With so many job changes, it would be easy to let financial benefits slip through the cracks. Paul Lebouf with Charles Schwab’s Houston office says when you exit a job, visit the Human Relations department on your way out. And when you start your new job, spend time with your new HR person.
“There are other things, in terms of insurance, in terms of your 401 (k), in terms of stock options and grants that may come out of that equasion as well.”
Ed: “I suppose it’s not entirely out of the question you might even forget some benefits you’ve collected from years ago.”
“Yes, so you need to go and do a full assessment of what you have. You certainly don’t want to leave any stock options that are in the money out there and allow them to expire. You want to make sure that you’re receiving all the benefits from your previous employer that you’re entitled to.”
Lebouf says there are three options to handle an old retirement plan: rollover to an IRA, move savings to the new employer’s plan or leave the money where it is.
“Unless you need the money, we would not advocate taking a cash distribution because this money was set aside for retirement, and it would be a fully taxable event, if you did do that. Rolling it in to your new employer’s plan could have some benefits — mainly, if you’re allowed to borrow against that plan, then that’s money that you can then borrow against in the future, if you need to. But you also need to look and see what your new investment choices are. So any 401 (k) typically is going to have limited investment opportunities. Rolling into an IRA keeps the preferential tax treatment, and in theory opens you up to unlimited investment choices.”
And if the new job impacts your tax bracket, think about a complete, tax-efficient overhaul of your portfolio. Ed Mayberry, KUHF News.