If you have ever been in a situation regarding a job transition, you may feel stressed out and fatigued attempting to adjust from one benefit package to another.  This guide is meant to help reduce that stress during a voluntary or involuntary job transition.

Experiencing an involuntary job transition can come suddenly from a company downsizing or your position being terminated with the firm.  These transitions typically happen rapidly, sometimes before you have the opportunity to attempt to begin a new job or even your job search.  It is important to remember that most companies want to help you even on your way out the door, and you should attempt to ask for or negotiate a severance package to help ease the transition along with reviewing the following items in a timely manner.

  • You should work with your HR department or your financial planner to determine if your group life insurance can be converted to an individual policy to allow for that essential coverage to be continued until you are able to work with your financial planner to find more effective coverage, or you begin another job that provides adequate group life insurance coverage for your family’s needs.
  • You should continue your family’s health care coverage by utilizing your right to a COBRA policy if you are the primary benefits providing spouse or sole provider.

[The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan]

  • You should talk to your tax advisor and financial planner about what your best options are to move over your retirement and pension plans. Your retirement savings may be tax deferred, tax free or a combination of the two depending on the type of account you were invested in.  You will want to make sure you move it in a timely manner to an Individual Retirement Account (IRA) or a new employer’s plan so you can avoid any potential penalties or taxes that may be involved in the event you remove your money from your previous employer’s plan.  As a note, most banks will offer a conduit IRA to allow you to avoid taxes and penalties on your retirement funds until you meet the required timeline of being able to invest in your next company’s retirement plan if you choose not to do your own IRA.

When your decision to make a job transition is your own, and it is on a voluntary basis, you will have more time to adequately evaluate your current employer’s benefits and salary to compare more directly with any companies you may be interested in transitioning to.  In this situation you will want to begin your transition by first using some of your detective skills to determine salary range for your field and experience level in your area.  Once you have an idea what your starting salary should be, you will have more time to focus on the company culture and benefit packages of where you would to go.  It is important to note that take home pay is only a portion of your salary, and your next job may also use different equipment and software; provide flexible hours or tele-commuting; provide an expense allowance; and it may also provide for your professional development.  When you have decided you are going to change jobs you should set up a meeting with your financial planner to discuss your current benefit package and what changes or upgrades you would like to see with your next company.

  • Prior to your departure, review your current group life insurance policy and determine if you will be able to transition it to an individual policy. Also, coordinate with your financial planner to see if there is more efficient coverage available that you can you purchase while still maintaining your current group coverage.  This individual coverage will help ensure there is no gap in your life insurance for your family, and the policy will be in place during your transition.  Also, maintaining your own individual policy will ensure you control the terms and conditions of what type and how much coverage you always have on your family at a minimum, and you can allow your additional coverage available to you through your next employer to go above and beyond your minimum needs you have already protected.
  • When comparing health care benefits with a new company ensure they are on par with or better than the current coverages you have in place. Most employers supplement a significant portion of the health care costs for their employees, so be sure to understand what your new plan could entail and what your cost portion will be.  Also, some employers have a wait time for new hires before they can come on the group health care plan.  Or you may have some downtime between leaving your old job and starting your new job.  If either is the case, make sure you exercise your right to COBRA so you do not have any gaps in health care coverage for yourself and your family while you transition.  Also, if you have any pre-existing medical conditions that could be excluded for a portion of your start time with your new job, you will want the extension of your old health care coverage via COBRA to cover that gap.
  • Know the effect on your current employer retirement and/or pension plan before you depart your job. You will want to know if your time at the firm has allowed you to become vested in the retirement plan and what your vesting schedule is.  It could be beneficial for you to wait until you hit the vesting period for you prior to making the move if the difference is large enough.  Consult your tax advisor or financial planner to determine what is best in your situation.  Also, you will want to learn the vesting schedule and employer matching options in your new plan so that you can compare your options with your financial planner understand the differences and how those affect your retirement plan.  Also, some pension plans can be moved to your new employer or an individual plan.  You will need to consult your tax advisor on any tax implementations of making this move.  Finally, as listed above, you can also transfer your old employer plan to your own IRA or to your new employer’s plan.
  • Know what type of short and long term disability your new employer may offer, and consult an insurance professional to determine if you will have adequate group coverage in place to cover your new income, potential bonuses, and retirement contributions. You will want to analyze your options and determine if any gaps can be covered by supplementing your group coverage with an individual disability policy as well your new employer’s group plan.
  • When you decide to depart your company for your next employer be willing to negotiate cash to compensate for any unused vacation, personal or sick days that you may have available, and try to also negotiate a severance package even though you are voluntarily leaving. Furthermore, if you typically receive an annual bonus, see if you would qualify for a pro-rated bonus for the year.  Most firms will be willing to work with you on your transition out, and you will want to provide an open and honest exit interview, if requested, to help the company improve itself and its own retention efforts.

If you are ready to learn the value of your reviewing your benefits in a job transition, and how that impacts your personal financial goals, we are here to help.  Contact us today to meet one of our professionals with the experience and expertise to provide the answers and clarity you need.

Securities, Investment Advisory and Financial Planning Services offered through qualified registered representatives of MML Investors Services, LLC, Member SIPC, 12 Cadillac Drive, Suite 440, Brentwood, TN  37027 (615) 309-6300.  Continuum Planning Partners is not a subsidiary or affiliate of MML Investors Services, LLC or it affiliated companies.  CRN201711-197736

Continuum Planning Partners Post Author
Chris Robinette, MBA, LUTCF

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