For many Microsoft employees, sell-at-vest is the most tax-efficient default — vested shares are already taxed as ordinary income, and holding only adds concentrated-stock risk. Holding can make sense if it’s part of a deliberate plan and you’ve capped your overall MSFT exposure. A specialist will model both paths against your bracket and goals before recommending a default.

Vested RSUs are taxed as ordinary income at the fair market value on the vest date. If you continue to hold the shares, future appreciation is taxed at capital gains rates — short-term if sold within a year of vesting, long-term thereafter. Higher-earning employees often face under-withholding because Microsoft’s default supplemental withholding rate may not match their real marginal rate.

Microsoft uses two RSU schedules. On-hire awards typically vest 25% per year over four years, with the first vest one year after your hire date. Annual stock awards are granted each August and vest 20% per year over five years on a quarterly basis. After year one, most employees are running both schedules simultaneously.

Unvested RSUs are forfeited at separation — there's no "vest acceleration" by default. Timing your departure around vest dates and any retention or refresher awards can preserve significant value. An advisor can map this for you in advance so you're not making the call under pressure.

Unvested RSUs are forfeited at separation — there’s no “vest acceleration” by default. Timing your departure around vest dates and any retention or refresher awards can preserve significant value. Exception: employees who reach age 55 with 15+ years of service (or age 65) may be eligible for continued vesting after leaving, subject to plan terms. An advisor can map this for you in advance so you’re not making the call under pressure.

The DCP is available to employees at Level 67 or higher. It allows eligible employees to defer up to 75% of base salary (November enrollment) and up to 100% of their September cash bonus (May enrollment) on a pre-tax basis. Unlike a 401(k), DCP balances are an unsecured employer obligation and are not ERISA-protected. Distribution timing elections made at enrollment are difficult to change, so getting the initial decisions right requires careful planning.

Yes — Microsoft’s 401(k) plan permits after-tax contributions and in-plan Roth conversions, which together enable the Mega Backdoor Roth strategy. For high earners, this can shelter tens of thousands of additional dollars per year in tax-advantaged growth on top of the standard $24,500 elective deferral. It’s one of the highest-leverage moves a Microsoft employee can make and one of the most commonly missed.

Concentration is reduced through a deliberate, multi-year plan: setting a maximum MSFT allocation, harvesting tax losses to offset diversification gains, and using vehicles like direct indexing or exchange funds when concentration is large. The wrong move is selling all at once and triggering an unnecessary tax event — the right move is staging it.

Datalign is free for consumers. Advisory firms in our network compete to be matched with clients, so you pay us nothing regardless of whether you ultimately work with the advisor we recommend. If you decide to engage with the advisor, their fees are disclosed transparently before you commit.

Datalign is an SEC-registered investment advisor that operates a matching platform. We don’t manage your money — we connect you with vetted fiduciary firms that do. Our fiduciary registration is what allows us to evaluate advisors objectively and route you to the right fit.