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Perks of the (New) Job

If you recently started a new job, you may not be aware of all the benefits available to you—and thus you may be leaving money on the table.

“The value of these extras—including retirement-savings plans, paid time off, health insurance and other benefits—can add up to about a third of your total compensation,” says Robert Aruldoss, a senior research analyst at the Schwab Center for Financial Research.

Here are some common (and not-so-common) benefits to investigate—and how to maximize them.
 

1. Health care

  • Carefully weigh your health care options, taking particular note of coverage, copayments and deductibles. (Cheaper monthly premiums don’t always pay off if they result in substantially higher out-of-pocket health care costs.) If your spouse or domestic partner also has health care coverage, compare the plans to ensure you’re getting the best coverage for your money.
  • If you’re covered by a high-deductible health plan, ask whether the company offers a Health Savings Account (HSA). Contributions are federally tax-deductible; capital gains, dividends and interest accumulate tax-free; and you pay no tax on withdrawals for qualified medical expenses.
  • Also see whether the company offers a tax-deductible Flexible Spending Account (FSA), which allows you to contribute up to $2,700 per year1 to cover certain out-of-pocket health care costs. (Generally, individuals can contribute to HSAs and FSAs simultaneously only if they are using an “HSA-compatible” FSA. When used in conjunction with an HSA, FSA funds may be limited to dental and vision expenses.)
     

2. Retirement

  • Check whether the new company offers a 401(k) or similar workplace retirement plan—and whether there’s a company match. If so, contribute at least enough to capture the match, though you may need to kick in a lot more to reach your goals.
  • Look into the pros and cons of rolling existing 401(k) funds into your new employer’s plan or an Individual Retirement Account.
     

3. Other benefits

  • Determine if your new company offers life insurance, or whether you might be better off purchasing it independently. (Compare term and permanent life insurance.) 
  • If you have or plan to have children, find out whether the company offers a tax-deductible FSA for dependent care, which allows married couples filing jointly or single parents filing as heads of household to contribute up to $5,000 per year to cover child care expenses.
  • Inquire about commuter benefits, such as pretax parking and transit passes.
  • See whether the employer offers other potentially valuable benefits, such as adoption coverage, low-cost legal plans or tuition reimbursement—some employers even offer discounts on gym memberships and technology purchases.
  • Look into any employer-offered short- and long-term disability coverage. As with life insurance, individual disability insurance may supplement or be a better fit than group coverage. (Learn more about individual disability insurance.)
     

1For married couples, each spouse may contribute up to the annual limit to her or his employer-sponsored FSA. You generally must use the money in an FSA within the plan year or risk losing any unspent funds.

What You Can Do Next

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Social Security for Spouses

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

A rollover of retirement plan assets to an IRA is not your only option. Carefully consider all of your available options which may include but not be limited to keeping your assets in your former employer's plan; rolling over assets to a new employer's plan; or taking a cash distribution (taxes and possible withdrawal penalties may apply). Prior to a decision, be sure to understand the benefits and limitations of your available options and 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.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.

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