Potential Financial Steps for T-Mobile Employees in December
By Kevin Estes
It’s the holiday season!
The nights are long. The shops are full. Mariah Carey, Brenda Lee, Bobby Helms, Burl Ives, and Wham! are playing everywhere.
I hope you had a wonderful Thanksgiving and are ready for December. Ready or not, it’s heeere! 🎁
Potential steps for T-Mobile employees this month
Financial steps T-Mobile employees might take in December include:
Make year end retirement contributions
Update resume and career plan
Harvest tax losses or gains, if applicable
Review Social Security statement(s)
Update 401(k) contribution rate(s)
1. Make year end retirement contributions
401(k)
If the goal is to max out the employee 401(k) contribution, make sure that’s on track.
From a cash flow perspective, now may be a good time for heavy contributions:
we’re only a few months away from the tax benefit,
many employees have reached the Social Security taxable maximum income, and
annual bonus payouts as well as Restricted Stock Unit (RSU) vesting are expected in mid-February.
Someone in the 28% federal and 8% state tax brackets might get $0.36 on every dollar contributed back in a few months with their tax return.
Individual Retirement Arrangement (IRA)
Contributing to an IRA might be especially helpful for a spouse. Their contributions will likely reduce the income tax for a married couple who files jointly.
The IRA income limits don’t apply to someone not covered by an employer retirement plan. That’s especially common in single income families. In that case, the spouse with earned income would need to have enough earned income above their retirement plan contributions to cover the contribution of their spouse.
Although the deadline to contribute to an IRA is usually tax day, it may make sense to do so now. It’s easy to forget!
It might also take a while to open and fund the account. Setting them up now could avoid a fire drill later. 🚒
2. Update resume and career plan
Bonuses and raises generally occur in mid-February each year for salaried T-Mobile employees.
Here’s a rough timeline (working backward):
Late January: the human resource and payroll teams need time to process the changes before the changes in mid-February.
Mid January: senior leadership often needs time to review / adjust / approve the proposed raises and bonuses.
Early January: supervisors often need to submit their raise and bonus decisions by mid-January. That means they’re making their decisions in early January or even December!
Let’s play out a couple scenarios.
The review is positive or even excellent 😎
A manager might want to do everything they can for the employee!
If they know where the employee wants to go in their career, it’s much easier to help them get there. The manager might be able to:
develop stretch assignments,
begin preparing the employee for a promotion, or
tap into their network to help the employee find a great opportunity with another team or department.
The review is less than stellar or even poor 🤔
Sometimes, a role or working relationship is a poor fit.
An employee might consider applying for a lateral position somewhere else in the company. In extreme cases, they may need to consider positions outside of T-Mobile.
Either way, an updated copy of their resume would come in handy!
Time to think
It’s typically a quiet time around the office. That provides an excellent opportunity to reflect on what was accomplished throughout the year.
It’s also a good time to review uncompleted projects. Why weren’t they completed? Is there anything that could be done about it? Any progress is better than a goose egg! 🥚
What worked for me
Here’s what I liked to do:
Go through my calendar month by month. What were my biggest projects? What did I accomplish?
Review my sent emails. What were my key deliverables? What impact did they have?
Review my folders. What did I create? How did that help my business partners, teammates, and customers?
I’d then consider the work I did and the people I worked with:
What did I really enjoy doing?
What didn’t I get a chance to do that I wished I could have?
Who did I like working with?
That information helped me and my manager set my direction for the next year:
“It seems like there may be an opportunity with X. I’ve been thinking about it and I feel we might be able to accomplish that by doing Y.”
“I really enjoyed working with Z on that project. I heard they’re leading a new opportunity. Could I explore that a little further?”
“W is making great progress. I feel they could be great at T. I have a fair bit of experience with that. Would there be an opportunity for me to mentor W on T?”
This bottom-up approach then led to a one-page self-appraisal, which I’d normally print out and share with my manager.
It’s a bit like discussing a letter of recommendation with a trusted high school teacher. They shouldn’t have to work hard to remember:
what I do well,
what my development opportunities are, and
what I’d like to do next.
I tried to make it easy for my manager to support me!
This process helped me direct my career. Noticing what I liked to do and who I liked to work with helped me choose where to take my career!
December is a good time to update resumes, CV’s, and career goals. They’re particularly helpful for performance review conversations and expanding opportunities.
3. Harvest tax losses or gains, if applicable
I wrote a fair bit about tax loss and gain harvesting last month.
Here are some highlights:
Tax Loss Harvesting: Selling an investment at a loss can offset earned income up to $3,000. That’s especially helpful in a high-income year.
Tax Gain Harvesting: Selling an investment for a gain can increase taxable income. That’s especially helpful in a low-income year.
Each of these tactics need to be completed by year end, making December an excellent time for an investment review!
4. Review Social Security statements
Social Security statements are updated once a year. December is a good time to check them!
The latest statement can help dial in financial independence plans. Some families have Social Security benefits which exceed their living expenses!
However, the default Social Security statement assumes someone will earn the same real income they did the previous year until at least age 62. That assumption may be fine for someone with over 35 years of earnings. However, someone who’s worked fewer years will have $0 assumed… lowering their average income and retirement benefits.
The Social Security Administration now includes a calculator to estimate what the benefits will be based on assumed future income. I like to have clients assume no future income to see how that impacts their estimated benefits.
Another good reason to review Social Security statements regularly is to check for fraud. Some criminals report income to a stolen Social Security number. Any one of us could be their victim!
Knowing as soon as possible might help catch the fraudster in the act and minimize the impact to the victim’s finances and credit. It’s less than ideal to learn about the fraud when being audited by the IRS!
5. Update 401(k) contribution rate(s)
One final step a T-Mobile employee might take in December is to update their 401(k) contribution percentages.
Matching
T-Mobile matches:
100% of the first 3% an employee contributes and
50% of the next 2% they contribute.
If someone contributes 5% of their income, T-Mobile will generally match 4%.
Qualifying income includes:
regular salaries and wages,
commissions, and
bonuses - including the short-term incentive plan, monthly cash incentive plan, spot bonuses, etc.
Many people adjust their contribution rates toward the end of the year for a variety of reasons. However, it’s important to refresh the contribution rates before the new year.
If someone’s planning to max out their employee 401(k) contributions, it might make sense to do so throughout the year. If someone reaches the maximum before the last paycheck of the year, T-Mobile doesn’t make a catch-up contribution until the following year - usually in March.
2024 maximum
The 401(k) limits for 2024 are:
$23,000 for employee contributions, up $500 from 2023
$7,500 catch-up for those age 50 and over
To avoid impacting the 2023 contributions, it may make sense to wait until after the last paycheck of the year to make the changes in Fidelity.
Don’t forget to consider both the regular and bonus 401(k) contribution rates for the following year!
What’s Missing?
Is anything missing from this list? If so, please let me know!
If you’re interested in a review of your specific situation…
Disclaimer
In addition to the usual disclaimers, neither this post nor this image includes any financial, tax, or legal advice.
