Rivermark Wealth Management provides Apple employees direct access to a holistic financial planner & fiduciary with comprehensive knowledge of the benefits, opportunities, and challenges that are present with a growing career at Apple.
Interested in how we help Apple Employees?
Learn how our Client Solutions can help to coordinate your RSUs, ESPP, employer benefits, and assets to meet your short-term, immediate, and long-term goals.
Step 1 is to understand your Apple benefits. To help provide value to you, we created the following in-depth guide based on our expertise reviewing your Apple benefits. The following information is going to be robust and complex. It is not to be interpreted as direct recommendations, but rather an overview of ideas and strategies that might be beneficial to you. If you are the type of person that would rather hire an expert to implement all of this for you, schedule an introductory call today.
Step 1: Understanding Apple Benefits
Apple’s employee benefits can be broken down into 7 core categories:
• Health Savings Account and Flexible Spending Accounts
• Life and accident insurance
• Disability coverage
• Time away from Apple
• Financial programs
• Additional services and programs
For the purpose of this section of our website, we are going to only focus on core benefits that relate directly back to financial planning. For all other benefits, we recommend setting up time with your HR department.
Financially, Apple is focused on taking care of you while you’re developing the innovative products and services that are changing the world.
Apple has built a compensation philosophy so that you are invested in the value that you are helping to create. Therefore, they may award you with an equity grant of restricted stock units (RSUs) as part of your overall compensation. The purpose of RSUs are to provide incentives to attract, retain and motivate people whose present and potential contributions are important to the success of the company by offering them an opportunity to participate in the company’s future performance through the grant of awards.
What are RSUs?
Each Restricted Stock Unit is the right to receive one share of common stock upon settlement of your RSUs, following satisfaction of the applicable vesting requirements. Your RSUs will vest as set forth in your written Restricted Stock Unit agreement. Generally, within thirty (30) days following the date on which your RSUs vest, shares will be issued to you (such issuance is referred to as “settlement”). Once any shares have been issued to you in settlement of your RSUs, you then own them outright and, subject to the company’s insider trading policy, you may hold, sell or otherwise dispose of them.
For more information, check out my article on 3 Strategies for Managing Your RSUs.
Employee Stock Purchase Plan
The Apple Employee Stock Purchase Plan (ESPP) allows eligible employees to buy Apple stock at a discounted price. A summary of the plan is below:
Payroll contributions: Employees can contribute up to 10% of their salary. The IRS limits the amount of stock you can purchase each year to $25,000.
Purchase periods: Payroll contributions accumulate during each six-month purchase period. Shares of Apple stock are purchased at the end of each purchase period in January and July.
Discount: Shares purchased via the Apple ESPP receive a 15% discount. The discount is applied to the lower of the market values at the beginning and the end of the 6-month purchase period.
To learn more about ESPP programs and whether you should participate at your company, check out my article “Should I Even Bother Contributing To My Company's ESPP?”
At Rivermark Wealth Management, we specialize in helping clients with complex equity compensation.
If you'd like a complimentary review of your equity compensations, book time using the following button:
Apple offers their employees the opportunity to save for retirement via their 401k retirement plan run by Empower Retirement. Below are the key terms and provisions on the plan:
Contribution options: Traditional (or Pre-tax), Roth, and After-Tax
After-tax contributions: You can also choose to contribute up to 20% of eligible pay, including commission pay, in After-tax contributions. After-tax contributions are not matched by Apple and are subject to Plan limits and the annual IRS limit of $58,000 (2021). The annual IRS limit applies to Traditional 401(k), Roth 401(k), the Apple Match, and After-tax contributions combined. Like Roth 401(k) contributions, After-tax contributions are made on an after-tax basis and will not lower your taxable income.
Enrollment: Apple has an automatic enrollment feature to encourage employees to save for their future. If the employee hasn’t elected otherwise after the first 30 days of employment, a pre-tax contribution of 3% will automatically begin. The funds are placed into an age-appropriate target date fund. More details on investment options below.
