As an employee at Google (or anywhere else, for that matter), it’s essential to start planning for retirement. That means taking a closer look at your employer’s retirement plan. Like many other major tech companies, Google offers a 401(k) to help employees save for their future.

Here’s a quick look at how Google’s 401(k) works:

• When you contribute to your 401(k), Google will support you with matching funds–up to a point, anyway. Google will match either 100% of contributions up to the $3,000 mark or 50% of contributions up to the calendar year’s IRS limit, whichever is higher.

• Google employees are automatically enrolled in a 401(k) plan. As a new employee, you’ll get registered at a rate of 10% of your eligible pay by default. However, you can change that rate if you’d prefer to contribute a different amount of your income.

• Google’s 401(k) is somewhat unusual in that matched contributions from the employer are considered immediately vested. An employee could leave at any time and take their matched funds with them.

That should give you a basic understanding of this plan, but there’s more to learn. Here’s what you should know about ways to maximize your Google 401(k) match.

1. Leverage Matched Funds

As you can see based on the breakdown above, Google is more than willing to help its employees save for retirement. The fund matching they provide as part of their 401(k) plan will essentially give you free money, so there’s no reason not to use it to its fullest. Since Google matches up to 50% of the IRS limit, you can view this as a 50% rate of return on your contribution for that year - the best deal you will find. 

2. Maximize Deferrals

Elective-deferral contributions (AKA “deferrals”) allow you to add funds from your paycheck directly into your 401(k). That is a powerful way to automate saving for retirement, but you’ll need to know some ground rules first.

Before utilizing this strategy, you must figure out the maximum amount you can add to your retirement account through deferrals. Fortunately, this is as easy as starting with the IRS limit for the current year and dividing it by your annual base salary.

For 2024, the IRS’ cap on 401(k) contributions is $23,000. If you make $200,000/year in cash compensation at Google, here’s what the process of calculating your maximum contribution would look like:

$23,000 / $200,000 = 11.5%

Thus, setting your pre-tax and/or Roth contribution to a total of 11.5% will let you max out your contributions over the year.

If you transfer to Google from another company, it is important to account for any current calendar year contributions you’ve already made to your previous employer’s 401(k) plan. For example, if you have already contributed $10,000 this calendar year to your previous employer’s plan, you can only contribute $13,000 to the Google plan after starting. Note that this will also impact the amount of match you receive from Google. 

3. Consider an “After Tax” Strategy - aka “Mega Backdoor Roth”

Following the steps outlined above will allow you to add a healthy amount of cash to your 401(k). But you don’t need to stop there, thanks to after-tax contributions–or, to use their more exciting name, the “Mega Backdoor” Roth strategy. By putting even more into your retirement savings account, you can plan even further ahead while diversifying your tax strategies.

To fully understand after-tax contributions at Google, you’ll need to know a thing or two about contribution limits:

• For 2024, the IRS’ hard limit on 401(k) contributions is $69,000. Are you confused about how that aligns with the previously mentioned amount of $23,000? The overall limit includes your personal deferrals, contributions from your employer, and after-tax contributions. 

• If you’re 50 or older in 2024, you are also eligible for a “catch-up contribution”. This benefit allows you to add an extra $7,500 on top of the personal limit, giving you a total of $76,500. 

• Google will match the larger amount under these two options. If you maxed out your before-tax personal contribution, you’d get 50% of what you contributed - i.e., $11,500.

With all this in mind, you could potentially contribute an extra $30,250 to your 401(k) after taxes. Here’s how the math works for 2024: 

• Pre-tax personal contribution limit: $23,000*

• Google match (50% of $23,000): $11,500

• After-tax contribution limit: $34,500

• Total contributions: $69,000

*If age 50 or over, add another $7,500 to your personal contribution limit.

One last word of advice: While working on your after-tax enrollment, be sure to convert your after-tax to Roth! That way, your after-tax contributions will be automatically converted to Roth, making your future investment grows tax-free. If you do not make this election, all your future growth will be subject to ordinary income taxes - this is an important button to push. 

Make the Right Moves

Are you feeling a bit overwhelmed by the numbers, percentages, and investment strategies detailed in this post? If so, you’re far from alone. Getting the most from your Google 401(k) match is key to creating a solid financial future, but that doesn’t mean navigating the world of finances is easy.

The best way to make sure you’re making the right decisions with your Google benefits is to get help from the pros. If you’re working for a major tech company, Consilio Wealth Advisors is the perfect choice for your financial advising needs. We specialize in helping tech professionals like you make the most of your complex benefits and compensation structures, including 401(k)s, RSUs, and more.

Whether you’re trying to maximize your Google 401(k) match or need guidance on great investments, the team at Consilio will provide jargon-free financial advice.

Disclosures: 

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

Consilio Wealth Advisors, LLC is not affiliated with Google or Alphabet. Our team of advisors regularly works with Google employees and receives updates on their employer benefit programs. This article is not sponsored by Google or Alphabet. 

Consilio Wealth Advisors, LLC (“CWA”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where CWA and its representatives are properly licensed or exempt from licensure.