Financial Planning When Changing Jobs
When you change jobs, four financial decisions come with the offer letter: what to do with the old 401(k), how to handle the gap in health and life insurance, what to do with any stock or equity compensation, and how to fit the new pay and benefits into your plan. Focused Financial Group helps professionals in metro Atlanta work through these before the first day at the new job.
What should I do with my old 401(k)?
You generally have four options: leave it in the old plan (if the balance is large enough), roll it to the new employer's plan, roll it to an IRA, or cash it out. Cashing out means taxes and usually a penalty, so it is rarely the right choice. The others depend on fees, investment choices, whether you hold company stock, and whether you want everything in one place. A direct rollover avoids withholding.
Am I covered between jobs?
Health coverage usually ends on the last day of the month you leave; COBRA lets you continue it at your own cost, and the new plan may have a waiting period. Group life and disability insurance end when the job does and rarely convert on good terms, which is why coverage you own personally matters. Check both before you give notice.
What happens to stock options and restricted stock?
Unvested awards are usually forfeited when you leave. Vested options often have a short window, sometimes 90 days, to exercise before they expire. Read the plan document, and talk with your CPA about the tax before exercising, because the timing can change the bill significantly.
How should I evaluate the new offer?
Look past salary: the retirement match and vesting schedule, health premiums and deductibles, bonus structure, equity, paid leave, and any signing bonus with a clawback. Two offers with the same salary can differ by thousands of dollars a year in benefits.
What should I set up in the first 30 days?
- Enroll in the new 401(k) at least to the match; set a Roth or pre-tax election.
- Choose health, life and disability benefits and name beneficiaries.
- Update your emergency fund target for the new income.
- Adjust tax withholding with your CPA if your income changed materially.
How Focused Financial Group helps
We compare the rollover options for your old plan, review the new benefits package, check whether your personal insurance covers the gap, and update your plan for the new income. We do not provide legal or tax advice.
Talk with us
Call 770-250-7588 or use the Contact Us page. Bring the benefits summary from the new employer and your last 401(k) statement.
Before rolling over a retirement account, compare the fees, investment options, services and protections of each option. This material is general information, not tax advice.