Changing Jobs? How to Make Sure You Don't Leave Money Behind

Cindy Wang is a planning excellence insight lead at Northwestern Mutual.

If you’re planning on making a career change soon, you’re probably focused on all the perks that come with a new opportunity, like additional responsibilities or a pay increase.

But before you officially quit your job and jump headfirst into a new role, make sure to think through the details of your compensation. Here are some tips to consider before you give your notice or work your last day.

Time your exit

Even if you’re itching to start fresh, there are a few situations when it makes sense to stick it out at your current job a little longer. Here are a few things that might influence your timing with a career change:

You expect a yearly bonus

Companies typically pay out annual bonuses on a scheduled date. A bonus can sometimes account for a decent percentage of your compensation, so you might want to announce a resignation after that date.

You’ll also want to understand the schedule of your new employer’s bonus payout (if they offer one) and how that might influence the tax you pay on your bonus. If your new employer asks you to start before your bonus is paid out, see if you can push your start date ahead. If not, mention that you’ll be missing out on money by leaving your current employer at that time—they may be willing to compensate you for starting earlier.

You’re about to vest in a retirement plan

If your company offers retirement benefits, you may not get to take the money with you if you leave before the money is vested—that is, when the benefit becomes yours. If you’re a few months away from vesting, you could lose out on thousands of dollars in retirement savings. It’s also important to learn about how vesting works in any plan you may have, whether it’s through your current employer or your new one.

Your company is about to match your 401(k) retirement contribution

Some companies only match 401(k) contributions only at certain times each year. You may want to wait until the matching payment happens before turning in your notice. Otherwise, you may miss the opportunity to receive the match.

You have stock plans

If your company offers stock options, your employer may give a short period of time to exercise the option. Make sure you understand the details before making a move. These are often complicated, so you may need help from a financial advisor.

Carefully read over the description of your stock plan, which may be set up as Restricted Stock Unit (RSU) or Employee Stock Purchase Plan (ESPP). Watch for special rules during termination or change of employment status. You may have to wait a certain amount of time before you have the right to sell the stock.

For all stock plans, keep an eye on tax implications and get help from an independent tax professional.

Consider your health coverage

You probably rely on your employer for benefits like health and dental insurance and vision coverage. When you’re looking at changing careers, go through this list one-by-one and think through how your coverage may change. Look at how much you’re paying for plans and what you’re getting.

If there’s a waiting period before you’re eligible for the new employer’s health coverage, you’ll also want to look into extending your current insurance through Consolidated Omnibus Budget Reconciliation Act (COBRA)—a federal law that allows certain employees to keep the health insurance from their employers in certain situations.

You might want to schedule some appointments with your primary care doctor, dentist and optometrist before your coverage changes to make the most of any deductibles you’ve reached. It can also be efficient to get one last visit in before new benefits cause you to switch providers.

Consider gaps in life insurance and disability insurance

Dig through your benefits package and carefully consider life insurance and disability coverage. Job changes are good times to talk with your advisor to see whether you’ve got enough protection.

• You may lose coverage provided by your current employer
• When you start a new job, your income may go up (or down), affecting the amount of coverage you should buy
• You may be going through other life milestones, like having children or caring for aging parents, that affect your needs

Make plans to avoid gaps in coverage so that you and your loved ones are protected in case of unexpected events. Your Northwestern Mutual advisor will use their expertise to help you look at the details of all of your options and make expert recommendations customized for your situation.

Recoup any money your employer owes you

Do you have unused vacation days? Check with your HR department to understand how your employer calculates vacation time and whether you’ll be compensated for the days you didn’t use. If so, remember that, as with your regular pay, taxes will be withheld from this payout.

The same goes for any unused flexible spending account (FSA) funds. Gather up any outstanding charges and medical expenses you may have and file a claim before your last day. If you don’t have any expenses, think about getting more contacts or new glasses.

If you have a corporate credit card, make sure to redeem or transfer any miles or points that you may have accumulated before returning your card. You could have enough for a free flight or a gift card to your favorite restaurant or store.

And if there are any employee expenses you need to be personally reimbursed for, get those submitted right away to help you get your money on time.

Think about your retirement funds

If you have a 401(k) or 403(b) retirement plan through work, you’ll have to decide how to handle it when you resign. You can usually leave your funds in your current employer’s plan, roll them over into an IRA or have them moved over to your new employer’s plan. Many people decide to roll funds into their new employer’s plan to keep things simple.

But if you don’t mind managing multiple accounts, there can be benefits to rolling the account over to an IRA or leaving it with your old employer’s plan. Before you decide to leave any accounts on an old employer’s plan, be sure to check the plan terms.

Work with a financial advisor

There’s a lot to think about when you switch jobs. Understanding the changes in your benefits is important, but if you have an increase in pay, you’ll also now have more money available to put toward financial goals.

The start of a new job is a great time to meet with your financial advisor. (Same goes for other big changes in your life.) Your advisor can help guide you in keeping your goals on track through the transition. They’ll help you evaluate all your financial options and adjust your plan as your life changes.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.