Financial Considerations When Changing Jobs

Are you changing jobs soon? If so, your new salary will likely be one of your main concerns. It’s important to remember that there are other financial factors to consider that can have a significant impact on your overall compensation and financial well-being.

Here are some key financial considerations to keep in mind as you evaluate your job change.

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 cash it out, but you would 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, as long as 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 to Consider

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 be a great opportunity to advance your career, develop new skills, and expand your professional network. It can also bring financial rewards, such as a higher salary, better benefits, and potential bonuses. However, it’s important to carefully assess the full range of benefits and compensation to ensure you’re making the most informed decision for your financial future. Understanding everything that’s included—beyond just the salary—can help you maximize the advantages of your new role.

DaVaul Carter | Edward Jones Investments | Financial Advisor2970 Peachtree Rd. | Suite 650 | Atlanta, GA 30305

Office: 404-254-3178
Fax: 888-844-2346
Email: Davaul.Carter@EdwardJones.com

www.edwardjones.com

Edward Jones, Member SIPC

Edward Jones employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.