The Salesforce Supersaver – A High Earner’s Guide to Maximizing Salesforce's Benefits

Exhale Wealth Management is not affiliated with Salesforce. While Exhale Wealth Managementt communicates with its clients regarding their Salesforce employee benefits, and educates itself on the Salesforce Benefits, there is no guarantee that the information we have provided is accurate. Salesforce employees are encouraged to contact their employer should they have any questions regarding their specific employee benefits.

So, you’re maxing out your 401k… Amazing! But what comes next?

This article highlights five common strategies that can be used by high-earning Salesforce employees, along with their 2024 contribution limits and potential tax benefits, to reach over $100,000 per year of tax-advantaged savings.

The below strategies each include some level of restriction on the use of funds; as such, individuals should consider saving separately for short and mid-term goals.

	Contribution Limit (2023)	Overview
Employee Stock Purchase Plan (ESPP)	$25,000 ($21,250 Investment + Minimum 15% Purchase Discount)	Financial Benefit – A minimum 15% discount on your purchase price and potential favorable tax treatment of gains for Qualifying Dispositions. Restrictions on Use of Funds – Unlike other strategies, you need to make it through the 6-month purchase period, then there are no restrictions on selling the shares and using the proceeds as you see fit. Highlights – Salesforce’s ESPP satisfies the three factors we look for in any ESPP and is a powerful tool for building wealth. 15% Discount, providing a minimum benefit if the stock goes down during the purchase period. 6 - 12 month lookback periods, allowing for significantly larger discounts on purchases when the stock price goes up during the purchase period. No ESPP Trading Restrictions, allowing you to sell ESPP shares immediately following purchase. Company and personal trading restrictions may still apply.
401k + Match	$23,000 + $5,000 Salesforce Match (+ $7,500 at age 50)	Financial Benefit: Traditional 401k – Tax deduction in the year of contribution and tax-free growth. Roth 401k – Tax-free growth and tax-free withdrawals in retirement. Salesforce Match! Salesforce matches 100% on the first 6% of your contributions, up to $5,000. Restrictions on Use of Funds – There is a penalty if withdrawn before age 59.5, with certain exceptions. Highlights – Salesforce's 401k offers Traditional, Roth, and After-tax options with various low-cost investment options.
Mega Backdoor Roth 401k	$41,000	Financial Benefit – Tax-free growth and tax-free withdrawals in retirement. Restrictions on Use of Funds – Penalty if withdrawn before age 59.5, with certain exceptions. Highlights – Alert for high earners looking to turbocharge their retirement! These are done by making after-tax contributions, then converting those funds to Roth. There is an overall cap of $69,000 across i) Traditional/Roth 401k deferrals, ii) Salesforce's employer match, and iii) After-tax 401k contributions.
Backdoor Roth IRA	$7,000 (+$1,000 at age 50)	Financial Benefit – Tax-free growth and tax-free withdrawals in retirement. Restrictions on Use of Funds – There is a penalty if withdrawn before age 59.5, with certain exceptions. Highlights – This is not specific to Salesforce but still an excellent tool for high earners. Precautions need to be taken to avoid the pro-rata rule. If individuals run into issues with the pro-rata rule due to existing funds in a traditional IRA, Salesforce's 401k allows employees to roll Traditional IRA funds INTO the plan, allowing you to “re-open the backdoor.”
HSA	$4,150 Single / $8,300 Family (+$1,000 catch-up at age 55)	Financial Benefit: Triple tax advantage i) tax deductions in the year of contributions, ii) tax-free growth, and iii) tax-free withdrawals for qualified medical expenses. Salesforce Contribution! Salesforce contributes $1,000 for individuals; note, this amount counts towards the annual contribution limit. Restrictions on Use of Funds – There is a penalty if not used for qualified medical expenses, although there is additional flexibility after 65 to make taxable withdrawals without penalty (similar to a Traditional IRA). Highlights – Only available for those with a High Deductible Healthcare Plan (HDHP). Expenses can be reimbursed at any point in the future, creating the ability to pay for medical expenses out of pocket today (save your receipts), still get tax-free growth, and get reimbursed years into the future.
TOTAL	$109,300 ($118,800 with catch-up contributions)	Yes, that’s some serious savings!!
Honorable Mentions		Charitable Contributions Match from Salesforce – Dollar-for-dollar match up to $1,000. 529 Education Savings Accounts – Not specific to Salesforce, but 529 plans offer tax-free growth and tax-free withdrawals for qualified education expenses. There is also the potential for additional state tax deductions (sadly, not California as of 2024). RSUs RSUs are not a tax-advantaged savings strategy, but they’re often a critical tool when determining one’s ability to take advantage of the strategies referenced in this article, particularly for those employees with > 15% of their annual income derived from RSUs. The key to your RSUs is to look at them as income and create an annual snapshot of your total earnings (salary + bonus/commission + RSUs) vs. your spending needs and then back into what you can contribute to the above-referenced savings strategies. Certain strategies, such as your ESPP, 401k/Mega Roth, and HSA, will materially reduce your salary, so using RSUs as an additional stream of income to cover living expenses can unlock your full savings potential. The value of your RSUs will fluctuate with the market, so make sure to revisit your plan regularly.

