Women’s Series: What to do When Getting A New Job
Getting a new job is usually a very exciting time and a time to look forward to your new opportunity. Leaving one company and going to another will also leave you busy comparing benefits, salary and retirement plans. Please keep the following in mind when moving to a new company.
- Employer Retirement Plan: When speaking to your new employer it’s important to ask about their retirement plan. The benefit to you is your salary deferral contributions are taken out of your payroll pre-tax. That is less taxable income for you plus your retirement plan contributions are higher than if you received that money in your paycheck. Other benefits may include an employer match contribution or an employer profit sharing plan contribution. That is money given to you from your employer if you participate in the retirement plan⃰ If you have an old retirement plan at your previous job then you have some options. You can either rollover your old retirement plan to a Traditional IRA without having any tax consequences, you may have the option to roll it into your new employer retirement plan without tax consequences as well or you may have the option of leaving your 401k assets in your old employers plan or taking your 401k in a lump-sum. If you take your 401k assets as a lump-sum distribution it will be taxable as ordinary income and if you are under the age 59 ½ then there is also a 10% penalty from the IRS. All retirement plans are different so you would need to find out from your new employer if the plan takes incoming rollovers. The benefits of rolling over your retirement plan into an IRA is the wide range of products you can invest in an IRA account versus the limited options most retirement plans offer.
- Health Benefits: Knowing your health benefits for you family is extremely important when starting a new job. Getting your benefits once you move is important so that you don’t have any gap of time between employers. If you do have a gap then you’ll more than likely need to go on COBRA. COBRA offers you the same health benefits you were receiving from your old job for the next 13 months with you paying up to 102% of the costs you and your old employer were paying. It’s also important to compare health insurance plans based on cost, coverage and the option of having a health savings account. Based on your family’s needs one health insurance product may be better suited for you over the others offered.
- Life Insurance and Disability Insurance Benefits: A lot of larger companies will offer life insurance and long term disability benefits to their employees for a low cost. When you take a new job it’s important to compare your new life insurance and disability benefits to your old benefits. If you are starting a new job that does not offer life insurance and disability insurance you may want to purchase both of these insurance policies before you start the new job so there is not a gap between coverage. Or, if you do not have these policies available to you at your current job and you are going to a job that does have these benefits it may be beneficial for you and your family to compare the costs of using a group policy versus your private policy.
Opening a new door in your career can be an exciting time and making sure you are tying up the loose ends prior to making the change can make your transition smoother.
If you have any questions about the topics above please let me know.
Our next Women’s Newsletter will be about: Nearing Retirement
CERTIFIED FINANCIAL PLANNER™
⃰Retirement plans may have different investing schedules. Be sure to review your specific plan.
Any opinions are those of Christina Jones and not necessarily those of Raymond James.