David J. Perrotto
A few quick thoughts on what to do with your money when you change companies.
Congratulations! Great job!
It's easy to get so caught up in the excitement of having a new job that you don't stop to think about what this will mean for your finances.
Here are a few things experts suggest you do right after starting a new job;
Adjust your budget to your new salary
'Change over your insurance
In most cases, you won't be able to start using your new health insurance plan until you've worked at the company for 30 days. During the transition period, you'll want to enroll in COBRA to keep your old coverage going. That can be expensive, since you'll be taking over the costs that were once covered by your employer, but it's still worth the peace of mind that comes from knowing that you're prepared in case of an emergency. It's also worth finding out if your new job offers life or disability insurance . If not, you may be able to convert your former employer's group policy into an individual one.
HSAs & FSAs
Health Savings Accounts and Flexible Savings Accounts can offer tax-advantaged means to cover important budget items, such as health care, transportation, or dependent care. Any contributions made to an HSA are essentially yours to keep, so be aware that leaving your job doesn’t mean forfeiting the contributed funds. By contrast, FSA contributions operate on a “use it or lose it” basis. Funds don’t roll over from year-to-year, and any unused monies are forfeited. Plan to utilize any remaining FSA funds prior to departing your job.
Many student loan re-payment programs, such as PAYE, IBR and income-sensitive plans rely on your income as the basis for your monthly payment. A change in income due to a new job can impact this calculation – sometimes significantly. Communicate with your lender to determine your new payment level and adjust your budget accordingly.
Decide what to do with your former workplace's 401(k)
If your former employer offered a 401(k) plan to save for retirement, you'll have several options: keeping it there, rolling it over into your new 401(k), or rolling it into an IRA.
For most people, rolling over retirement accounts into an IRA is usually the way to go, An IRA account comes with the same tax-deferred benefits as 401(k), 403(b), and 457(b) accounts, with lower administrative costs and a wider range of funds to invest in.
If you just switched job's and need help with your 401(k), your benefits, or your insurance, don't hesitate to give me a call or write me an email.