Photo of Kevin Estes smiling and wearing a dark suit with a black tee shirt. Behind him is an out of focus wooden background.

Hello, I’m Kevin - a financial planner who helps tech employees and their families live great lives.

Make yourself at home - we’ll get to some April steps in a moment.

But first - here are some links you may want to save for later.

Is It Worth Holding Employer Stock?

Transactions in Retirement Accounts Aren't Taxed… Yet

Is Your Cash Starving?

Now, let's get on to the blog! 😀

In bloom

Wow, is it ever nice here in the Pacific Northwest! The rain stopped, the sun’s out, and it’s getting warmer.

Potential steps this month

Tech professionals might do the following in April:

Evaluate stock purchased at a discount
File tax return(s) or extension(s)
Make tax payment(s) or plan refund(s)
Review / rebalance investment portfolio
Replenish emergency fund
Review tax return(s)

1. Evaluate stock purchased at a discount

Employees who’ve participated in an Employee Stock Purchase Plan may be in for a welcome surprise.

ESPP Purchase

Consider a stock that closed at about:

$206 on 9/30/2024 and
$269 on 3/31/2025.

A six-month lookback feature might take the lower of the price at the beginning and end of six months before applying a 15% discount.

15% off $206 is about a $175 purchase price.

Funds contributed may result in a gain of 54%:

gain of $94 ($269 less $175)
divided by $175 purchase price.

For more, check out: How Does an ESPP Work?

Employer risk

We have a lot riding on our employers:

income,
retirement contributions,
insurance,
benefits…

Employees who live near a major office may also risk the value of their:

home,
rental, or
small business.

Risk and return

We love our employers. That’s why we work there!

However, on average - they’re average.

One company has more risk because of single stock exposure. That’s the chance something bad happens to a particular business:

a competitor enters the space,
an executive makes a poor strategic decision,
someone cooks the books, etc.

Owning a single stock has higher risk with a similar expected return. That’s a bad combo.

Of course, there are may possible outcomes. Volatility is good if the direction’s up!

A good investment can underperform. A bad one can do well.

For more, check out: Is It Worth Holding Employer Stock?

2. File tax return(s) or extension(s)

It’s worth double-checking for opportunities before filing a tax return.

There’s still time!

Some accounts will accept contributions for 2024 until April 15, 2025.

Those include:

traditional Individual Retirement Arrangements (IRAs),
Roth Individual Retirement Arrangements (Roth IRAs),
Health Savings Accounts (HSAs), and more.

IRA contributions are often overlooked. They’re especially helpful for someone whose employer doesn’t have a retirement plan.

A Spousal IRA contribution may reduce taxable income. It depends on:

whether the spouse was covered by a retirement plan at work and
the couple’s income.

The deduction is phased out above income limits for 2024:

$123,000 if covered by a workplace retirement plan and
$230,000 if not covered by a workplace retirement plan.

Running out of time

The deadline to file personal taxes is April 15, 2025.

May businesses had a deadline of March 15 to give investors time to include income on their personal returns.

A personal extension filed by April 15th pushes the filing deadline to October 15th. However, taxpayers still need to pay estimated taxes by April 15th to avoid interest and penalties.

3. Make tax payment(s) or plan refund(s)

In a perfect world, a taxpayer would neither owe a payment nor receive a refund. However, that rarely happens.

Bad extremes

It’s not ideal to either:

make a sizable tax payment or
receive a significant refund after filing.

A large payment is hard psychologically and on cash flow. Underpayment can also incur interest and penalties.

Receiving a big refund is also a problem. It’s an interest-free loan to the government!

How to pay the tax

Consider the best way to pay:

dip into an emergency / opportunity fund,
go on a payment plan,
sell an investment, etc.?

Selling an investment may drive up taxes this year!

If a household usually pays when filing, it may make sense to:

make quarterly estimated payments,
adjust W-4 withholdings, or
both.

What to do with a refund

Some options for a refund include:

build up a cash reserve,
pay down high interest debt,
increase deductibles,
pay in advance to get a discount, and more.

Will the money be needed over the next few months or can it be invested? It may take weeks for the refund to arrive.

Cash flow planning is especially important for tech professionals who are often flush with cash after receiving their:

annual bonus,
merit increase,
Restricted Stock Unit (RSU) vests, and
Employee Stock Purchase Plan (ESPP) shares.

How to invest the refund

Investment options for a refund include:

401(k) up to the company match or contribution limit,
Employee Stock Purchase Plan (ESPP),
traditional or Roth IRA,
Health Savings Account (HSA),
taxable brokerage account,
small business, and
real estate.

For more on saving and investing, check out:

Love Future You

Your Last Career Will Be Investor

Is an HSA Worth It?

Own Stock or Contribute to ESPP?

Real Estate

Investments need to be profitable. Passive real estate losses may not lower taxes until the investment is sold.

Feeding a property cash every month can be particularly painful if:

income drops,
property values fall, or
both.

Check out: Investing in or Betting on Real Estate?

4. Review / rebalance investment portfolio

A household may have:

received a bonus - pushing their cash above what’s needed,
received shares from Restricted Stock Unit (RSU) vests, and
purchased shares through an Employee Stock Purchase Plan (ESPP).

In addition, the stock market has fallen recently. The S&P 500 index is down about 4% year to date.

Lower stock prices can make a portfolio more conservative. It’s important to check the allocation.

Dividends may need to be reinvested. Many investments can be set up to do so automatically.

Interest from high-yield savings and money market accounts can also build up cash. Investing excess cash may improve returns.

For more considerations, check out:

What to Do with RSUs?

How Are Restricted Stock Units Taxed?

Are My Assets in the Right Location?

5. Replenish emergency fund

Now’s a great time to check up on cash reserves.

Recurring expenses

I generally suggest someone keep about three (3) to six (6) months of living expenses in cash or cash equivalents.

Factors that could push up the target include:

a single income,
variable compensation,
real estate, and
job uncertainty.

Major purchases

It’s important to plan for upcoming expenses like:

summer vacations and camps,
home improvement projects,
vehicle purchases,
new business ventures, and
real estate investments.

For me: stocks, bonds, vehicles, real estate, and cryptocurrencies don’t count toward the reserve fund! Although they might be sold quickly, the market can move even faster.

High-yield savings and money market funds might pay 4% or more. Since checking accounts pay little interest, 4% might earn an extra:

$400 a year on $10,000,
$2,000 a year on $50,000, or
$4,000 a year on $100,000.

However, it’s important to keep some in checking for ongoing expenses. It’s crucial to pay bills on time to avoid late fees, penalties, and credit score blemishes.

For more, check out: Is Your Cash Starving?