Congratulations on the new job! While the transition to a new company or a new position may be stressful, taking the following steps can help provide a smooth transition and simplify your personal financial life.

Get to know your new retirement plan

The type of plan offered (401k, 403b, 457, SIMPLE IRA, SEP IRA, etc.) will impact the maximum amount you can contribute, and the availability of a Roth feature will determine if you can contribute pre-tax or after-tax. Explore the investment options, financial planning support offered, and fees associated with the plan.

Don’t pass up free money

If your new employer provides an incentive to participate in their retirement plan, such as a matching contribution, take advantage of that benefit. At an absolute minimum, you should at least contribute enough to maximize the employer’s contribution.

Escalate your savings

If your new position came with an increase in pay, take this opportunity to increase your retirement savings. It’s easier to make this change now rather than once you’ve gotten used to a higher take-home pay.

Consider consolidating old retirement accounts

You typically have four options with your old retirement plan when leaving a company: 1) keep it where it’s at, 2) rollover to your new employer’s plan, 3) rollover to an IRA, or 4) cash out. Consolidating old workplace retirement accounts can simplify your finances and give you a clearer view of your retirement future. Try to avoid the temptation of cashing out due to substantial penalties and tax implications.

Check your tax withholding

Make the appropriate federal and state tax withholding elections based on your new income level to avoid receiving an unexpected tax bill come April. You may also want to consider making estimated tax payments throughout the year. This is especially important for individuals earning in excess of $200,000 ($250,000 if married filing jointly) who may now be subject to 0.9% additional Medicare Tax (AdMT).

Coordinate your new benefits with those of your spouse

If you have a working spouse, compare and contrast the benefits offered by each of your employers. It may be more advantageous to elect certain coverages as a family under one employer rather than being on separate policies depending on the costs and benefits offered.

Review your life insurance needs

If you had employer-provided life insurance at your previous employer, it likely dropped once you left. Your new employer may or may not provide new coverage, so performing life insurance needs analysis can help you determine how much coverage, if any, is necessary to ensure your family’s security if you were to pass away unexpectedly.

Review your disability insurance needs

During your working years, your biggest asset is arguably your ability to earn money, yet disability coverage is often one of the most overlooked types of insurance. Look for both short term and long term coverage. If your employer does not offer it, seek professional assistance to compare rates and coverage levels for purchasing coverage on your own.

Reassess your long-term financial plan

Evaluate how your new role, income, and benefits package will impact the likelihood of reaching your financial goals.

Submit a contact form or call us at 864-288-2849 to schedule a free consultation with one of our advisors. We can assist in making this job transition as seamless as possible.

Review your current benefits and financial plans with you advisor:

  • Which benefits need to be replaced, such as health, disability, or life insurance?
  • Which benefits can be kept or transferred, such as a workplace savings plan?
  • When will benefits such as health, disability, or life insurance cease and how will COBRA insurance can help fill a gap in coverage?
  • What compensation, if any, you are entitled to, including back pay, vacation days, sick pay, or future distributions?
  • What changes, if any, will you need to make to your budget?
  • Will you incur additional expenses (e.g., commuting costs, health care, etc.)
  • What should you do with your old retirement savings plan?
  • What should you do with a new workplace plan?
  • Do you want to finance a business using a retirement account?
  • Will you need to refinance your mortgage during the next two years?

Review legal obligations with your attorney:

  • Do you have employment contract obligation?
  • What legal document do you need to have drafted or reviewed?
  • What business licenses do you need to file?