It’s no secret that people are on the move. A poll conducted earlier this year on behalf of Fast Company indicated that the majority of U.S. workers are considering a job change.
Moving to a new opportunity at a new employer can be an exciting time. It can also be a stressful time. Here are seven things to consider when changing jobs.
Old 401(k)
Devise a plan for your old 401(k). You typically have four options when it comes to former employer plans:
- Leave behind in the old employer plan (in accordance with the old company plan documents)
- Transfer to the new employer plan (in accordance with the new company plan documents)
- Take a distribution
- Transfer to an outside IRA account
Because certain choices may carry tax and penalty implications, it’s especially important to consult a tax professional to help you decide which option is most appropriate for your situation.
New 401(k)
Familiarize yourself with the new company plan including the company match, vesting schedule, elimination period to participate, etc. Don’t be one of the 25% of workers who misses out on full 401(k) match. If you have a long period before you can contribute, consider other options such as an IRA or brokerage account to continue saving in the meantime.
Company Shares/ESOP
If you own company shares, have a conversation with your previous company HR manager about the separation rules. Liquidating company stock held outside of qualified retirement accounts could leave you with an unexpected tax liability. Once you have this information, it should be included in your financial plan moving forward.
Health Insurance
If you will have gaps in coverage between your old plan and new plan, talk to your previous company HR about coverage through COBRA.
Talk to your new plan administrator about resources available to verify in network providers and drug coverage.
Evaluate the cost trade-offs of a High Deductible Healthcare Plan (HDHP) with an HSA versus PPO or HMO plans. Some employers will incentive employees to participate in the High Deductible Healthcare Plan by offering employer-made contributions to the employee’s HSA account.
If you have an existing HSA, secure the plan information to bring the benefit forward with you.
Revisit your spouse or domestic partner’s coverage options. A job change may be considered a qualifying “life event,” allowing you to be added to his/her plan. Be thorough in your review, as some plan rules dictate special circumstances including rules for primary/secondary coverage.
Disability Insurance
Disability insurance is one of the best benefits an employer can offer. Unfortunately, it is also one of the most misunderstood pieces of the financial plan. Review your short-term and long-term disability coverage (if offered) to understand exactly what your plan will pay if you are too sick or injured to work. A few key questions to ask: What is the waiting (elimination) period? How long is the benefit period? How is my benefit taxed?
Life Insurance
The great thing about life insurance offered through an employer is that it is typically low-cost and may not require evidence of insurability for coverage. The bad thing is the policy is typically owned by the employer – meaning you may be unable to bring it forward with you should you leave. When signing up for insurance at your new employer, be sure you understand the portability rules for the policy should you leave in the future.
Bill Pay
Verify that any accounts set to auto-pay bills do not run out of money. If there is going to be a time lag between that last paycheck from your old employer and the first paycheck from your new employer, be sure you have planned for automatic bill payments to be withdrawn.
Every financial situation is unique. The best way to tackle these elements during a job transition is sit down with a fiduciary advisor who can review the entire package of company benefits and help you align your selections with your goals.