Contribution Limit (2023)

Overview

Employee Stock Purchase Plan (ESPP)

$25,000

($21,250 Investment + Minimum 15% Purchase Discount)

Financial Benefit – A minimum 15% discount on your purchase price and potential favorable tax treatment of gains for Qualifying Dispositions.

Restrictions on Use of Funds – Unlike other strategies, you need to make it through the 6-month purchase period, then there are no restrictions on selling the shares and using the proceeds as you see fit.

Highlights – Salesforce’s ESPP satisfies the three factors we look for in any ESPP and is a powerful tool for building wealth.

15% Discount, providing a minimum benefit if the stock goes down during the purchase period.
6 - 12 month lookback periods, allowing for significantly larger discounts on purchases when the stock price goes up during the purchase period.
No ESPP Trading Restrictions, allowing you to sell ESPP shares immediately following purchase. Company and personal trading restrictions may still apply.

401k

+ Match

$23,000

+ $5,000 Salesforce Match

(+ $7,500 at age 50)

Financial Benefit:

Traditional 401k – Tax deduction in the year of contribution and tax-free growth.
Roth 401k – Tax-free growth and tax-free withdrawals in retirement.
Salesforce Match! Salesforce matches 100% on the first 6% of your contributions, up to $5,000.

Restrictions on Use of Funds – There is a penalty if withdrawn before age 59.5, with certain exceptions.

Highlights – Salesforce's 401k offers Traditional, Roth, and After-tax options with various low-cost investment options.

Mega Backdoor Roth 401k

$41,000

Financial Benefit – Tax-free growth and tax-free withdrawals in retirement.

Restrictions on Use of Funds – Penalty if withdrawn before age 59.5, with certain exceptions.

Highlights – Alert for high earners looking to turbocharge their retirement! These are done by making after-tax contributions, then converting those funds to Roth. There is an overall cap of $69,000 across i) Traditional/Roth 401k deferrals, ii) Salesforce's employer match, and iii) After-tax 401k contributions.

Backdoor Roth IRA

$7,000

(+$1,000 at age 50)

Financial Benefit – Tax-free growth and tax-free withdrawals in retirement.

Restrictions on Use of Funds – There is a penalty if withdrawn before age 59.5, with certain exceptions.

Highlights – This is not specific to Salesforce but still an excellent tool for high earners. Precautions need to be taken to avoid the pro-rata rule. If individuals run into issues with the pro-rata rule due to existing funds in a traditional IRA, Salesforce's 401k allows employees to roll Traditional IRA funds INTO the plan, allowing you to “re-open the backdoor.”

HSA

$4,150 Single /

$8,300 Family

(+$1,000 catch-up at age 55)

Financial Benefit:

Triple tax advantage i) tax deductions in the year of contributions, ii) tax-free growth, and iii) tax-free withdrawals for qualified medical expenses.
Salesforce Contribution! Salesforce contributes $1,000 for individuals; note, this amount counts towards the annual contribution limit.

Restrictions on Use of Funds – There is a penalty if not used for qualified medical expenses, although there is additional flexibility after 65 to make taxable withdrawals without penalty (similar to a Traditional IRA).

Highlights – Only available for those with a High Deductible Healthcare Plan (HDHP). Expenses can be reimbursed at any point in the future, creating the ability to pay for medical expenses out of pocket today (save your receipts), still get tax-free growth, and get reimbursed years into the future.

TOTAL

$109,300

($118,800 with catch-up contributions)

Yes, that’s some serious savings!!

Honorable Mentions

Charitable Contributions Match from Salesforce – Dollar-for-dollar match up to $1,000.

529 Education Savings Accounts – Not specific to Salesforce, but 529 plans offer tax-free growth and tax-free withdrawals for qualified education expenses. There is also the potential for additional state tax deductions (sadly, not California as of 2024).

RSUs

RSUs are not a tax-advantaged savings strategy, but they’re often a critical tool when determining one’s ability to take advantage of the strategies referenced in this article, particularly for those employees with > 15% of their annual income derived from RSUs.
The key to your RSUs is to look at them as income and create an annual snapshot of your total earnings (salary + bonus/commission + RSUs) vs. your spending needs and then back into what you can contribute to the above-referenced savings strategies. Certain strategies, such as your ESPP, 401k/Mega Roth, and HSA, will materially reduce your salary, so using RSUs as an additional stream of income to cover living expenses can unlock your full savings potential. The value of your RSUs will fluctuate with the market, so make sure to revisit your plan regularly.