States With the Most People Looking for a New Job in 2022

Consider and evaluate any unvested 401k match, stock options, or restricted stock units before leaving a company. You may be leaving funds on the table. Also, if you are leaving a position with a non-qualified deferred compensation plan, it may become 100% taxable upon leaving. Talk to your advisor about how this job change may impact your overall financial plan.

Emily Rassam, Senior Financial Planner, Archer Investment Management

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Here are the list of items we recommend looking at before quitting your current job:

Retirement – does your employer offer a retirement plan with matching contributions? What is the vesting schedule, i.e. would waiting a few months make a significant difference to your balance? Do you have any retirement plan loans that become due in full at separation of service?

Health insurance – understand your current plan. Does it make sense to take care of any health issues now or wait? Might be a good time to visit the dentist or the eye doctor. Will you need to replace coverage for your entire family or move to a spouse’s plan?

Life insurance/Disability Coverage – are you enrolled in this coverage? Can you take it with you or will you need to replace it?

Current compensation package – do you have any deferred compensation coming in the near future, bonus payouts, or stock option vesting? Think about waiting for these events to occur.

Get finances in order – do you have emergency savings? Will changing jobs impact your expenses? Do you need to move your home as well?

Nannette Kamien, CFP®, CDFA®, MBA, Financial Planner at Cultivating Wealth

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If you have a Flexible Spending Account (FSA) take time to use up your elected contributions for the year since they are use-it-or-lose-it. You can buy anything at the FSA Store including sunscreen, menstrual products, and first aid. Typically employers provide a 1-2 week grace period after leaving to use up your FSA dollars — double check your employer’s rules. If you have a Health Savings Account instead, these funds stay with you or can even be rolled over to a new employer if you will continue to be using a High Deductible Health Care Plan (HDHP).

Note how much you contributed so far to your 401(k) retirement plan. If you’re trying to max out for the year take care not to over contribute. The max for the year, no matter how many employers you had is $20,500.

It’s a great time to review your W-4 elections. Don’t assume that what you used in the past will be the best option for you at your new job and new salary. Use the IRS tax withholding calculator online (https://apps.irs.gov/app/tax-withholding-estimator) to figure out how best to fill out your W-4. It could also be a good time to ask your accountant or financial advisor for help adjusting withholdings.

Cady North, CFP®, CEO, North Financial Advisors

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BEFORE quitting their current job, what actions do you recommend people take?

Develop an income plan to determine how long you have before your cash is depleted. The last thing you want to do is invade your retirement accounts prematurely to pay the bills. You would likely incur taxes and penalties and potentially jeopardize your retirement goals. You also want to review your health insurance options to avoid any gaps in coverage. Incurring a major medical expense without coverage could be catastrophic to your financial plan.

At the outset of STARTING their new job, what actions do you recommend people take?

Conduct a thorough review of your new benefits plan. Do they offer a high deductible health insurance plan? If you’re in good health and can pay the deductible from savings, you can save money on premiums and contribute towards a health savings account. These accounts offer many tax benefits and often receive employer contributions. Does your new company offer a match on retirement contributions? You will want to contribute up to the company match to capture that “free” money and even consider a Roth 401(k) if offered and warranted based on your tax situation.

Brett Tushingham CFP®, Founder of Tushingham Wealth Strategies

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Before Quitting Your Job:

If you have a 401k loan, check your plan to see if you are allowed to continue paying off the loan after you leave the company. In most cases, it might be better to pay off the outstanding loan to prevent a taxable distribution. For most people, cashing out their retirement account for nonretirement expenses should be your last resort. If there’s a gap of time between your jobs, consider applying for Cobra health insurance or getting a marketplace insurance. If you have money leftover in your FSA, be sure to claim your health care reimbursements before your termination date. Depending on whether or not your next job pays weekly or biweekly, you may want to consider tightening your budget or adding money to your savings account in the meantime.

Upon Starting Your New Job:

Read your employer benefits plan to determine which benefits are best suited for your retirement plan. If you are need help transcribing your employer benefits plan, reach out to a fee-only financial advisor.
Consider rolling over your employer retirement plan to another qualified retirement plan; this will prevent you from misplacing accounts in the future. Before you roll over your money to another retirement plan check the yearly maintenance fees. If you plan to continue to contribute to your HSA, make sure that your health care plan with the new employer meets the High Deductible Health Plan requirements.

Danielle Miura, founder of Spark Financials

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