Financial considerations when changing jobs
Edward Jones - Chad Choate, AAMS
For more information about the author, click to view their website: Edward Jones
Jan 28, 2025
Florida - Sarasota, Bradenton & Charlotte Counties
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Are you changing jobs soon? If so, you’ll
obviously be interested in your new salary — but you’ll also want to look at
other financial considerations.
Here
are some of the most important ones:
•
401(k) — If you had a 401(k) plan through your previous employer, you’ll
need to decide what to do with it once you’ve joined a new employer. You could just
cash it out, but you’d pay taxes and possible penalties. You could leave your
401(k) with your previous employer, if allowed, and if you have been happy with
your plan’s performance. Or you could move your 401(k) into your new employer’s
plan, which might be a good choice if the new plan has lower fees and attractive
investment options. You’d also want to ask whether the new employer offers
matching contributions. Finally, you could roll over your old 401(k) into a
traditional IRA, which would give you more investment choices.
•
HSA/FSA — If your new employer offers a health savings account (HSA) as
part of a high-deductible health plan, you may want to take advantage of it.
Your contributions are made with pre-tax dollars, your
earnings generally grow tax deferred, and your withdrawals are tax free, if
they’re used for qualified medical expenses. Plus, you can carry unused funds
through retirement when you can still use them for qualified medical expenses.
Your employer might also offer a flexible spending account (FSA), which can pay
for a variety of health care costs, such as deductibles, co-payments, and
co-insurance. Generally, if you’re contributing to an HSA, you can’t fund an
FSA in the same year, except for a limited purpose FSA.
•
Waiting period for health benefits — You’ll want to ask your new
employer if there’s a waiting eligibility period to enroll in its benefits plan
— health insurance, dental, vision, and so on. If so, you may need to get COBRA
coverage for a few months to stay in your old plan, unless you can be added to
a spouse’s plan. When you go on your new employer’s health care plan, make sure
you know what it covers. Depending on your situation, you might want to add
supplemental health insurance.
• Life insurance — When you leave a
job, your employer-sponsored life insurance will end, unless you have the
option to convert your group term life policy into an individual permanent cash
value policy. So, you’ll want to be sure your new employer offers at least the
same insurance coverage as your old one. But you should also determine whether
the group policy offered by your employer is sufficient for your needs.
Depending on several factors, such as your income, spouse’s income and family
size, you may need to supplement your employer’s policy with an individual term
life insurance policy.
•
Other benefits — Review your new employer’s benefits package carefully
to see what’s available. Many employers offer tuition reimbursement for their
employees, and some even provide college planning assistance for employees’
children. For example, your employer might offer matching contributions to a
tax-advantaged 529 education saving plan, which can be used for college, some
K-12 expenses and some trade/vocational school programs.
Changing jobs can provide you with an opportunity to expand your career, learn new skills and broaden your social network. And it can certainly be financially rewarding, too — so make sure you know all the benefits involved.
Chad Choate III, AAMS
828 3rd Avenue West
Bradenton, FL 34205
941-462-2445
[email protected]
This article was written by Edward
Jones for use by your local Edward Jones Financial Advisor.
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