Top 5 Financial Considerations When Changing Employers

Whether by choice or circumstance, it’s likely you’re going to change employers at least once during the course of your career. Changing jobs is a major life event and there’s a lot to consider during the transition. When you make a career move, there are some essential things you’ll want to make sure you do: 

1. Assess your retirement savings options — The vested balance in your employer’s qualified 401(k) or 403(b) plan is yours to keep. When deciding whether to leave the money in your former employer’s plan or to roll the money into an individual retirement account or your new employer’s retirement plan, consider fees, investment choices and ability to access to your funds under each option.

1. Sign up for your new retirement plan — Your new employer may automatically enroll you in a 401(k), 403(b) or other employer-sponsored plan. Regardless, you may be able to get into the plan more quickly if you sign yourself up as soon as you are hired. Make sure that you take time to understand the investment options the plan offers. Also, contribute as much as you can to maximize any employer-sponsored match that’s available to you. It’s just that much more money to put away for retirement.

1. Remember your health savings account (HSA) — If you have an HSA, you (not your employer or insurance company) own and control the money in your account, regardless of who has made deposits into it. The bottom line: it’s portable and goes where you go. If your new employer doesn’t offer a high deductible health plan (HDHP), you can still use your HSA to pay for out-of-pocket medical expenses. However, you won’t be able to continue to make contributions to it.

1. Evaluate your new insurance benefits — It’s likely you’ll have disability income insurance and/or life insurance as part of your employee benefits package. Evaluate the coverage and make sure that it offers the protection you need to help sustain your current lifestyle or achieve your goals if an illness or injury prevents you from working—or if the unexpected occurs. If the coverage isn’t adequate, consider options to make up the difference.

1. Understand the implications to your company stock, stock options and bonuses — If you’re lucky enough to have these benefits, or other forms of non-salary compensation, be aware of what does and doesn’t go with you when you switch companies. Restricted stock and stock option awards typically vest over a period of time. So calculate what—if any—portion of these will be available to you upon your departure. If you’re close to your stock vesting and/or bonus payout date and your future employer is flexible with your start date, explore whether it makes financial sense to wait to give your notice.

The transition to a new employer can present many financial choices and options. Your financial professional can help you make the decisions that are right for your financial situation. He or she can also help adjust your financial strategy to align with your changing short and long-term financial needs and goals.

Jeff Mushen, MSF, CFP, ChFC, APMA, is a Financial Advisor and CERTIFIED FINANCIAL PLANNER practitioner ™ with Ameriprise Financial Services, Inc. in Edmonds, WA.  He specializes in fee-based financial planning and asset management strategies and has been in practice for eight years. To contact him, www.ameripriseadvisors.com/jeffrey.m.mushen.

Ameriprise Financial and its representatives do not provide tax or legal advice. Consult with your tax advisor or attorney regarding specific tax issues.

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