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Retirement & Planning

Changing Jobs Checklist


Changing Jobs? Here’s What to Do to Stay Financially Secure.

Job transitions can evoke a wide range of emotions—excitement if you’re headed for an interesting new venture, or trepidation and worry if you’ve been laid off. But regardless of the reason for leaving, you may be feeling stress over how to make sure nothing has fallen through the cracks in terms of monetary matters—and of course there’s the added pressure of budgeting during a period when you may not have a paycheck.

But a little planning and foresight can make things a lot easier. The checklist below highlights what you’ll want to consider before you leave your old job, during the period between jobs, as well as after you begin a position at a new company. Thinking through these “to do’s” will help ensure you’re in a stable financial position as you begin the next phase of your career.

Before you leave your current position:

  • Stay protected: know when your insurance coverage ends.

    Know how long you’ll have insurance coverage (health, disability, and life) with your soon-to-be former employer. If health coverage ends before it starts up again with your new company, be sure to talk to your employer about your options through COBRA. Although it may be pricey, consider the tradeoffs if you were to be injured during your transition time.

  • Keep what’s yours: know if you have any benefits that will follow you.

    Benefits like a health savings plan will follow you wherever you go, so be sure you know which benefits will come with you and how to continue to access them once you leave.

  • Get paid: calculate pay that’s due to you when you leave.

    Understand how much unused vacation pay, sick pay, and other compensation should be paid out to you upon leaving. If you have stock options, make sure you know how long you have to exercise them before they expire.

  • Make retirement plans: know what you’re going to do with your 401(k).

    Consider what to do with your current 401(k) plan. Know the pros & cons of leaving the money in your current plan, rolling it into an IRA, or rolling it over into your new company’s 401(k), and decide which is best for you. Get more information on 401(k) options.

  • Have a financial strategy: create a budget for your time between paychecks.

    Develop a budget that will cover your expenses while you’re not receiving a paycheck between jobs. Your goal should be to get by with the money you have vs. going into debt to cover non-essential purchases.

When you’re between jobs:

  • Stick to your budget.

    The last thing you want to do is run up debt when you don’t have a paycheck coming in (if you can possibly avoid it). Do your best to stick to the budget you’ve laid out for yourself while between jobs, even if it means cutting back on fun. In the long run, you’ll be glad you did.

  • Follow up on your 401(k).

    If you’re planning to roll your 401(k) into an IRA, now is a good time to get the ball rolling. Contact your plan administrator to start the process and set up an IRA account (if you don’t already have one). Remember that once your old plan administrator cuts you a check with the proceeds from your 401(k) plan, you only have 60 days to deposit it into your IRA to avoid substantial tax penalties.

    A rollover of retirement plan assets to an IRA is not your only option, however. You may also be able to keep your assets in your former employer's plan, roll them into a new employer's plan, or take a cash distribution (this option is typically not recommended as taxes and possible withdrawal penalties may apply).

    Before you make a decision, be sure to understand the benefits and limitations of your available options. Also consider factors such as differences in investment-related expenses, plan or account fees, available investment options, distribution options, legal and creditor protections, the availability of loan provisions, tax treatment, and other concerns specific to your individual circumstances.

    Get more information on rolling over a 401(k) into an IRA.

After you start a new job:

  • Take advantage of what your new employer offers: review and sign up for benefits.

    Sign up for benefits as soon as possible to make sure you and your family are covered by insurance. Remember that small benefits like commuter savings, flexible spending accounts (FSAs), and health savings accounts (HSAs) add up too.

  • Collect “free” money: set up your 401(k).

    If your new employer offers a 401(k) plan, sign up as soon as you are eligible. A 401(k) is one of the best ways to save for retirement (plus it helps you save on taxes since contributions lower your taxable income). If there’s an employer match, be sure you contribute at least enough to take full advantage of it—that’s essentially free money in your pocket. Use this retirement calculator if you need help figuring out how much to set aside in your 401(k) for retirement.

  • Know where you stand with Uncle Sam: estimate your tax liabilities.

    A change in salary can potentially affect your tax bracket, so be sure you understand what your new tax liabilities may be. Use the IRS Withholding Calculator to determine how much you should set aside for taxes; then change your tax withholding amounts on your W-4 form if necessary.

How Schwab can help:

With a wide variety of investment options and a highly-qualified team of over 350 financial consultants nationwide, Schwab can provide comprehensive investment help and guidance in a personal way that’s right for you. Let us help you make a smooth job transition to ensure you’re on sound financial footing as you start a new job. Visit us online to learn more or call us at 877-302-5886 to speak with an investment professional today.