Covered compensation: For Apple, compensation includes base compensation, overtime pay, commissions and performance bonuses. It does not include Restricted Stock Unit grants. The Internal Revenue Code also limits the amount of eligible pay that may be considered for purposes of making contributions to a 401(k) plan. In 2021, the limit is $290,000.
Employer Match: Apple matches your Traditional 401(k) and Roth 401(k) contributions to the Apple 401(k) Plan each pay period, up to a maximum of 6 percent of your eligible pay for the pay period, generally until your contributions reach the annual 401(k) contribution limit. Your match rate at Apple is determined by your eligible years of service at the Company.
Completed Years of Service Match rate
Less than 2 years: 50%
2-5 Years: 75%
More than 5 years: 100%
If you meet the annual 401(k) contribution limit early in the year by contributing more than 6 percent per pay period, you may not receive the maximum Apple Match.
Use the Maximizer tool at www.myapple401k.com to determine the contribution rate that allows you to maximize your Apple Match.
The Apple 401k plan offers a wide variety of options in which to invest your retirement savings. The “menu” can be divided into 3 general categories:
Target date funds: Select a target date fund based on a projected retirement date. The fund will automatically adjust to become more conservative over time as you approach your target retirement date. Apple’s 401k uses a series of target-date funds called LifePath Index funds (operated and managed by Blackrock). This is an ideal option if you like the simplicity of choosing one fund and the convenience of not having to be “hands on” with your retirement savings.
Individual fund selection: In addition to the target date funds, the Apple 401k also offers a variety of individual funds that enable you to build a portfolio with the asset classes of your choosing. Below is a list of the funds available in the plan, ranging from low risk/low expected return to high risk/high expected return:
The Apple 401(k) Plan offers a self-directed brokerage option through the Charles Schwab Personal Choice Retirement Account (PCRA). You can elect to invest up to 95 percent of your Apple 401(k) Plan assets in a large universe of mutual funds, individual stocks, bonds, and other investment choices through the PCRA (excluding Apple securities, and limited partnerships and other securities that could generate unrelated business taxable income). The PCRA is where you can access specialty investment options such as socially conscious, environmental and religious funds.
The PCRA option is designed for knowledgeable investors who understand the risk associated with the many investment choices available through the PCRA and who are seeking more flexibility, increased diversification, and a greater role in managing their retirement savings. You can access the PCRA option through www.myapple401k.com.
You also have the ability to hire an outside money manager to actively manage your Apple 401(k) account.
Let Us Help You Decide:
Tell us a little about yourself and the account(s) you want help with. Then we will review your options, answers a few questions to narrow your choices, and help build a custom allocation to best meet your needs that you can implement through your plan website. For those of you who want to outsource the ongoing management of your retirement account(s), we provide institutional asset management through PCRA for an asset management fee. This way you don’t have to worry about logging in to make changes, allocation updates, or rebalancing. You can rest assured that your account is in the hands of a trusted fiduciary.
Click HERE to schedule a 20-minute introductory call or Zoom meeting
Mega back-door Roth Conversion
One of the most overlooked opportunities within a unique 401(k) plan like the Apple Plan is the ability to contribute after-tax money. There is a little-known strategy called a Mega Back-Door Roth IRA Conversion that is available to almost all Apple employees. This is different than contributing directly to a Roth 401(k). In 2021, the IRS allows an employee to contribute a maximum of $58,000 into a 401(k). $19,500 can be pre-tax contributions, and the rest would be made up of employer match & after-tax contributions. This creates a really unique planning opportunity for high income earners.
If you are interested in the Mega Back-Door Roth IRA strategy, don’t go it alone. There are complex 401(k) and IRA administration rules and ordering that needs to be navigated. Rivermark Wealth Management has experience working directly with the Apple Empower Plan to ensure you execute properly. Contact us for an introductory call.
