On-site wellness centers
• Workplace accommodations for physical or mental health concerns
• Access to mental health apps

Open Enrollment

It is important to remember that if you don’t enroll or make changes during this window, your current benefits (except Flexible Spending Account, “FSA,” elections) will roll over to next year at the new rates.

If you have a 2024 FSA and want one for 2025, you must enroll in a new FSA during Open Enrollment – these accounts do not roll over year-to-year.

For 2025 open enrollment, Google is offering:

• A new Surest PPO plan, which is a copay-only plan with no deductibles or coinsurance. This plan, like the Anthem gHIP plan, is at no cost to employees.
• Enhanced disability insurance options with a new voluntary Unum Individual Disability Insurance (IDI) benefit. If elected, this policy would supplement employees’ existing long-term disability coverage due to illness or injury. Benefits are tax-free and provide additional coverage to replace a higher percentage of income than what is covered under the group long-term disability plan.

Health Savings Account (HSA)

The HSA Plan has the highest deductible, but it comes at no cost to employees and features a medical savings account that you can fund with pre-tax income plus contributions from Google. For 2024, HSA contribution limits are $4,150 for individuals and $8,300 for families (increasing slightly to $4,300 and $8,550 in 2025). Google matches up to:

• $500 for individual coverage
• $1,000 for employee + dependents coverage

HSA funds grow tax-free and the withdrawals to pay for qualified medical expenses are also tax-free. The money is yours to keep, even if you leave Google. Given their unique tax treatment and ability to invest contributions, HSAs can also be used to supplement your retirement health savings.

Flexible Spending Account (FSA)

An FSA allows you to save for health and dependent care costs using pre-tax income. If you do not have an HSA, you may contribute up to $3,200 per year (or $3,300 in 2025) to a Medical FSA (Med-FSA) or Limited Purpose FSA (LPFSA).

Google also offers a Dependent Care FSA that can be used for certain childcare expenses or to care for senior citizens who live with you and are claimed as dependents on your federal tax return. Contributions are limited to $5,000 annually.

Unlike an HSA, FSA funds must be spent by the stated deadline to avoid forfeiting any of the savings, as only $640 of contributions are allowed to be rolled forward from 2024 to 2025. An FSA is best used for large pre-planned medical or dental expenses, such as orthodontics.

Life Insurance

Google’s life insurance benefit is equivalent to twice your base salary at no cost to you, up to $500,000. Employees can purchase additional life insurance up to ten times their salary, with a maximum benefit of $2 million for no out-of-pocket costs. Supplemental life insurance for employees or employee family members can also be elected on top of this, with premiums paid out of your paycheck.

Accidental Death & Dismemberment (AD&D) coverage is also available, which applies for death or injuries resulting from a covered accident.

Disability Insurance

Google provides short-term and long-term disability coverage, replacing 60% of your income in the event of a disability. Additional voluntary disability coverage options can supplement your income further (IDI policy), and coverage is portable, allowing you to retain the policy if you leave the company.

Other Benefits

Google offers a range of additional benefits to support employees’ financial wellness:

• Legal Assistance Plan: Available for various legal needs, such as estate planning and identity theft.
• Childcare and Family Support: Google’s family programs include childcare resources and parental leave benefits.
• Employee Discounts: Access discounts on products and services, including electronics, travel, and dining.
• Professional Development: Google encourages skill development with options for tuition reimbursement and access to various learning platforms.
• Charitable Giving: Google matches charitable gifting of employees up to $10,000 annually.

Reviewing Your Google Benefits

Google’s benefits program is robust, but understanding which offerings best serve your financial goals is key. If you have questions about optimizing your benefits or integrating them into your overall wealth strategy, consult with your Coldstream Wealth manager.

*All of Coldstream’s staff shall attain the required licenses and designations necessary for his/her position. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and Certified Financial Planner™ in the U.S.