Potential Financial Steps for T-Mobile Employees in March
By Kevin Estes
Growing season
We may have just weathered winter’s last blast.
The season was mild here in the Pacific Northwest. While tough on the ski resorts, it’s been great for our day to day lives!
The days are getting longer, leaves are budding, plants are sprouting… spring has sprung!
Potential steps for T-Mobile employees this month
Financial steps T-Mobile employees might take in March include:
Select employee stock contribution %
Plan major purchases
Finalize last year contributions
Prepare taxes
Schedule summer Paid Time Off (PTO)
1. Select employee stock contribution %
T-Mobile offers an Employee Stock Purchase Plan (ESPP) with a:
15% discount and a
six-month lookback.
The program takes 15% off the lower of the price at the beginning and end of six months.
Example:
Mike works for T-Mobile and maxes his contribution by funding the ESPP with 15% of his gross income each paycheck.
At the end of six months, T-Mobile uses the funds to buy stock at a discount. If Mike leaves the company before the purchase, he’ll receive the cash instead.
What happens if the stock price rises from $100 to $110?
Mike would buy at $85, 15% off $100
However, the stock’s worth $110!
That's a 29% gain ($25 / $85)
What happens if the stock price falls from $100 to $90?
Mike would buy at $76.50, 15% off $90
However, the stock’s worth $90!
That’s an 18% gain ($13.50 / $76.50)
If able to sell right away, Mike might only hold the shares a day or two.
Participating in the Employee Stock Purchase Plan may offer higher returns and lower risk than holding company shares.
Maximum ESPP contribution
The maximum Employee Stock purchase plan contribution each year is:
15% of compensation, up to
$25,000 for the year.
Compensation includes gross salaries, wages, bonuses, and commissions. It doesn’t include Restricted Stock Unit vests.
Not for everyone
However, participating in the T-Mobile’s ESPP isn’t for everyone. 0% may be the right percentage!
It may not make sense for households with:
high interest debt,
living expenses higher than income, or
large upcoming purchases.
For more, check out:
Are Employee Stock Purchase Plans Underrated?
Own Stock or Contribute to ESPP?
2. Plan major purchases
Now is a good time to prepare for big-ticket expenses.
Remodel
Home upgrades are often easier in the summer than they are in the winter. It’s much easier to move earth once it thaws! Also, planting in spring gives landscaping more time to get established before winter.
Buy a car
The least expensive time of the year to buy a car may be the fall. That’s when the new models come out, which can result in good deals for previous year models.
Someone may be able to minimize their financing costs by preparing now:
review their most recent credit report,
pay down high balance credit,
update income (if it’s grown) with financial institutions…
Also, shopping around may save thousands on a car purchase. For more, check out: Buying a Car
Move
While it may be more expensive to buy a home in the summer, it’s easier to move. There’re also more homes on the market.
Families often prefer to move during the summer because it’s easier on children. Changing schools is hard enough without doing so during the school year!
3. Finalize last year contributions
There’s still time to make contributions for 2023!
Traditional IRA
Contributions to an Individual Retirement Arrangement (IRA) can be made up into April 15th, 2024.
It’s possible a family may earn too much to either:
receive a tax deduction on a pre-tax (traditional) IRA or
be able to contribute directly to a Roth IRA
Roth IRA
A Roth Individual Retirement Arrangement (IRA) account works differently than a pre-tax account. There’s no tax deduction for the contribution on the front end.
Contributions are taxed initially. However, they may never be taxed again if certain conditions are met!
Spousal IRA
A spouse without earned income might still be able to contribute to a traditional or Roth IRA!
The employed spouse would need to have enough income to fund all of the couple’s retirement contributions. This is known as a spousal IRA.
Whether pre-tax contributions would lower taxable income depends on:
whether the spouse was covered by a retirement plan at work and
how much the couple earned in 2023.
Here’s a quick decision tree with the limits:
Health Savings Account
If someone was on a qualifying High Deductible Health Plan (HDHP) by December 1st, 2023, they have until April 15th, 2024 to contribute to a Health Savings Account.
The primary benefit of an HSA is that contributions are triple tax advantaged. They:
lower taxable income when made,
grow tax-free, and
can be used tax-free for qualifying medical expenses
According to the IRS, the 2023 contribution limits are:
$3,850 for individual coverage
$7,750 for family coverage
For more, check out:
Pros and Cons of a Health Savings Account
4. Prepare taxes
Even if taxes are self-prepared, it’s important to dedicate time to them.
Scheduling time is even more important when working with a tax professional! They’re overworked and in high demand.
Get organized and come prepared.
Tax checklist
Everyone’s busy. Things get missed - even by tax preparers!
Crashes happened frequently in the early days of aviation. Implementing simple checklists significantly improved safety.
Checklists have expanded to other areas like:
building construction
truck driving
surgery
We even use checklists when getting ready to sail!
One thing I like to do both for myself and for clients is draft a tax checklist. It lists everything I know that could impact taxes for the year!
A good place to start is the previous year’s tax documents:
Which still apply?
Are there any changes?
Creating the checklist also reminds me of other tax items!
5. Schedule summer Paid Time Off (PTO)
Now is a wonderful time to book Paid Time Off (PTO) for the summer!
Vacation rentals begin to book.
Flight prices start to rise.
Calendars get full.
Call Dibs
It’s not just the calendars of your friends and family members. You also have to worry about your coworkers’!
Summer coverage can be a struggle for many teams. People who schedule late may have limited say in which days they can take off. 😯
Claim the days which work best for you and your family now!
Use It or Lose It
T-Mobile limits how many hours can be rolled over. Hours above the limit are involuntarily donated to the company.
Full time employees can usually roll over two weeks (80 hours) at the end of the year.
During my tenure with T-Mobile, the rollover:
shrank to as little as 1 week (40 hours) and
grew to as much as 3 weeks (120 hours).
Avoid the drama. 🎭 Schedule Paid Time Off (PTO) now!
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.
