10 things you can do with your money before changing jobs
So you’re starting a new job. Congratulations. Before you pack your stuff and take the nice plant they gave you, check this list to make sure your finances are in order before you go.
1. Find out which employee benefits you’ll need to replace, and which you can take with you.
First, ask HR when your insurance benefits terminate — the day you leave, the end of the month? Then find out when your benefits take effect at the new company (day 1, or on day 30, for example).
- Health insurance: Know how your current coverage compares to the new coverage. If you’re in the middle of treatment and not covered by insurance at your new job, plan and budget accordingly. Examples: fertility treatment or specialty medications.
- Dental and vision insurance: If you have dental or vision insurance now, but won’t in the new job, schedule appointments before you leave. New glasses or contacts? Check.
- Life insurance: If you bought (or were provided) extra life coverage, called a voluntary policy, through your employer and want to keep it, start the paperwork to convert from a group to an individual policy, if that’s offered. You’ll just pay the premium directly to the insurance company, rather than having it payroll-deducted.
- Retirement: You could have decisions to make about your 401(k). More on that below.
2. Look into health coverage options if there’s a gap between jobs.
COBRA stands for Consolidated Omnibus Budget Reconciliation Act. Passed in 1985, it allows you and your family to continue health insurance for a while after losing group coverage. COBRA can be pricey because you’ll pay the full premium, but a health crisis could have huge financial implications if you don’t have insurance. If you have dental and/or vision in your old job, that’s included in COBRA, too. An alternative is a Health Insurance Marketplace plan. Available plans vary from state-to-state, and depending on your household income, it may cost less than COBRA. Visithealthcare.gov to learn more.
3. Decide what to do with Health Savings Account (HSA) funds if you have a High Deductible Health Plan (HDHP).
If you expect to enroll in an HDHP at your new employer, you can often transfer a balance in yourHSA. If you don’t plan to enroll in an HDHP, you can generally leave any remaining funds there and use as needed for future eligible expenses.
4. Check your flexible spending account (FSA) balance.
Brush up on the rules for your company’sFSA benefits and deadlines. Submit claims for dependent care or health care expenses through your termination date so you’ll get reimbursed. If you have a balance, what you don’t use, you lose. In other words, it’s time to shop for FSA-eligible items. Your employer has a list.
5. Decide what to do with your retirement plan, such as a 401(k) or 403(b).
First, find out how long you have to decide. In most cases, you get 30 to 90 days. Then you can generally choose among these four options:
- Roll your savings from your 401(k) into an IRA. Combining retirement accounts can help you simplify your money.Learn how to start a rollover IRA here.
- Move your money to your new employer’s plan. This is typically an option if you’re joining a company that offers a retirement plan and allows roll-ins.
- Keep your money where it is if it’s allowed under your old plan. Check with your former employer if you have a lower account balance. Some retirement plans force you to take out a balance that’s under a certain amount — $5,000 is common.
- Cash-out your account balance. There are some downsides to that, including immediate tax consequences. Ouch. It may be tempting to have the extra money now, but there arebetter options for emergency cash than an early 401(k) withdrawal.
If you’re still unsure, read more about thepros and cons of each option.
6. Know what will be in your last paycheck.
It could include back pay, vacation/sick days, commissions, or a bonus.
7. Create a “transition” budget.
Budget for that lag time between your old job and your first paycheck at the new one. If you run short, you could tap youremergency fund.
8. Be prepared if you have student loans with income-based repayment programs.
Log in to your student loan account to see if your monthly payment isbased on your income. A new, higher income could mean a new, bigger payment. Visit theFederal Student Aid site for more information.
9. Find out the rules for vesting, what you get when you leave, tax implications, and so on, if you have stock options or restricted stock awards.
If you get non-salary compensation, know the vesting period and what percentage of compensation is available to you, if any, when you leave. Many companies require you to exercisestock options within a certain amount of time, often 90 days.
10. Check your company’s tuition reimbursement program if you’re taking classes.
If your last day on the job is in the middle of a semester, find out if you’ll be reimbursed for that semester’s expenses. Some companies require you to remain there for a certain length of time or you pay back the funds you received.
- Need a financial advisor to help you figure out your next steps?Principal will help you find one.
- Interested in anIRA to keep saving for retirement? To learn more, readhow to start a rollover IRA.
- If you have a Principal retirement account or insurance from your employer,log in to principal.com to check it, learn about rollover options, access personalized planning, and sign up for our newsletter. First time logging in? Get started here.
This post was created byPrincipal withInsider Studios.
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