Apple Group Life Insurance
As an Apple employee, you have a minimal amount of group life insurance coverage based on your earnings. The life insurance benefit provided to you is a formula based on your base salary (not including cash bonuses or RSUs).
Basic Employee Life Insurance coverage equal to two times your annual salary provided by Apple. You do not pay a premium for this coverage. More often than not, we see this coverage not being nearly enough to protect a family if the unimaginable happens.
Supplemental Employee Life Insurance can be purchased during annual enrollment in an amount up to 10 times your annual salary.
Some advantages of the Apple group life insurance plan are:
- Covers employees who otherwise would not be able to afford individual life insurance policies.
- Allows higher risk individuals to be given life insurance coverage.
- Death benefit coverage could be sufficient for younger clients who don’t have many obligations outside of student loan debt.
- Free: Valuable coverage at no cost.
Some of the disadvantages are:
- The employee has little to no control over their individual coverage.
- Coverage does not continue or follow the employee if you leave your job.
- Healthier individuals pay the same premiums as those who are considered to be a higher risk within the group policy.
- Most people need significantly more coverage than their group policy provides in the event they prematurely decease.
- The premiums will increase as you move into higher age ranges.
Apple Short and Long-term Disability Insurance
At Apple, you work hard to build a life for yourself and your family, and it's only natural that you want to protect that. Most likely you protect your home, car and family from the unexpected with the appropriate insurance plans. Disability insurance protects your income!
You already insure assets like your car and your home. If you take your current annual income and multiply it by the number of years until you expect to retire, you almost certainly have a number that is larger than either of those assets. Said differently, your greatest asset is your ability to earn a high income that funds your lifestyle and takes care of your family. LT disability insurance is how you protect this very important asset. Apple offers both short-term and long-term disability, but more often than not this is not enough.
If you were suddenly unable to work due to an injury or illness, could you maintain your current lifestyle and fund important goals? If you answered no, you may need to consider additional disability insurance.
Apple’s short-term disability covers a % of your salary for a period of up to 6 months (7-day waiting period, 12 weeks @ 100% of salary, 13 weeks @ 70% of salary).
Apple’s long-term disability covers a % of your salary until you can go back to work.
The Basic LTD benefit is 50% of your monthly earnings. If you choose the “buy up” option during annual enrollment, the benefit is 70% of your monthly earnings.
Remember, their definition of income does not include the income you generate through Restricted Stock Unit grants or cash bonuses. If you rely on your bonus or RSU income to fund your lifestyle, you may be at risk of not having the disability coverage you need.
If you are unsure that you have the proper amount of life or disability coverage for your situation, schedule a complimentary 20-minute consultation.
Apple Accidental Death & Dismemberment Insurance
AD&D Insurance pays benefits in a lump sum for loss of limbs, sight, speech, or hearing, or loss of use of limbs, as well as for accidental death.
Coverage: Apple provides you with Basic AD&D Insurance coverage equal to two times your annual salary. You can also increase your coverage by buying Supplemental AD&D Insurance coverage for yourself and for your eligible dependents.
Supplemental coverage of up to 10x annual salary ($4MM maximum) can be obtained either during annual enrollment or within 30 days of a qualifying event (i.e. marriage, divorce, child birth, etc).
Health Savings Account (HSA):
A health savings account is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan.
How Can an HSA Benefit You?
1) Triple tax advantages:
The HSA has unique tax benefits that make it a "triple tax advantaged" account:
At time of contribution: Since your contributions are made before taxes are withheld, you do not pay Social Security tax, Medicare tax, federal income tax, and, in most areas, state and local income taxes on the money you contribute.
While you invest the balance: Growth in an HSA (whether interest, dividends, or capital gains) are shielded from any taxation.
When you take distributions: As long as you use the money for eligible medical expenses, you will incur no taxes or penalties at the time of distribution.
