Find Financial Advisors for Meta Employees & Executives: Q&A Insights from the Experts

RSU Taxes Are the Most Common Blind Spot for Meta Employees

Both advisors below say misunderstanding how restricted stock units are taxed comes up constantly in first meetings. Deciding what to do with newly vested shares — how much to hold, when to sell, and what taxes each choice triggers — is where a coordinated plan pays off.

Meta’s 401(k) Opens the Door to a Mega Backdoor Roth for High Earners

The advisors below point to after-tax 401(k) contributions converted to Roth dollars as a powerful option for employees who can afford to save beyond the standard limits. It is not right for everyone, but for high earners it can add substantial long-term, tax-free savings.

Build a Checklist Before You Leave Meta

A job change is easier to navigate with a written checklist: RSU and stock option vesting and expiration dates, a comparison of your current and new 401(k) plans, HSA and health coverage options, and beneficiary designations on your retirement accounts. Anything not handled before you resign should be acted on immediately afterward.

First, I like to get to know them as a person. Learning about someone’s family, values and dreams help to connect the dots between what we’re doing today from a planning perspective to their long-term vision in life. By getting to know my clients, I can anticipate their needs as the planning relationship develops.

Misunderstandings of taxes in relation to RSUs comes up frequently. It’s definitely not unique to Meta employees, I see it elsewhere. The US tax code is not known for its simplicity, so I always feel good when I can help an employee truly understand the tax implications of their RSUs and how best to leverage this wonderful benefit.

Meta’s 401(k) plan has the capability for a Mega Backdoor Roth. That’s an amazing benefit for savers who can afford to set aside extra money to take advantage of that benefit. It’s definitely not for everyone, but for high earners who are looking to maximize their savings, it’s a great option.

We understand Meta offers great retirement tools and our first goal is to make sure Meta employees see the long-term picture regarding their employee benefits. Our process is very methodical. We start by reviewing all their employee benefit options and dig into which benefits are currently used or not. We help them understand the pros and cons of any unused benefits. We also help them with decisions regarding their RSU’s, 401(k) options and strategic decisions around matters such as the Mega Backdoor Roth.

I like to ask Meta employees about their goals and about what money means to them. What was their experience with money growing up? What would they like to achieve with their money? We spend a lot of time initially on the non-quantitative work before we start to discuss numbers. As we progress, we want to know all about their RSU’s, retirement account balances, other assets, their budget, cash flow uses and taxes. We incorporate the hard numbers with what we learned about them to develop an investment portfolio and a written financial plan. I wrote an e-book titled 5 Steps To Retirement Planning, which serves as the framework for the work we strive to do with Meta employees.

We feel that the HSA plan may be underutilized. The HSA can offer triple tax benefits – tax deductible contributions, tax free growth and tax-free withdrawals if all of the rules are properly followed.

Individuals can start by creating a checklist that covers all aspects of their personal and financial life before the transition. A transition can be difficult so they should be organized. Organization will allow Meta employees to spend time on what matters most to them. The checklist could include some or all the following: RSU and stock option vesting schedules and expiration timelines, comparison of their existing 401(k) plan to their new employer’s plan, HSA plan options, new healthcare options and beneficiary tracking for their retirement accounts. After they resign they should immediately execute any matters that were not tackled prior to their resignation.

We think a comprehensive financial plan is the best way to prepare for retirement. Employees can start by listing their sources and duration of income – pensions, social security, investment accounts and other sources of income. They should consider their expenses – fixed costs, variable costs for matters such as entertainment and living needs. What does the net number (income minus expenses) illustrate? Could they reduce expenses if there is not a significant surplus? Inflation and investment returns are an important part of the equation. If they are using a portfolio for part of their living expenses, they should make sure their portfolio is appropriate for their risk tolerance and cash flow needs. Does the asset allocation of the portfolio make sense? Are there any concentrated positions? Where are the risks in the portfolio? What happens to the portfolio if the market drops 40% and how does that impact their spending? What are their health care costs and what happens if there is a health event? Do they have adequate insurance?

Meta employees considering working with an advisor should start by thinking about the complexity of their portfolio and finances. How much experience do they have regarding investments and finances? How much time do they want to spend on their finances? Are there other areas of their lives where they could use help such as estate planning, behavioral investing or concentrated positions? How do they react when the markets decline? Do they need someone to consult with during market volatility? Could they benefit from a comprehensive plan? The answers to these questions may help them determine if they should consider working with an advisor.

Some of the unique challenges we see with employees at Meta pertain to company stock and total benefits packages. What do they do with vested stock? How much should they hold? What are the tax consequences from newly vested positions? Are they taking advantage of ALL their benefits? We try to help them overcome these obstacles by creating a comprehensive plan that combines their values, experience and goals with their investments, retirement accounts and company benefits to help them pursue their long-term goals.

We think employees at Meta should start by asking their financial advisor if they are a fiduciary. Is the potential advisor required to put the clients’ interests above their own interests at all times? Ask about their services. What services do they offer? Will they offer comprehensive planning or simply investments? Who is part of their team? How often will they meet with their advisor? How will investments be transitioned? Are they planning to use third party managers? What is the fee and what is included in the fee? Are there extra fees to be paid for the investments?

What surprises me most is their approach to their restricted stock benefits. I never receive a consistent answer and that is OK. In my previous job, I also worked with employees who received restricted stock from several different firms. Many of these employees wish to hold the stock, others set the stock aside for different goals, while others have asked me to diversify their positions.

Highly compensated employees and executives should pay particular attention to tax strategies such as the Mega Backdoor Roth option. Executives with high compensation should consider how to defer or reduce taxes now to reap greater benefits in the future. Anything that provides a tax deduction or defers capital gains or protects income from taxes should be considered.