Microsoft Equity FAQ

Microsoft RSUs typically vest monthly over 4 or 5 years depending on the award type. On-hire grants usually vest 25% annually over 4 years, while annual refresher grants vest over 5 years (5% quarterly). Vesting occurs in February, May, August, and November.

This depends on your personal financial situation and risk tolerance. Selling immediately avoids concentration risk in a single stock, while holding for at least one year after vesting allows you to pay long-term capital gains rates (typically lower) on any appreciation. Many employees worry about over-concentration in Microsoft stock.

Microsoft's ESPP allows you to contribute up to 15% of your salary (maximum $25,000 annually) to purchase stock at a 10% discount. The plan has quarterly purchase periods and includes a 27-month lookback provision, meaning you get the discount from the lower price at either the beginning of the offering period or the purchase date.

A qualifying disposition occurs when you hold ESPP shares for at least 2 years from the offering date AND at least 1 year from the purchase date. Meeting these requirements allows you to receive more favorable long-term capital gains treatment on a portion of your gains.

Microsoft's annual refresher RSU grants vest over 5 years (at 5% quarterly), which is longer than the typical 4-year industry standard. This extended vesting schedule is designed to encourage longer-term retention, though it means refreshers vest more slowly than your initial on-hire grant.

Microsoft withholds 22% by default for federal taxes when RSUs vest, though you can adjust this rate. If your total supplemental income is high, the withholding rate may be 37%. You'll also owe Social Security, Medicare, and state taxes where applicable.

Yes, Microsoft matches 50% of your contributions up to 3% of your salary (essentially a 1.5% match). The company also offers Roth 401(k) options and allows mega backdoor Roth conversions through after-tax contributions, with immediate vesting of all matching contributions.

If you meet the early retirement milestone (age 55 with 15 years of service, or age 65), your unvested RSUs will continue to vest according to the original schedule even after you leave. Otherwise, unvested RSUs are typically forfeited upon departure.