2) It's Investable
Investing your unused HSA money can be a great accelerator to building up reserves for retirement health care costs. This is an important step in the strategy of leveraging an HSA because if all you do is park the money in cash and leave it in the account for years or decades, the balance won't keep up with inflation. The future purchasing power of the money will get smaller with each passing year. This is especially true for health care costs, which have been inflating at a rate much higher than general inflation for many years.
3) The contributions are 100% vested and belong to you:
All the funds in your HSA, including Apple’s contributions, are 100 percent owned by you. Unlike funds in a Health Care Flexible Spending Account, all of your HSA funds roll over from year to year. This is a common misconception that likely causes many people to miss out on this uniquely tax-advantaged account. If you're thinking "I have to use it or I lose it", you're thinking about a Flexible Spending Account, not an HSA.
Below are the contribution limits in effect for 2021:
|2021 HSA Contributions:||If you cover only yourself||If you yourself and dependents|
|Your contribution1,2||+ Up to $2,850||+ Up to $5,700|
|Total contributions||= Up to $3,600||= Up to $7,200|
1. Employees age 55 or older in 2021 can contribute an additional $1000 to their HSA.
2. Employees can contribute to more than one HSA as long as their sum total contributions into all HSAs do not exceed the annual IRS limit.
While the HSA might offer significant tax and financial benefits, there are also non-financial factors to consider before enrolling in a high-deductible health plan. You might be required to change medical networks which means new primary doctors. If anyone in your family has a medical condition that requires frequent and ongoing services (i.e. diabetes) or if you are expecting a baby, choosing a high-deductible plan might not be the best choice.
If you have questions about a Health Savings Account and whether it is a good strategy for your situation, schedule a complimentary 20-minute consultation.
What is an FSA?
A flexible spending account (FSA) is tax-advantaged account much like a HSA or 529 plan. Funds are contributed to this account on a pre-tax basis and can be used for eligible expenses within the plan year.
Apple Healthcare FSA
For 2021, Apple employees can contribute $2,750 to their healthcare FSAs.
The benefit is you don’t pay tax on this income, so they can become a great tax savings vehicle. If you have set qualified medical expenses you will be spending during the year, this option may be helpful. For example, if you are in a 40% combined Federal/State income tax bracket, maxing out the Healthcare FSA could save you $1,100 of income tax!
It is important to do a medical expense evaluation before maxing out your FSA. The risk of a Healthcare FSA is that you can only roll $500/year over to the following year. At Rivermark Wealth Management, we can help analyze your medical expenses and conduct a needs analysis to determine proper pre-tax funding into the Apple Healthcare FSA. If you tend to have a lot of medical expenses, it would be wise to max out this benefit.
Apple Dependent Daycare FSA
A Dependent Care FSA (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services.
Similar to a Healthcare FSA, you can contribute up to $5,000 of pre-tax funds into your Dependent Daycare FSA. You will need to submit receipts for reimbursement from your FSA and expenses must meet IRS edibility rules. The IRS has provided a wide variety of the types of expenses a Dependent Daycare FSA can be used for, including some of the most common ones we run into with Apple employees: Before or after school programs, Au Pairs, Nannies, Preschool, Nursery school, payroll taxes related to eligible care, and summer day camp.
This can be another significant source of tax savings. Again, if we revisit our client who is in the 40% Federal/State Income Tax Bracket. By funding $5,000 to their dependent care FSA, they would save $2,000 in taxes.
Other fringe benefits of working at Apple include:
- Educational Assistance Program: reimbursement for professional development expenses
- Adoption Assistance Program
- Employee Assistance Program (EAP): Counseling services
- Employee Purchase Plan (EPP): Discounts on hardware and software purchases
- Wellness Reimbursement for taking care of yourself to use towards wellness activities (gym membership, etc.)
- Paid Parental Leave at 100% of your salary for moms and dads
- Paid Family Leave to care for a seriously ill family member
- Uses of back-up care per year (including in-home care for a child, adult or elder)
Rivermark Wealth Management is not an authorized representative of the company sponsor and its retirement plans.
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