10 Mistakes with Broadcom's 401(k), ESPP, and RSU Plans
At White Pine Financial, we understand that Broadcom employees have unique opportunities and
challenges when it comes to investing and retirement planning. Our goal is to help you navigate these
complexities to ensure you make the most of your benefit plans.
401(k) Plan
Mistake #1: Contributing only 6%.
Impact: Missing out on additional tax savings opportunities.
Solution: While you should contribute at least 6% of your salary to get the full company match, aim to contribute up to the IRS limit ($22,500 for 2024, $30,000 if 50+) to maximize retirement savings.
Mistake #2: Ignoring After-Tax Contributions and Mega Backdoor Roth.
Impact: Missing out on additional tax-advantaged retirement savings.
Solution: Contribute after-tax dollars and roll them into your Roth 401(k) for tax-free growth.
Mistake #3: Poor investment choices.
Impact: Suboptimal growth of retirement savings.
Solution: Consider Vanguard target-date funds if you lack investing experience or professional advice.
Mistake #4: Not taking advantage of Fidelity BrokerageLink®.
Impact: Missing out on better investment options.
Solution: Utilize Fidelity BrokerageLink® for investments beyond those offered in the plan to improve returns and diversification.
ESPP
Mistake #5: Not taking full advantage of the discount.
Impact: Missing out on potential gains.
Solution: Contribute up to 10% of eligible compensation to benefit from the 15% discount. If the stock rises during the 6-month offering period, your discount is greater than 15%.
Mistake #6: Failing to consider tax implications.
Impact: Unexpected tax liabilities.
Solution: The plan requires you to hold purchased shares for at least 6 months. When you sell, you’ll pay the higher, short-term capital gains rate if you hold the stock for less than 1 year from purchase or the lower, long-term capital gains rate if you hold the stock for longer than 1 year.
Stock Incentive Plan (RSUs)
Mistake #7: Not understanding vesting schedules.
Impact: Missing out on tax reduction opportunities.
Solution: Review your RSU award letter and consider your financial plan when deciding how long to hold vested shares.
Mistake #8: Not planning for taxes on vesting shares
Impact: Unexpected tax bill.
Solution: Broadcom typically withholds some vested RSUs for taxes. Since your actual tax rate could be higher, set aside funds to cover any additional taxes.
Mistake #9: Not planning for taxes when selling shares.
Impact: Unexpected tax bill.
Solution: When you sell RSUs after their vesting date, you are responsible for capitals gains taxes on the increased (or decreased) value. You pay short-term or long-term capital gains if you hold shares for less than or more than 1 year from vesting date.
Mistake #10: Concentrating too much in company stock.
Impact: Increased risk of price decline and reduced diversification.
Solution: Implement a systematic selling strategy to reduce the concentration risk gradually without triggering large tax liabilities and invest in a diversified portfolio.
Why work with White Pine Financial?
• We specialize in wealth management for individuals and families. We show you when you can retire and how much you can spend in retirement. We empower you to retire earlier and spend more.
• Our fee includes financial planning, tax planning and asset management.
• We create a customized, high-quality, no-cost financial plan to provide you a framework for financial success.
• We implement strategies for ongoing tax reduction.
• We optimally allocate your assets across your investment portfolio.
• We clearly explain what we do and why we do it. You can be as involved as you like.
• We periodically meet to discuss progress toward your goals and make any updates.
Employer price
Employer priceStart-up fee: $500 for new plans; $1,000 for existing plans (one-time)
Administration fee: $375 + $7.50 per participant over 30 participants (per quarter)
Asset price
Asset price| Plan Assets | Quarterly rate |
|---|---|
| Up to $1.5 million | 0.1450% |
| $1.5 – 3 million | 0.1325% |
| $3 – 5 million | 0.1200% |
| $5 – 10 million | 0.1075% |
| $10 – 25 million | 0.0950% |
| $25 – 50 million | 0.0825% |
| Over $50 million | 0.0700% |
*Minimum quarterly fee is $580
40 participants with $1.8 million in plan assets
Employer price = $375 + $7.50 x 10 = $450
Asset price = $1,800,000 x 0.001325 = $2,385
Total price = $450 + $2,385 = $2,835 (per quarter)
Employer price
Employer price| Participants | Quarterly price |
|---|---|
| 1 – 15 | $994 |
| 16 – 50 | $994 + $18.75/participant over 15 |
| 51 – 100 | $1,665 + $17.50/participant over 50 |
| 101 – 500 | $2,525 + $16.25/participant over 100 |
| 501 – 1,000 | $9,025 + $15.00/participant over 500 |
| Over 1,000 | $16,525 + $13.75/participant over 1,000 |
Asset price
Asset price| Plan Assets | Quarterly rate |
|---|---|
| Up to $1.5 million | 0.1250% |
| $1.5 – 3 million | 0.1125% |
| $3 – 5 million | 0.1000% |
| $5 – 10 million | 0.0875% |
| $10 – 25 million | 0.0750% |
| $25 – 50 million | 0.0625% |
| Over $50 million | 0.0500% |
20 participants with $2 million in plan assets
Employer price = $994 + $18.75 x 5 = $1,088
Asset price = .001125 x $2,000,000 = $2,250
Total price = $1,088 + $2,250 = $3,338 (per quarter)